[News] Walmart is going to start charging fees to vendors... (What?)

Discussion in 'Politics, Religion, Social Issues' started by gkarris, Jun 25, 2015.

  1. gkarris macrumors 604

    gkarris

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    #1
    What?

    A store to start charging its VENDORS for storing and selling their product?

    That's a new one...

    http://www.businessinsider.com/r-wal-mart-to-impose-charges-on-suppliers-as-its-costs-mount-2015-6

     
  2. iBlazed macrumors 68000

    iBlazed

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    #2
    I wonder how this decision will impact them in the long term. I expect selection to decrease tremendously. That's a huge part of their appeal. Their prices aren't THAT much lower on many items.
     
  3. zin macrumors 6502

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    #3
    Walmart generated over $16 billion in profit last year, not to mention over $200 billion in registered assets. They could absorb the costs due to wage rises.

    Nah, never mind. It sounds crazy when I actually write it out. :rolleyes:
     
  4. Gav2k macrumors G3

    Gav2k

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    #4
    They already to this to 20-30% of the vendors so it's not something new
     
  5. mrkramer macrumors 603

    mrkramer

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    #5
    The article says
    If it is a common thing I don't see a problem with it. It's better than the costs being passed on to consumers, the companies that supply the goods can afford it (So can Walmart, but you know they want to keep making big profits).
     
  6. rdowns macrumors Penryn

    rdowns

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    #6
    When Walmart can dictate terms to the likes of Proctor & Gamble or Coca-Cola, the smaller guys have no chance. If they don't sell through Walmart, they go out of business.
     
  7. vrDrew macrumors 65816

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    #7
    Grocery stores have been doing similar things for years: So-called "slotting fees" for the privilege of having your merchandise on the shelves.

    Companies large and small have struggled with the question of whether - and how - to do business with Wal-Mart for years. Just as the people at Vlasic Pickles and Levis jeans how that worked out for them.

    On the positive side, selling at Wal-Mart means your products will find a ready-made market and distribution system that reaches hundreds of millions of people.

    Frankly, smaller manufacturers shouldn't even try to sell through Wal-Mart. They are much better off selling direct, via the Web, or through Amazon and similar marketplaces. But even doing business through Amazon is no picnic.
     
  8. webbuzz macrumors 65816

    webbuzz

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    #8
    Yep, it has been happening for years.
     
  9. gkarris thread starter macrumors 604

    gkarris

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    #9
    Cost is ALWAYS passed on to the Consumers one way or another. Do you think the Retailer or Manufacturer/Supplier is going to pay?

    Consumers will see it in higher prices, or prices that may not fall as quickly (for technology items), or cheaper builds/components used.

    This may go even as far as the suppliers cutting wage earners' pay/raises/benefits or maybe even outsourcing (though changes to small to be publicized).
     
  10. Praxis91 macrumors regular

    Praxis91

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    #10
    Whenever someone complains/whines/whatever about another company's profit, they never mention that same company's profit margin.
     
  11. Renzatic Suspended

    Renzatic

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    #11
    They made $16 billion last year. If their profit margin is 1% or 50%, they still made 16 billion dollars.

    Though it does bring up a good point. What are the profit margins on 3rd party goods sold through Wal-Mart? They're obviously making a ton of money. Are their suppliers doing the same, or is Wal-Mart using their size to leech off them for their own ends?
     
  12. Praxis91 macrumors regular

    Praxis91

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    #12
    If they made $16 billion and their profit margin was 1%, they would only end up with 1% of that $16 billion. LOL

    The profit margin is the important number, not the actual profit.. just like with oil companies.. sure they deal with lots of volume, but their margin is in the single digits.

    Apple enjoys a margin in the 30%+ range.
     
  13. LIVEFRMNYC macrumors 603

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  14. Renzatic Suspended

    Renzatic

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    #14
    They made $16 billion last year. That's net. Margins are an aside.
     
  15. chown33 macrumors 604

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    #15
    As stated, the profit was $16 billion .

    If the margin was 1%, then the total revenue was $16 billion / 0.01 = $1.6 trillion.

    In other words, what was the total revenue such that 1% of it is equal to $16 billion?


    According to this:
    https://en.wikipedia.org/wiki/Walmart

    FY 2015 revenue: $485.651 billion. Net income $16.363 billion.

    Calculation of the overall margin is left as an exercise for the reader.
     
  16. zin macrumors 6502

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    #16
    Their net profit was $16 billion. That is after operating expenses, interest, and taxes. Their revenue was $485 billion.

    Regardless of their profit margin, that $16 billion remains an actual value of cash, just like the $200 billion in assets. Walmart has 2.2 million employees. Even if they set aside "just" $3 billion of that, each Walmart employee would be better off by $1,400 per year. Assuming their revenues continue to grow for subsequent years, as it has done, this cost would further be marginalised.

    Yes, Apple enjoys a much bigger profit margin. Shame most of their employees don't get to enjoy more of the fruits of it.
     
  17. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    #17
    This practice dates back a long time.

    In any case, it won't affect me, since, I would rather walk on hot coals than shop at Walmart.
     
  18. rdowns macrumors Penryn

    rdowns

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    #18
    Me thinks a remedial economics course might help here.
     
  19. Praxis91 macrumors regular

    Praxis91

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    #19
    I was mistaken on the $16 billion being their net. They generated almost $500 billion in sales ($473 billion) in 2013 and ended up with $16 billion. That doesn't excite me as a potential shareholder with a measly 3.3% profit margin.
     
  20. chown33 macrumors 604

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    #20
    That's roughly the same 30% margin you cited for Apple. Or is Apple not exciting either?
     
  21. Praxis91 macrumors regular

    Praxis91

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    #21
    No.... $16 billion out of $473 billion is 3.3% not like Apple's 30%. If it was 30%, Walmart would have $142 billion instead of $16 billion.

    Btw, I am an Apple shareholder and not a Walmart shareholder.
     
  22. rdowns macrumors Penryn

    rdowns

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    #22
    That's a great profit margin for a retailer of commodity goods. Supermarkets have margins half that.
     
  23. Praxis91 macrumors regular

    Praxis91

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    #23
    Sure, and they do deal in volume like gas companies, but I prefer larger dividends for my hard-earned investment dollars. :)
     
  24. chown33 macrumors 604

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    #24
    You're correct. My turn for making an arithmetic error.
     
  25. Praxis91 macrumors regular

    Praxis91

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    #25
    That's okay. I hire nerds to do math for me. :)
     

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