If I have a product that is sold at Walmart, so to say, do I make money when someone buys my product from Walmart or does Walmart buy my product in bulk to sell and that’s how I make my money? This question has bothered me for decades, thanks!
In: Economics
The supermarket buys the product at a flat rate from the manufacturer.
So for Example I work in the food sector, Ingredient manufactures by raw produces from farmers, we then buy the packaged raw ingredients from then to make flavor powders/mixes, Food item manufactures will by our mixed ingredients from us, The supermarkets buy it from them and then you the end consumer buys it from the supermarket. Everyone is making their money from the sale to the next step in the chain.
This can cause issues as it hands the supermarkets a **LOT** of power. A part of the reason that you will often hear say dairy farmers complaining about not making enough money is the super markets often use products like milk as a “Loss leader” i.e something they sell at a loss because its an everyday item that gets people through the door and buying other stuff that they do make a lot of money on.
As a result they want to pay as little as possible to avoid the losses being to high, This narrows the profit margin of the dairy processer, who in turn puts a similar squeeze on the farms they buy from. This can play out across the supermarkets entire product range but he shorter and simpler the logistical chain the more they can squeeze as it makes it easier to move to another supplier if you wont give them the price they want
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