Wholesale
Categories: Company Management
Maybe there’s a better question here: What is half sale? Partsale? No? Ok...fine.
You buy a bottle of Heinz Ketchup for 6 bucks at the grocery store. That 6 bucks was the retial price you paid for the ketchup. But when Safeway or Krogers or Albertson’s bought it, they paid something more like 4 bucks for it. The 4 bucks they paid was their wholesale price.
That is, most of the time, in business, manufacturers don’t actually sell their product direct to consumers. Rather, they distribute their products in bulk, selling at prices cheaper than retail and then allowing the retailer to mark up the price, giving them enough profit margin, to, um…exist.
And this makes sense. Heinz is good at managing cheap, non-union tomato labor in Mexico, smashing them, adding vinegar, removing fly wings, bottling, storing, and all the other production things, like adding sugar. Can’t forget about the sugar. And yeah, ketchup has a ton of it.
So that’s what Heinz is good at. Making ketchup. They’re not necessarily good at selling ketchup, at least not directly to consumers. Like, how would they do this anyway? Website? Mail order?
Should they have a big chain of Heinz ketchup drive-thrus? Okay, uh, probably not. So…Heinz wholesales its ketchup to grocery stores, to convenience stores, to Walmarts, and to the special effects people in Hollywood and at magic show theaters around the world.
Many questions remain as to why the unit profit margins on ketchup to a grocery store are 30%...whereas to capers their 90%, and to Diet Coke they’re only 15%. The answer lies in a few key dials that directly map the power or leverage each side has in any given negotiation.
That is, Heinz is a brand that people like, and generally seek out, but wouldn’t die without having in their fridge. The retailer Safeway could have its own Safeway brand of ketchup, and riots would probably not break out in the street. But if they did, there would be plenty of fake blood on hand, anyway.
The same cannot be said of Diet Coke, where for many shoppers, if the grocery store didn’t carry it, they would simply shop elsewhere. So if this is the case, then why are capers such a huge profit margin item to grocery stores?
There is no sought-after brand like Coca-Cola, and, uh, you can imagine what the last caper riot looked like. In fact, very few capers are sold, so the cost of the “real estate” of however many square inches they take up on the grocery store shelves is very expensive, and without high margins, the grocery store would simply not bother to sell this low-turnover item.
So the bottom line is that, instead of hundreds of millions of customers, Heinz has just a few thousand to whom they wholesale their fake blood product. Yeah, maybe someone just discovered a 58th variety.
Related or Semi-related Video
Finance: What is wholesale?4 Views
Finance allah shmoop what is wholesale and well maybe there's
a better question here What is half sale or a
part sale No crickets Okay fine You're no fun All
right you buy a bottle behind to catch up for
six bucks at the grocery store That's six bucks Was
the retail price you paid for that ketchup But when
safeway or kroger's or albertsons bought it they paid something
more like in four bucks for it The four bucks
they paid was their wholesale price That is most of
the time in business Manufacturers don't actually sell their product
directly to consumers Rather they distribute their products in bulk
Selling it price is cheaper than retail and then allowing
the retailer to mark up the price giving that retailer
enough profit margin teo Well you know exist And this
makes sense because well heinz is good at managing cheap
nonunion tomato labor in mexico smashing them up adding vinegar
removing fly wings and worm thing is bottling storing and
all the other production things like adding a whole heap
of helping of sugar And you can't forget about the
sugar All right so that's what hines is good at
Making ketchup They're not necessarily good at selling catch up
at least not directly to consumers like how would they
do this anyway A website A mail order thing from
heinz dot com Should they have a big chain of
pints ketchup drive throughs like who would drive to a
store to go by a jump You're probably not gonna
happen So heinz wholesales it's ketchup to grocery stores and
two convenience stores and tio wal marts and of course
to the special effects people in hollywood and at magic
show theaters all around the world Many questions remain as
to why the unit profit margins on catch up to
a grocery store are thirty percent whereas capers are like
eighty or ninety percent and a diet coke is only
like in a fifteen percent well the answer lies and
a few key dials that directly turned to map the
power or leverage each side has in any given to
go Oh she ation that is Heinz is a brand
people like and generally seek out but wouldn't die without
having it in their fridge Well the retailers safeway could
have its own safeway brand of ketchup and riots would
probably not break out in the street if they ever
do Didn't carry hines and you know that well in
either situation there'd be plenty of fake blood on hand
Teo manage through those riots right Well the same cannot
be said of diet coke where for many shoppers if
the grocery store didn't carry it well they'd simply shop
elsewhere So if this is the case while then wire
capers such a huge unit profit margin item to a
grocery store Why Because there's no sought after brand like
coca cola And well this is what the last caper
riot looked like In fact very few capers or ever
sold So the cost of the quote riel estate unquote
of however many square inches capers take up on the
grocery store shelves is very expensive And without high profit
margins at least per unit sold well the grocery store
would simply not bother to sell this low turnover Generally
who cares about jeff item Sorry capers I was just
keeping it real here So the bottom line is that
instead of hundreds of millions of customers while then pines
has just a few thousand to whom they wholesale they're
fake blood product And yeah it looks like while someone
just discovered a fifty eighth variety Hey what do you 00:03:17.223 --> [endTime] know