Black Friday deals

In many cases it comes down to what a customer is willing to pay, and how low your competitors are willing to go on price. It also depends on the category of item. For example, in a grocery store, General Merchandise is marked up a lot more than Grocery items in many cases because the Grocery category accounts for much more volume in the sales mix, and shoppers pay a lot more attention to the Grocery category prices because they are a “need.” General Merchandise margins are often inflated to make up for lower grocery gross. In the end, it’s all about charging the maximum amount that you can, while not losing customers to your competition. With that being said, Amazon has upended the old business paradigm. They are willing to lose money on many items because they can make up for those losses on other items with huge volume. Many of the costs associated with doing business in brick and mortar stores, don’t exist for Amazon.

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