Submitted by IncomeStatementGuy t3_1182v9l in dataisbeautiful
daveed4445 t1_j9ftp9v wrote
$611 billion of revenue to $11 billion of profit. Why investors love tech so much and hate mature industries like retail
Deto t1_j9gdq93 wrote
It also looks extremely fragile. If the cost of sales goes up just a little faster than then revenue then BAM, all profit gone.
TypicalCraft7 t1_j9hgnid wrote
That's not how it works at all. If costs go up, guess who pays? You do. It doesn't come out for their bottom line unless demand drops.
Deto t1_j9hv2i7 wrote
Not all goods have inelastic demand. Costs going up means people will buy less.
TypicalCraft7 t1_j9igy75 wrote
It's Walmart. Most of their products have relatively inelastic demand in that the are low cost consumer goods.
Deto t1_j9ihlp3 wrote
I mean, if your suggesting that Walmart could raise prices and make more profit then why aren't they doing that already? Like if the price right now is X, then the only reason it's not X+.50c is that they've determined they would sell less at the higher price point - enough less to not offset the increased profit.
TypicalCraft7 t1_j9ihtb1 wrote
They can't do that because they have competition who would charge less.
[deleted] t1_j9j1g9t wrote
[deleted]
drapparappa t1_j9i4xex wrote
I guess nobody has been paying attention to inflation
LanchestersLaw t1_j9hk5h1 wrote
Walmart is the biggest purchaser of many goods which puts it as the counterpart to a monopoly; a monopsony (single purchaser instead of single producer).
Walmart has incredible negotiating power, when there is a price shock Walmart forces its suppliers to take the hit with the threat of never buying from them again; which it can do. One of the efficiencies of Walmart’s economy of scale is that it pays below market rate for most of its goods because of bull purchase efficiencies and negotiation power.
https://www.econ.ucdavis.edu/events/papers/1014JustinCWiltshire_JMP.pdf
Real_Jackraps t1_j9hdiz2 wrote
Only if you have absolutely no idea what you're talking about.
incraved t1_j9hgf01 wrote
I feel like they probably factor that into their business model somehow
nobecauselogic t1_j9ichyp wrote
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Mature industry doesn’t always mean low margin.
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Low margin doesn’t always mean low return.
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Tech doesn’t always mean high margin.
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Tech doesn’t always mean high return.
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“Investors” like returns above the market average. S&P 500 5-year total return is about 45%. WMT 5-year total return is about 76%.
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