That’s basically what Amazon did. They did it even worse: they sold many things below cost. They ran their entire business burning cash for a long time (surviving off money raised from investors and later from going public and selling stock), driving other book stores out of business. Once they had enough market share and less competition, they negotiated tougher deals with publishers for lower costs and raised their prices to be at least a little profitable (they still sell some things loss-leader and many things at cost).
Edit: publishers, not punishers!
And now you know the story of Amazon.
To put it simply, cost isn’t the same for everybody.
Also, unless you’re selling literally everything, they can pad their margins on what you don’t provide, and pound you into the ground with loss-leaders, ON TOP of volume discounts. That’s how Walmart destroyed local businesses, by taking “acceptable losses” selling below cost for a while until it broke the competition.
The difference between you doing that and a megacorp doing that (amazon) is that the megacorp has a lot of money to keep doing that for years
I think you are asking, essentially, why there are no retail non-profits. Operate them like a charity for the common good, etc, but all you do is sell stuff. No fancy human rights work or animal rescue. Just sell stuff. Cheap. As a non-profit.
Here’s the best possible answer to this: good idea - go do it.
I think what you will find is that you can’t get any kind of investment to help you, not even a small business loan. So it’ll be hard for you to compete at all. And in the beginning you’ll be so small that you probably won’t be able to sell for less than the big stores. They buy at special lower prices because they are so big. You don’t get that. And even if you frame the whole thing as a charitable enterprise to help the poor, who will your donors be? Why would anyone give their money to this cause over something that helps the most vulnerable directly?
How would this store afford to pay its employees, rent and utilities if it only sold things at cost? One store alone would also make no difference, you’d need a chain of many stores.
I am talking like a small town. Buy.build business outright have a couple investors for tax purposes and only employee people going thru hard times who want to work and give them a percentage in store. Cover all insurance cost and everything.
I suggest having a side business to help prop this ‘at cost’ idea up. Could be as simple as a moving truck rental business.
Big corps do this the reverse way.
First off for the most part, high prices isn’t where big corps are screwing us usually. Least not on luxury goods. Mainly low wages is the real killer, our shit is stupidly cheap. Prices that are only possible via exploitative labor and high environmental destruction. So even the premise is flawed.
But then the bigger thing, even if you could say sell something below amazon’s price… and keep up with inventory and shipping to keep doing it. Amazon can, and will bring their price down… temporarally, only as long as you are still selling the product. They have bots watching everything… and they will undercut you. For them it’s not a big deal, they are in basically every other industry, so while you are still paying for hosting, some bare minimum staff needed to get and sell your product, amazon can just undercut you, make sure you have no customers and starve you out, and the second the bots see you are no longer selling… they jump their prices up to where they are profitable again.
which undercuts competitors by a lot
Not by a lot. First thing you got wrong is that local grocery stores run on high margins. They aren’t.
Second: Your non profit store would still be more expensive than shopping mall, because shopping mall benefits from economics of scale. A lot.
Where I live large scale Carrefour is like 25% cheaper than small scale Carrefour Express
You mean google fiber?
Long story short, logistics benefits from scale. The cost to ship a pallet of poptarts to a store is roughly the same as shipping half a pallet. Smaller stores can’t really undercut larger corporations because they don’t have the scale.
Also when your mom and pop store doesn’t make a profit for 3 months, they go under. When a Walmart doesn’t make a profit for 3 months, they stay open because they have those loses spread across hundreds of other Walmarts.
