Have you ever wondered why there is a difference between the prices small stores charge vs what large mega corporations charge?
Many people assume that small stores, especially rural ones located in remote areas simply take advantage of their situation and overcharge for their services and goods. But is this assumption accurate?
To understand what is really happening, you need to know the two main factors at play that make it impossible for small stores to compete with large mega corporations on pricing.
One is, volume discounts. Large mega corporations can buy their products at lower prices than small independent stores because of volume discounts.
Large corporations move huge volumes of product and therefore get the best volume discounts available from their suppliers. Small independents have insignificant sale volumes compared to these mega corporations and therefore get practically no discounts at all. Thus, large mega corporations can sell their products at lower prices.
Unfortunately, this discrepancy in prices gives rise to the perception that it is the independent stores that are acting in a “greedy” way and are predatory to their communities, when in reality they are just doing the best they can given the circumstances.
The second factor at play is a more dubious practice. Rather than trying to explain this one, please watch the video below.