If you have retail investments, especially Wal-Mart stock, chances are that you know about retail arbitrage. Arbitrage is the practice of purchasing a stock at a low price and selling it at a higher price to make a profit. For example, if you owned 100 shares of Wal-Mart stock and were able to sell all of them for a price of ten dollars each, you would earn fifty dollars. If you were to purchase shares of another company’s stock for five dollars each, you would then lose your investment and lose five dollars. Arbitrage is essentially the process of buying low and selling high.
The reason why retail arbitrage makes sense is because of supply and demand. Companies like Wal-Mart have a lot of products. People are looking for ways to save money and companies like Wal-Mart are willing to give in order to clear out shelves and create more room. This gives you an opportunity to buy Wal-Mart stock at a discounted price and resell it at a higher price, creating an additional source of income. If you purchase Wal-Mart stock at a price of one dollar and sell it at three dollars, you will make three hundred dollars in retail sales.
While this may seem like a simple concept, retail arbitrage is not as simple as it seems. In order to determine the correct retail price, there are several factors to consider. One of the main factors to consider is the location of the store. If the store is located in a part of town where many people go to eat and drink, it will obviously have a higher sales figure than if the retail outlet was located in a part of town that is not populated.
Another factor to consider when purchasing retail merchandise is the number of people that will be entering and exiting the store. Will customers driving by be driving by and coming back, or will they be passing by on their way to another location? This can determine whether the traffic will increase or decrease when they enter and exit the store. Obviously, a store located in a highly populated area will have more traffic going by and will have more potential customers. This is true no matter what retail chain you purchase your merchandise from, but Walmart has a unique situation.
When stores such as Walmart are first opened, the company does not have any inventory. This means there is no way for store management to know how much to sell in order to make a profit. This is the number one reason retail arbitrage exists. Retail arbitrage involves purchasing a product that is currently being sold by a competitor, but the price is far lower than what the retail store is selling the item for. The difference between the retail price and what the store is selling is the “auction value”. Since the retail store cannot sell the item for what it is worth, it needs to buy it at a discount.
An example of retail arbitrage can be found at any Walmart store. When a customer purchases an item, they may choose to purchase more items. This will increase the store’s inventory, making it necessary to purchase more items to add to the shelves. This will increase the store’s cost of production, but it will also make the items cheaper for the customers. In essence, retail arbitrage is a way for Walmart to make more items available to its customers at lower prices.
One of the most important factors to consider about retail arbitrage is how it affects the bottom line of a store. If Walmart is able to buy all of its products at a discount, the store’s bottom line will increase. Customers will spend more money, which means more income for the company. If all of the items in the store are sold at retail prices, some of those items will have to be purchased at a discount in order to make up for the sales that did not go through. This is a simple way of explaining how retail arbitrage benefits a business by increasing profits and decreasing expenses.
Retail arbitrage is just one way that Walmart uses to save itself money on the purchases that it makes from its customers. Other retail chains have also used this method in order to increase their profits. They realize very quickly that the savings offered by retail arbitrage are great enough to offset the cost of the discount. For this reason, many consumers look to Walmart for their daily necessities, and the company continues to use the method of retail arbitrage to do just that.
