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I can't figure out why the unscrupulous retailer is buying Tide from anyone except P&G. Except that he knows Bob is up to something and willing to assist Bob.



Quote from the article: "Despite its popularity, Tide is not a big moneymaker for stores. P&G’s proprietary surfactants and enzymes are relatively expensive to produce, notes Bill Schmitz, a Deutsche Bank analyst, so Tide’s wholesale cost is steep. Only so much of that can be passed on to customers. “It’s so tight,” says Schmitz of the profit margin. In general, a retailer clears just a few percentage points on a Tide purchase. A store that charges $19.99 for a 150-ounce bottle might claim $2 in profit. But if it buys stolen bottles for $5, that jumps to $15."


"A few percentage points"? $2 in profit/$18 in cost is over 10%. That's nothing like the ~1-2% grocery store profit margin which I think of when I hear "few."

Quoting one source: "Total pretax profit for the industry in 2009 was about $5.2 billion," and "Convenience stores’ gross revenue for 2009 was more than $505 billion." "While the average gross revenue per store for cigarettes was about $576,354, the gross profit on those sales was closer to $89,923. Cigarettes are the second highest-ranking profit producers for convenience stores, after nonalcoholic beverages, which provide each store with about 18 percent of its profits." "Motor fuel [...] provides a gross profit margin of only about 6.4 percent"

That puts detergent a bit under the 15% margin for cigarettes, but a lot higher than the margin for the store as a whole, and higher also than the margin on motor fuel.


This is covered in the article. If the retailer's supply was exhausted by theft, their tracking system fails to alert them to reorder in time. They're in a bind and can't get supplies in time, so they turn to the local suppliers that very likely are selling them back the stolen goods.




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