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Most successful businesses that use loss leaders to gain revenue / market share do so for several specific products among a much larger offering. For example, t
by leroy_masochist 11y ago
Most successful businesses that use loss leaders to gain revenue / market share do so for several specific products among a much larger offering. For example, the supermarket's 50% off charcoal sale ahead of the 4th of July that gets you into the store where you'll buy hot dogs and beer.
It's not a loss leader when your entire company is losing money. It's just a loss.
- sharkweek 11y agoI was a buyer for a major grocery chain for a while - If you ever feel like really sticking it to the man, the biggest losses I used to stare at were always the rotisserie chickens, the expectation being customers buy other sides that had insane margins. So buy those without anything else in the cart and slowly run your local grocery store out of business!
- Retric 11y agoMy assumption for "not losing money on the bulk of its orders" meant that most transactions where not loss leaders. Zappos is a good example where uniform business models may include unprofitable transactions. Having a liberal return policy is fine as long as only a small percentage of orders are a small net loss. AKA, if 0 or 1 return is profitable, they break even on 2 returns, and most orders never hit 3 returns it's a very good sign. But, if even 2 returns is unprofitable and people regularly go past that then the business model may be at issue.