Low-Margin Business vs. High-Margin | Chron.com

Are you a low-margin business or a high-margin business?

Traditional market wisdom, especially in the offline business world, would have us believe that you can either make money trading high-volume/low-margin OR low-volume/high-margin. An example of each would be a convenience store who turns over a high amount of inventory earning a small profit per sale compared to a luxury car dealership who may sell a very few cars but they have a significant profit margin attached.

The rise of businesses online can increase their net profits by reducing their overheads and making more money for distribution or growth.  Does the impact of easy access to foreign sources of goods, via alibaba.com for example, mean that online entrepreneurs are able to further skew the playing field in their favour by reducing the costs of goods sold and thereby increasing their gross profit margins as well?

Are you an online or offline business and do you follow the traditional methods of sourcing stock or do you see the rise in mini global commerce as a way of competing against bigger business?  Let me know your thoughts.

Low-Margin Business vs. High-Margin | Chron.com.

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