Ben Gilbert: preference

Transcript context

…Yeah, and there's another component. What you're saying, which is Sam's original lesson of, you actually make more profit dollars selling items at the dollar than you do at $120 because you sell three times as many. But there's also the peace in the middle, the franchisor, the Butler brothers, remember, they're taking 25% from the manufacturer to Butler brothers, and then out to the stores. That's how most everything operated. These discounters are like no, we're going to go direct to the manufacturers for everything, just like Sam was starting to do in this but on the margins. We're just going to completely not be a franchise operation. We're going to own and operate everything. We're going to operate our own back end, our own supplier relationships, and our own distribution. There's a great quote, this is again later in Walmart's development. It's when Sam Walton is informing the Walmart vendor relations team and merchandisers on how to deal with vendors. He's telling them, "Don't leave in any room for a kickback because we don't do that here. And we don't want your advertising program or your delivery program. Our truck will pick it up at your warehouse. Now what is your best price? And if they told me it’s a dollar, I would say, Fine, I’ll consider it, but I’m going to go to your competitor, and if he says 90 cents, he’s going to get the business. So make sure a dollar is your best price. If that’s being hard-nosed, then we ought to be as hard-nosed as we can be. You have to be fair and upfront and honest, but you have to drive your bargain because you’re dealing with millions and millions of customers who expect the best price they can get. If you buy that thing for $1.25, you’ve just bought somebody else’s inefficiency." Totally.…

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