Contributed by: Joe Clark
Part of speech: n.
Quotation: You can buy an iPod nano on Apple, Best Buy, etc. for about $149. Amazon sells it for $134. That’s probably cost price. It turns out that Amazon can sell almost everything at cost price and still make a product because of volume. It’s all down to the Negative Operating Cycle. Amazon turns over its inventory every 20 days whereas Best Buy takes 74 days. Standard retail term payments take 45 days. So Best Buy is in debt between day 45 and day 74. Amazon, on the other hand, are sitting on cash between day 20 and day 45. In that time, they can invest that money. That’s where their profit comes from.
Author:
Jeremy Keith
Article, document, publication, web site:
Adactio Publishing location:
Brighton, England
Date of publication:
June 22, 2009
This catchword has yet to be researched.