The operation and profit mode is the mode of earning price difference. A part of the money will be drawn by Gome for every transaction, and the goods will still be provided by the merchants themselves.

The profit model of earning price difference, which can also be called the profit model of "eating price difference", is the only way for most retail enterprises to complete the accumulation of original capital and realize profit, and it is also the starting point of retail.

this traditional profit model of retail enterprises is to gain the initiative advantage in bargaining with suppliers by expanding the outlets and increasing the sales scale of retail enterprises, so as to "force suppliers to lower the purchase price and reduce their other purchase costs at the same time, and then use the strategy of small profits but quick turnover, that is, low price and low profit to expand sales to obtain the difference between the purchase price and retail price in order to achieve the goal of basin profit.

Gome, as a leading enterprise in the home appliance retail industry, has more than 1,211 direct stores in nearly 281 cities in China, and Gome launched its e-commerce website in April 2111. This online and offline sales model of "physical store +B2C" makes Gome have the widest sales network and a strong sales scale.

Small profits but quick turnover is Gome's business strategy, which makes Gome better tie more consumers. At the same time, Gome has a large purchase volume and good sales performance, and its strong sales ability makes suppliers willing to cooperate with Gome. Gome has an active position in bargaining with suppliers, so suppliers "voluntarily" reduce the purchase price. The greater the sales volume, the lower the purchase price, and the greater the sales volume, Gome's profit and sales scale will gradually increase. In this way, Gome has formed a circular system, as shown in the figure

Extended information:

Gome's corporate strategy:

The core of the low-cost strategy is that enterprises will reduce their costs by all possible ways and means, and become the lowest-cost participants in the market competition at low cost.

the advantage of low cost usually comes from two aspects: if it is sold at a price lower than that of competitors, it will impact and penetrate the market at a low price and gain a higher market share. The increase of market share will promote the expansion of production scale, thus setting a scale door for competitors, and the expansion of scale will reduce costs, thus setting a cost threshold for competitors.

if products are sold at the same or similar prices as competitors, the cost advantage will be transformed into financial advantage, and low-cost enterprises will get higher profit rate. If an enterprise can obtain and maintain a leading position in overall cost and price its products at or near the industry average cost level, it will become a high-level operator in the industry.

Non-main business income of Gome:

It mainly consists of sales promotion income, entrance fee, management fee income, shelf fee, air conditioning installation management fee, booth fee, agency fee income, advertising fee, etc. All these incomes come from supplier rebate and channel fee paid in the final analysis. Take the admission fee as an example, the lowest rate is 1.5%, and the highest rate is as high as 31%. This profit model not only makes Gome get rich hidden profits, but also explains why Gome frequently launches price wars and still has abundant funds to ensure that the losses caused by low prices are successfully compensated by considerable non-main business profits.

Reference:

Baidu Encyclopedia-Gome