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#1
Old 07-12-2014, 11:12 AM
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Whats the deal with walmart $0.88 OTC medical supplies

For the last few years walmart has been selling a wide variety of OTC medical supplies for $0.88. Braces, tape, antifungals, antihistamines, muscle rubs, alcohols, bandaids, etc.

I've noticed that sometimes these products are priced far below the walmart equate brand of the same product. With an antifungal or antihistamine gel, the name brands are about $5-6, the equate brand is about $3 and then there is the generic for $0.88 for the same active ingredient and a tube about the same size (the 88 cent tube is a little bigger if anything).

Why is walmart selling products that undercuts their own house brands by 70%? Is there a quality difference? The ingredient listing is the same. It doesn't seem like walmart would be making any money by doing this. If a company can sell the product for $0.88 and still make a profit, what incentive is there for walmart to carry it instead of only carrying the name brand stuff and the equate brand stuff? It seems like walmart can make either 10 cents in by selling the 88 cent tubes, or it can make $2 in profit by selling the equate brands (assuming the equate brands cost the same to manufacture as the 88 cent ones).
#2
Old 07-12-2014, 11:48 AM
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First, google up the concept of "loss leader."

Second, it's brilliant marketing on several levels. Some people will buy the 88 cent stuff, knowing that in all likelihood (and according to USP) it's just as good as every product tier above it. (Others will buy it to Heil HItler, but never mind them.) OTOH, there's some interlinked concepts of price setting ("anchoring") and value perception that drive people to buy the more expensive of two items because the costlier one must be better and vice versa. And no matter which one any segment of the market buys, it's a marketing/consumer perception coup in that it reinforces how cheep-cheep-cheep Walmart is.
#3
Old 07-12-2014, 12:02 PM
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I suppose it could drive people to buy the equate product. Kroger has 3 different tiers of generic products, and I almost never buy the cheapest tier. I prefer the 2nd lowest. I don't know what that behavior is called, but perhaps Walmart is using the same principle to drive up consumption of their equate brand items because people assume the absolute cheapest item has quality issues.

Loss leaders tend to be items that draw people to the store. People aren't going to make special trips to walmart to buy $0.88 tubes of antifungal gel.

Last edited by Wesley Clark; 07-12-2014 at 12:03 PM.
#4
Old 07-12-2014, 12:48 PM
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A lot of things that are really cheap are a terrible value. The cheapest off-brand toothbrushes are so bad, they become uselessly splayed out after a few weeks, while a name brand should last at least six months. WalMart has deals on those too, lie down on the floor and search for accurate price labels on the bottom shelf, to find them. The Chinese make disposable toothbrushes for the hotel trade, for about 2-cents each in bulk lots of 10,000 including shipping, even imprinted with your logo. The only thing that varies from one toothbrush to another is the endurance of the bristles -- how much difference in price can be reflected by the quality of the bristles?

Last edited by jtur88; 07-12-2014 at 12:49 PM.
#5
Old 07-12-2014, 02:48 PM
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I have wondered about these 88-cent drugs too. I'm a cheapskate so I think they're highly awesome. They work just fine, unless I'm unusually susceptible to the placebo effect.

I've noticed that, unlike the Equate products, the name "Walmart" does not appear anywhere on the packaging. The tiny print says "Distributed by LNK International, Inc." with an address in Hauppauge, NY. I googled LNK and found their website. This is where it gets interesting. The website does not say where their products are manufactured. There are some pictures of alleged employees with their testimonials about how awesome it is to work at LNK, and the pictures are obvious stock photos. So I'm guessing their plant is in India or China.

For a couple of years I lived in a very small, economically-depressed town. The local Walmart had all the 88-cent products gathered together in their own highly-visible section in the pharmacy area. A few months ago I moved to a city that is vastly more affluent (I'm not, I just live here). No 88-cent display in the neighborhood Walmart; I did find a few of the products shelved here and there alongside the Equate and name-brand stuff (and disappointingly, they don't stock the 88-cent version of Zyrtec).

I tend to agree with Amateur Barbarian on this. It's clever marketing strategy. A parsimonious guy like me is going to grab this stuff while inwardly guffawing at the idiots buying the more expensive versions, while someone else is going to think "Ick, no, that shit's probably made of pulped Harlequin novels" and take the classier Equate brand.
#6
Old 07-12-2014, 04:14 PM
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In addition to much of the above, it's an attempt to have a clear segment that competes against dollar stores. Despite usually having products in each category under a dollar, customers often assume that dollar stores are more thrifty places to shop if one is willing to use generics. By having a broad selection of items at a single price point under a dollar, it attracts and keeps those shoppers who were otherwise heading to the dollar shop (often in the same shopping center).

Some of the 88-cent products are small enough that they're not a good value over and above the Equate generics; the triple antibiotic cream is only 1/2 oz. per tube, naproxen sodium is a 12 ct. bottle. The alcohol is only 50%, while the normal alcohols are 70% and 91%. Others are definitely better value (300 ct. aspirin for 88 cents vs. Equate 200 ct. for 98 cents... and both are made by the aforementioned LNK). And yet other items were carried all along and got brought in to the 88 cent tier (hydrogen peroxide IIRC actually went up a few cents to match the price).

When the 88-cent products are shelved with their normally priced counterparts, they're often still segregated away from the products they're equivalent to. For some reason, the 88-cent generic to Zyrtec ("All Day Allergy") is usually shelved on the bottom shelf past the generics to Benadryl.
#7
Old 07-12-2014, 04:28 PM
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I just always assumed that Walmart has overstock on things that were getting to close to a certain window of their expiration date to be sellable-- not past the expiration date, they can't sell those at all-- just withing a year of it, or something, and they want to move that stuff out quickly. I buy it, and it works fine on me, albeit, I'm probably subject to the placebo response someone mentioned, because I believe generics work just as well, and I have in the past taken non-generics, when generics were not available.

Brand name drugs (and other items) that are going to expire can be returned to the manufacturer, but store brands and generics can't; that's why you often see half-price store brand milk sold on the day of its "sell by" date (if you open it on that day, it'll be good for a few more days, as long as you keep it refrigerated, but you might not want to use it for sauces of puddings). Sometimes there's half-price bread as well.

I check the sell-by date on the $.88 drugs to see just how close it is, but if I'm on the market for it, the chances are that I'm going to use it up in a couple of weeks, so no worries.

I would say buy it, but don't use the discount as an opportunity to stock up.
#8
Old 07-12-2014, 07:00 PM
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It is not just Wal-Mart. CVS has a number of basic medicine items for $0.99, a price that is below their house brand price. These are often given minimal shelf space and can be hard to find. I assumed that it was a requirement of WIC or some other Federal program.
#9
Old 07-12-2014, 07:08 PM
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Walgreens does the same thing. It's a loss leader, and it works. If it didn't, they wouldn't do it.

I mean, come on. Who walks into a WalMart and leaves with just 88 cents worth of product?
#10
Old 07-12-2014, 07:20 PM
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Quote:
Originally Posted by jtur88 View Post
A lot of things that are really cheap are a terrible value. The cheapest off-brand toothbrushes are so bad, they become uselessly splayed out after a few weeks, while a name brand should last at least six months.
Ew. Replace your toothbrush every 3-4 months. The ADA agrees.
#11
Old 07-12-2014, 07:22 PM
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Originally Posted by araminty View Post
Ew. Replace your toothbrush every 3-4 months. The ADA agrees.
Sooner, if you've had a cold, according to both my doctor and my dentist.
#12
Old 07-12-2014, 08:13 PM
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Equate isn't a Walmart brand.
#13
Old 07-12-2014, 08:26 PM
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Can you get "Equate" any place but Walmart?
#14
Old 07-12-2014, 08:50 PM
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Originally Posted by RivkahChaya View Post
I just always assumed that Walmart has overstock on things that were getting to close to a certain window of their expiration date to be sellable-- not past the expiration date, they can't sell those at all-- just withing a year of it, or something, and they want to move that stuff out quickly.
That would require Wal-Mart to ship all the expiring product back to the company and have the company create new packaging, manually open all the old stuff, insert into the new boxes (or relabel old bottles, or transfer to a new tube), and ship it back out, which would be more expensive than doing in-store clearances or simply destroying the stuff when it expires. As noted above, this stuff is packaged differently than the in-house generics.

Anyway, it's not repacked old stock. Most of the products are lower in weight/ct. size than Equate generics (often half), thus the lower price. In fact, due to the way shipments from the warehouse work, the 88 cent stuff arrives in-store alongside the Equate versions, indicating they're being shipped from the manufacturer to the warehouses alongside each other.

Off the top of my head, here's a bit more info on most of the 88 cent stuff Wal-Mart carries:

Most/all of the pills are by LNK, which is one of the primary generics manufacturers for Equate pills. Some are in different forms (the 88 cent generic to Zyrtec is a round pill, while the Equate is a caplet shape). The generic to Excedrin lacks aspirin, containing only acetaminophen and caffeine (and is actually a generic to Excedrin Tension). Mucus Relief is its own product despite seeming similar to Mucinex, with different levels of guiafenessin and not time-released. Aspirin is one case where the 88 cent version is a larger quantity than the Equate.

Tussin, Nasal Spray, and the generic to Pepto-Bismol are by Perrigo, which manufactures the Equate versions. Tussin and Nasal Spray are the same size as the Equate versions. Chewable Antacid and Chewable Anti-Gas are by Raritan, also the Equate manufacturer. Cough Drops and Vitamin C lozenges are by BestSweet, also Equate. (BestSweet also makes a lot of branded stuff, like Sweet 'n Low sugar free candies.)

Hydrogen Peroxide, alcohol, wintergreen alcohol, and epsom salts are by the same regional manufacturers that supply the standard stuff in the first aid section, which is Swan in my area. Hydrogen peroxide is the same product as what's in the first aid section, just an additional "home" for the stocker to fill. The alcohols are 50% formulations, lower than normal (70, 91, and 99%). The epsom salt is more expensive per pound than the standard cartons/bags.

The tubed stuff (medications, scar therapy, "lubes") are from Sheffield, a generics manufacturer that makes no house brands for WM, and are lower in content to boot. The "personal wipes" are the same manufacturer as Equate wipes, but per-wipe the Equate is more economical; it's essentially a new package for a trial/travel size. Restorz nasal strips (Breathe Right) are by the former generic manufacturer for Equate, while currently the Equate brand is a rebranded effort that used to be Afrin nasal strips. Gummy vitamins and energy shots are unique items, which aren't much different in price than what would be normally available (shots are 10 cents lower than single bottles of name brand Stacker 2 shots, vitamins are 10 ct. travel packets).

Don't recall the manufacturers for the liquid diphenhydramine, medicated chest rub (VapoRub generic), medicated patch, feminine wash, or pregnancy test, but they're not the same as the Equate manufacturers. The chest rub, patch, and wash all come shipped in crappy, structurally-weak recycled cardboard typical of low-end Chinese manufacturers. And, incidentally, I have no clue why the pregnancy tests sell so well, as they're awkward to use - the absorbent patch isn't a "stick" one can stick into the urine stream, but a hole in the middle of the cassette... which means either a mess is made, or one has to use an eye dropper.

If you can't tell, I have a bit of an inside perspective on this stuff.

Last edited by Student Driver; 07-12-2014 at 08:52 PM.
#15
Old 07-12-2014, 09:01 PM
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Quote:
Originally Posted by Inna Minnit View Post
Equate isn't a Walmart brand.
Just saw this. Yes, it is.
#16
Old 07-12-2014, 09:17 PM
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Originally Posted by Student Driver View Post
That would require Wal-Mart to ship all the expiring product back to the company and have the company create new packaging, manually open all the old stuff, insert into the new boxes (or relabel old bottles, or transfer to a new tube), and ship it back out, which would be more expensive than doing in-store clearances or simply destroying the stuff when it expires. As noted above, this stuff is packaged differently than the in-house generics.
That isn't what I meant at all. Around here, the blank label stuff is usually a little more expensive than $.88-- like $1.29. Sometimes it drops down to $.88, and I assumed it was because they were trying to get rid of backstock.
#17
Old 07-12-2014, 09:32 PM
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Originally Posted by araminty View Post
Ew. Replace your toothbrush every 3-4 months. The ADA agrees.
From your own link:

"there is insufficient clinical evidence to support that bacterial growth on toothbrushes will lead to specific adverse oral or systemic health effects."

I already stated in my comment that a toothbrush can be visually inspected by the user, to judge whether its' bristles retain their integrity. I don't need the ADA to come into my house periodically and throw out my toothbrush, I can take care of that using my own discretion, without marking a date on the calendar.

Last edited by jtur88; 07-12-2014 at 09:34 PM.
#18
Old 07-12-2014, 10:52 PM
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I understand why they're cheap, I'm more interested in why they sell for $0.88, and not $0.99 or even $0.77 for that matter. Probably some complicated formula about how they work best at that price.

Some people don't like generics. IMHO that's stupid. I have only encountered one generic that I liked worse than the name brand (another brand of generic was good, but no choice which). But it was a transdermal thingy, not pills.
#19
Old 07-13-2014, 12:22 AM
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Quote:
Originally Posted by thelurkinghorror View Post
I understand why they're cheap, I'm more interested in why they sell for $0.88, and not $0.99 or even $0.77 for that matter. Probably some complicated formula about how they work best at that price.
They sell for .88 at Walmart. Their price point at other stores may be different.

Walmart has a history of using the n.88 price point on clearance items though that may have changed. Besides, 0.88 is cheaper then the most common cheap price of 0.99. So they can say they have the lowest price.
#20
Old 07-13-2014, 10:05 AM
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Originally Posted by Student Driver View Post
And, incidentally, I have no clue why the pregnancy tests sell so well, as they're awkward to use - the absorbent patch isn't a "stick" one can stick into the urine stream, but a hole in the middle of the cassette... which means either a mess is made, or one has to use an eye dropper.
They don't come with tiny disposable droppers? The ones I've used for medical research have a teeny plastic dropper that you stick into the urine specimen cup to draw up the urine. (Wait, they're only 88 cents, so that probably answers that...)
#21
Old 07-13-2014, 11:28 AM
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Originally Posted by Ferret Herder View Post
They don't come with tiny disposable droppers? The ones I've used for medical research have a teeny plastic dropper that you stick into the urine specimen cup to draw up the urine. (Wait, they're only 88 cents, so that probably answers that...)
You seriously think they come with a cup, for 88 cents?

BTW, pregnancy tests are one of the most stolen items at places like Walmart, so you get flagged for walking out with one, even if it's paid for, as I found out. This has caused people to resort to using them inside the bathroom at the store. I've seen them on the floor, more than once. OK, just twice, but I know someone else who has had that experience. It made me really sad.
#22
Old 07-13-2014, 12:19 PM
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Eighty Eight cents?


Hail Hydra!
#23
Old 07-13-2014, 01:42 PM
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Originally Posted by RivkahChaya View Post
You seriously think they come with a cup, for 88 cents?
No, because ours didn't come with cups either.
#24
Old 07-13-2014, 05:03 PM
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Originally Posted by chiroptera View Post
Walgreens does the same thing. It's a loss leader, and it works. If it didn't, they wouldn't do it.

I mean, come on. Who walks into a WalMart and leaves with just 88 cents worth of product?
Maybe it is because if one store carries them, they all have to carry them. If CVS, dollar tree, walmart, walgreens, etc. are all carrying these products then any store that doesn't isn't competitive. But again, if the profit margin on a LNK bottle of muscle rub is $0.10 (I assume walmart has to make a profit even at $0.88, otherwise they wouldn't sell it) and the ingredients are the same as the $2-3 store brand for the same size, then shouldn't the profit margin on a tube of store brand be $1-2? That means the store would have to sell 10-20 bottles of the LNK stuff to make the profits from one bottle of store brand (CVS, walmart, etc) stuff.

I notice some walmarts stock them differently. Some put them in a large bin near the checkout isles like DVDs, so you have to search through it to find what you want. Some put them next to the corresponding item (muscle rub with the other muscle rubs, antifungal with the other antifungals) and some put all the $0.88 items together in their own shelf. I wonder if walmart is trying to discourage people from buying this item with the first and third method of storage.
#25
Old 07-13-2014, 08:52 PM
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I believe the WalMart my mom and I normally go to puts these $.88 items on a shelf in the "X items or less lane" (where they sell the cigarettes).

Impulse buy!

This store is located about midtown. We are in the Central Midwest.

So far I have tried the antacid tablets, triple-antibiotic gel, and cortisone cream. They seem to work fine. I would be slightly leery of a $.88 pregnancy test...

I don't recall the $.88 items being anywhere near the higher-priced options in the pharmacy, at least at this store.
#26
Old 07-13-2014, 09:06 PM
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Originally Posted by Wesley Clark View Post
Maybe it is because if one store carries them, they all have to carry them. If CVS, dollar tree, walmart, walgreens, etc. are all carrying these products then any store that doesn't isn't competitive. But again, if the profit margin on a LNK bottle of muscle rub is $0.10 (I assume walmart has to make a profit even at $0.88, otherwise they wouldn't sell it) and the ingredients are the same as the $2-3 store brand for the same size, then shouldn't the profit margin on a tube of store brand be $1-2? That means the store would have to sell 10-20 bottles of the LNK stuff to make the profits from one bottle of store brand (CVS, walmart, etc) stuff.

I notice some walmarts stock them differently. Some put them in a large bin near the checkout isles like DVDs, so you have to search through it to find what you want. Some put them next to the corresponding item (muscle rub with the other muscle rubs, antifungal with the other antifungals) and some put all the $0.88 items together in their own shelf. I wonder if walmart is trying to discourage people from buying this item with the first and third method of storage.
The profit margin on store brands is pretty large usually. The profit margin on the 88 cent stuff is often as large, but obviously less is made per unit. Your estimations are pretty accurate, though the ratio is more in the range of 2:1 to 5:1. Better to snag that minimal profit than have it go to a dollar store, I suppose. They're also positioned as impulse buys, where someone will buy one or two of them when they hadn't planned to buy any meds at all. At the price, they're practically disposable; someone shopping with a headache will buy a bottle just to take a couple, and then promptly lose the rest without much care.

WMs are supposed to try to stock the products in three places: the dump bin (which is supposed to be in all stores at all times, and higher-ups do check for compliance) for impulse buys near the cash registers, a dedicated 88 cent modular for stock-up buying (often a permanent end cap or a sidecounter) that may not be in smaller stores that can't shoehorn the thing in without losing space for other items, and approximately 66% of the items are also shelved in their respective categories' modulars for bargain hunters. The modular planners seem to ghettoize the placement of the products in this last part, and the items are rarely close to the products they mimic, but instead on the bottom few shelves away from the main brands. This is to try to pull extra profit from destination shoppers; someone who's sick enough to make a specific trip to look for a cold medication is willing to pay more money to treat it right then, and they're not going to think to look beyond the obvious "cold medication" set on the modular.
#27
Old 07-13-2014, 10:48 PM
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Quote:
Originally Posted by chiroptera View Post
Walgreens does the same thing. It's a loss leader, and it works. If it didn't, they wouldn't do it.

I mean, come on. Who walks into a WalMart and leaves with just 88 cents worth of product?
It's probably not a loss leader, because it's not explicitly being sold with the intention of drawing customers in so they'll buy other stuff. Nobody goes to the drugstore with the intent of buying an 88 cent tube of triple antibiotic, you know. Loss leaders are things that they advertise heavily- "2 bags Lay's Potato Chips - $2 dollars for the 4th of July!" or something along those lines so that people looking to buy potato chips will see them in the circular, go to the store for the good deal, and then pick up their hot dogs, buns and beer while they're there. They lose money with the chips, but make money overall with the other stuff.

More likely they're there as a competitor to dollar stores for price-sensitive customers. You can guarantee that they make money on them even at 88 cents.

There's likely also a BIG difference in size- for example, Equate triple antibiotic is some obnoxious size like 1.5 oz of ointment, while the 88 cent version (Dr. Sheffield?) is like 1/2 oz. I'd bet the value is still better on the Equate one for $1.47 or whatever. The aspirin is probably a bottle of 40 vs a bottle of 150 or something along those lines.


Oh.. apparently the absolute best deal going is on the cheapo pregnancy tests- they're just as accurate, and not so astronomically expensive. The suggestion is to use those until you get a positive, and then confirm it with a more expensive one. (wife and I have gone through the trying-to-get pregnant dance several times now, with a couple of successes).
#28
Old 07-13-2014, 11:14 PM
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Originally Posted by bump View Post
It's probably not a loss leader, because it's not explicitly being sold with the intention of drawing customers in so they'll buy other stuff. Nobody goes to the drugstore with the intent of buying an 88 cent tube of triple antibiotic, you know. Loss leaders are things that they advertise heavily- "2 bags Lay's Potato Chips - $2 dollars for the 4th of July!" or something along those lines so that people looking to buy potato chips will see them in the circular, go to the store for the good deal, and then pick up their hot dogs, buns and beer while they're there. They lose money with the chips, but make money overall with the other stuff.

More likely they're there as a competitor to dollar stores for price-sensitive customers. You can guarantee that they make money on them even at 88 cents.

There's likely also a BIG difference in size- for example, Equate triple antibiotic is some obnoxious size like 1.5 oz of ointment, while the 88 cent version (Dr. Sheffield?) is like 1/2 oz. I'd bet the value is still better on the Equate one for $1.47 or whatever. The aspirin is probably a bottle of 40 vs a bottle of 150 or something along those lines.


Oh.. apparently the absolute best deal going is on the cheapo pregnancy tests- they're just as accurate, and not so astronomically expensive. The suggestion is to use those until you get a positive, and then confirm it with a more expensive one. (wife and I have gone through the trying-to-get pregnant dance several times now, with a couple of successes).
As far as size, there really isn't that big a difference. That is part of what made me curious about it. A 1oz tube of anti itch cream or antifungal is $0.88, but a 1oz tube of equate brand is $3 and a 1oz tube of name brand is $5. It is all the same ingredient at the same concentration.
#29
Old 07-15-2014, 10:29 AM
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It's got to be a market position thing then. It's not a loss leader, because it's not being used to drag other customers in with the hope that they buy other stuff.

More likely, it's aimed at capturing that segment of the market that would buy their food at Wal-Mart, but their triple antibiotic and ibuprofen at the dollar store, by offering them a comparable value at Wal-Mart.

The takeaway for the rest of us is just how huge the markup is on those things- if they can still sell them for 88 cents a piece and make money, they're just making even more on the other higher priced items, especially if there's no difference in formulation.
#30
Old 07-15-2014, 11:50 AM
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It may also keep a lot of people from buying a single dose of something for $.75 at a convenience store. Once people know they can get 12 doses of something, or a whole tube of antibiotic ointment at Walmart for $.88, if they have a sudden need while they are out-- headache, cut themselves on a hike-- the sort of thing where they would stop at the very first place they came to, and buy the single dose (yes, convenience stores sell tiny packets of antibiotic ointment), if they know Walmart is just five more minutes away, and for a few cents more, they can get more than a single dose, they might go all the way to Walmart.

They may sort of get the feeling Walmart "helped" them in cases like that, and feel more kindly disposed toward it, as well.
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