There are good profit margins on “synthetic” oils in the US market. Walmart is capitalizing on that and purchasing in high volume.
What makes SuperTech Synthetic "cheap"
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Originally Posted By: Brian Barnhart
There are good profit margins on “synthetic” oils in the US market. Walmart is capitalizing on that and purchasing in high volume.
Do you have any data to back this up, or are you merely making an assumption?
There are good profit margins on “synthetic” oils in the US market. Walmart is capitalizing on that and purchasing in high volume.
Do you have any data to back this up, or are you merely making an assumption?
Originally Posted By: fdcg27
Originally Posted By: Brian Barnhart
There are good profit margins on 'synthetic' oils in the US market. Walmart is capitalizing on that and purchasing in high volume.
Do you have any data to back this up, or are you merely making an assumption?
I believe the data exists. Consider these words from one who’s devoted considerable time to the industry. He sums it up very well...
BITOG Link
Originally Posted By: Brian Barnhart
There are good profit margins on 'synthetic' oils in the US market. Walmart is capitalizing on that and purchasing in high volume.
Do you have any data to back this up, or are you merely making an assumption?
I believe the data exists. Consider these words from one who’s devoted considerable time to the industry. He sums it up very well...
BITOG Link
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There may some incentive to offer bargain priced products other than profit per unit over more expensive products. If Wal Mart didn't make more per quart on this than with Mobil 1 or anything else they carry, why bother?
It could be they seek products that trip the trigger to buy for many types of customers. Some seek the "best" others feel better when they buy lower or lowest price. There also could be some kind of well researched number play between bargain priced and premium product pricing. This could influence how they prefer you buy.
It could be they seek products that trip the trigger to buy for many types of customers. Some seek the "best" others feel better when they buy lower or lowest price. There also could be some kind of well researched number play between bargain priced and premium product pricing. This could influence how they prefer you buy.
There's nothing in the thread you've provided a link to that supports the notion that synthetics offer higher margins for retailers than do conventional oils, and the line between the two is blurred in any event.
Still, I think that you're probably right in that all motor oils probably have higher margins than we might realize.
The real test is in store brand sales, where the retailer eats the price reduction with no manufacturer participation.
Walmart likes to say that they don't have sales. They do, of course, but they call them "rollbacks" and sale pricing on ST is rare. Walmart does offer regular sale or "rollback" pricing on name brand oils, although this may involve some arm-twisted manufacturer's participation.
Consider a couple of other retailers, though.
RK has their house brand oils on sale through this week, $1.79 for conventional and $2.79 for syn while Meijer also has their house brand on sale through 11/21, 11.69/jug for conventional, 12.69/jug for syn blend HM and 14.39/jug for syn, which is dexos licensed.
I doubt that either Meijer or RK are selling their house brand oil below cost, so margins generally must be pretty high.
Still, I think that you're probably right in that all motor oils probably have higher margins than we might realize.
The real test is in store brand sales, where the retailer eats the price reduction with no manufacturer participation.
Walmart likes to say that they don't have sales. They do, of course, but they call them "rollbacks" and sale pricing on ST is rare. Walmart does offer regular sale or "rollback" pricing on name brand oils, although this may involve some arm-twisted manufacturer's participation.
Consider a couple of other retailers, though.
RK has their house brand oils on sale through this week, $1.79 for conventional and $2.79 for syn while Meijer also has their house brand on sale through 11/21, 11.69/jug for conventional, 12.69/jug for syn blend HM and 14.39/jug for syn, which is dexos licensed.
I doubt that either Meijer or RK are selling their house brand oil below cost, so margins generally must be pretty high.
Originally Posted By: fdcg27
There's nothing in the thread you've provided a link to that supports the notion that synthetics offer higher margins for retailers than do conventional oils, and the line between the two is blurred in any event.
I would agree with that, and mentioned some of our marketing and pricing issues in Canada in the PUP Napa thread in the sales/rebate section, in answer to your question about us getting screwed.
Given my experiences at Imperial Oil, I would gather that the margins that our big box retailers charge would vary by product line, both by percentage and absolute markup. While all oil is cheaper at the distributor, the biggest discounts there are to be found on conventional oils and HDEOs (either synthetic or conventional). I suppose the reasoning is that farmers, truckers, and shops are buying the bulk of their oil from the distributor, and those bulk of that volume would be HDEOs and conventionals. Therefore, it's wise to have those prices set sensibly for those members of the general public who don't happen to be Walmart or Canadian Tire. Synthetic is still cheaper, but not quite the same discount one gets on the others. I suppose Imperial Oil sells most of that volume to other retailers anyhow, who would be getting a bigger discount in the first place.
Historically, up here at least, conventional has risen much faster than synthetic. I remember many years ago, Mobil 1 was always around $7 to $8 a litre on the shelf, as a regular price, ignoring sales, of course. At the time, regular priced conventional under $2 a litre was common. Now, the rule is that synthetic is about double the price of conventional, sometimes a little less, depending upon the retailer, and when comparing regular prices, rather than sales.
Up here, it seems we have the basic retailer not going insane with charging high markups on oil, whereas Walmart Canada and Canadian Tire try to charge as much as they can, outside of having stuff on sale, or SuperTech, which is always reasonably priced.
There's nothing in the thread you've provided a link to that supports the notion that synthetics offer higher margins for retailers than do conventional oils, and the line between the two is blurred in any event.
I would agree with that, and mentioned some of our marketing and pricing issues in Canada in the PUP Napa thread in the sales/rebate section, in answer to your question about us getting screwed.
Given my experiences at Imperial Oil, I would gather that the margins that our big box retailers charge would vary by product line, both by percentage and absolute markup. While all oil is cheaper at the distributor, the biggest discounts there are to be found on conventional oils and HDEOs (either synthetic or conventional). I suppose the reasoning is that farmers, truckers, and shops are buying the bulk of their oil from the distributor, and those bulk of that volume would be HDEOs and conventionals. Therefore, it's wise to have those prices set sensibly for those members of the general public who don't happen to be Walmart or Canadian Tire. Synthetic is still cheaper, but not quite the same discount one gets on the others. I suppose Imperial Oil sells most of that volume to other retailers anyhow, who would be getting a bigger discount in the first place.
Historically, up here at least, conventional has risen much faster than synthetic. I remember many years ago, Mobil 1 was always around $7 to $8 a litre on the shelf, as a regular price, ignoring sales, of course. At the time, regular priced conventional under $2 a litre was common. Now, the rule is that synthetic is about double the price of conventional, sometimes a little less, depending upon the retailer, and when comparing regular prices, rather than sales.
Up here, it seems we have the basic retailer not going insane with charging high markups on oil, whereas Walmart Canada and Canadian Tire try to charge as much as they can, outside of having stuff on sale, or SuperTech, which is always reasonably priced.
Ouch!
Part of the cause may be a lack of competition resulting from a population barely three times that of the state I live in spread across a vast land and only about a tenth the population of the US as a whole.
Here, there is a Walmart within a stone's throw of everyone and there are many regional chains to provide the competition to keep Walmart honest, although Walmart is usually a price leader for motor oil.
Don't like Walmart's prices?
In my immediate area, one can instead shop Meijer, Rural King or Tractor Supply for motor oil, and there are always the parts chains with their sales. Within a stone's throw of every Walmart there'll be an Auto Zone, an Advance Auto Parts and an O'Reilly's, along with a NAPA or two. All have some oils on sale every month.
The smaller regional chains tend to match Walmart's shelf pricing when the gorilla has a sale, oh, I guess I meant a rollback and the national parts chains sometimes offer oil and filter deals that a Walmart shopper can only dream of.
Throw in the MIRs that abound in this market and you have some really cheap oil just waiting for your purchase.
Part of the cause may be a lack of competition resulting from a population barely three times that of the state I live in spread across a vast land and only about a tenth the population of the US as a whole.
Here, there is a Walmart within a stone's throw of everyone and there are many regional chains to provide the competition to keep Walmart honest, although Walmart is usually a price leader for motor oil.
Don't like Walmart's prices?
In my immediate area, one can instead shop Meijer, Rural King or Tractor Supply for motor oil, and there are always the parts chains with their sales. Within a stone's throw of every Walmart there'll be an Auto Zone, an Advance Auto Parts and an O'Reilly's, along with a NAPA or two. All have some oils on sale every month.
The smaller regional chains tend to match Walmart's shelf pricing when the gorilla has a sale, oh, I guess I meant a rollback and the national parts chains sometimes offer oil and filter deals that a Walmart shopper can only dream of.
Throw in the MIRs that abound in this market and you have some really cheap oil just waiting for your purchase.
Yes, there is a lack of competition, and a lack of brains among the Canadian oil buying public. Superstore, a big grocery chain here, had a great oil selection for years. Their prices beat Walmart and CT all the time. They never did a big sale. But, they hardly ever touched the price. You could always go to Superstore and buy oil, and know you weren't getting screwed. It wasn't better than some of the rollbacks, but it was always better than everyone else's regular price. M1 was the same price (+/- $2 a jug) for about twenty years. But, no, people went to Canadian Tire and Walmart, and Superstore cut their oil section. Even their wholesale stores have a lot less of an oil stock than they used to, though the pricing is still not bad.
Canadians seem to like responding like trained seals and buying oil when Walmart and Canadian Tire deign us worthy to get a special.
Canadians seem to like responding like trained seals and buying oil when Walmart and Canadian Tire deign us worthy to get a special.
Walmart does occasionally roll back there Super Tech conventional oil but I "never" seen them roll back there Super Tech synthetic.In fact in my area for the last 2 months there Super Tech conventional has been on roll back.
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We just recently got SuperTech synthetic (called something else here, TuneIt!), but I haven't paid a lot of attention.
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