Below are some numbers - please adjust if you have additional information - to see how the numbers work for Walmart.
Revenue = $399 for PS3
Cost:
PS3 = $350 (assumption - I don't know how much Walmart buys it for. There is a person that mentioned their store only makes $15, so $350 is generous).
Gift Card Cost - $100 less average profit margin on WalMart sales. In this case, if you look at Walmart financials, their operating margin (according to Yahoo) is 5.84% or 6% to summarize, and their profit margin is 3.33%. We'll use the operating margin for simpler calculation.
Therefore, the actual cost of $100 gift card IF FULLY REDEEMED is actually $94.
Even if you assume another 20% NON REDEMPTION (ie. lost cards, etc.) - the cost of the gift card to WalMart is $75.
THEREFORE....
I WILL SUMMARIZE IN THE NEXT POST.
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