Core Insights - The article discusses the business model behind low-priced products on e-commerce platforms, highlighting how merchants manage to sell items at prices as low as 3.8 yuan while still making a profit [1][11]. Group 1: Pricing Strategies - Low-priced items, such as those under 10 yuan, accounted for 35.7% of total transactions on e-commerce platforms in 2025, indicating their growing importance [1]. - Merchants often utilize a "consolidated shipping" model to reduce logistics costs, allowing them to lower the per-item shipping cost to 1-2 yuan [1][3]. - Some merchants employ a "freeloading" strategy, where they include their small items in larger shipments from other sellers, reducing their shipping costs to as low as 0.5 yuan [3]. Group 2: Cost Structure - The production cost for simple items like phone cases can be as low as 0.5-1 yuan, especially when purchased in bulk from manufacturing hubs [3]. - The average profit margin for low-priced items was approximately 15% in the first three quarters of 2025, meaning a 3.8 yuan item might yield a profit of around 0.7-0.8 yuan [3][11]. - Many low-priced products serve as "loss leaders" to attract customers, with some merchants willing to sell at a loss to increase foot traffic [6]. Group 3: Customer Acquisition and Retention - Low-priced items act as a draw for customers, with data showing that stores offering such products see a 30% increase in overall visitor traffic [4]. - Approximately 25% of customers who enter a store to buy low-priced items end up purchasing additional higher-margin products [4]. - Stores with low-priced items have a 20% higher repurchase rate compared to those without [11]. Group 4: Additional Revenue Streams - Many low-priced products offer upsell options, where customers can pay extra for better quality or customization, with 40% of consumers opting for these add-ons [6]. - Merchants often implement minimum purchase requirements to encourage bulk buying, increasing the average transaction value by 35% [7]. - The use of "shared logistics" and optimized packaging for small items can save 0.5-0.8 yuan per shipment, further enhancing profitability [9]. Group 5: Consumer Behavior and Satisfaction - Despite lower prices, consumer satisfaction for items under 10 yuan remains relatively high, averaging 4.1 out of 5, indicating that many low-priced products meet basic expectations [10]. - E-commerce platforms often provide subsidies for low-priced items, which can account for about 5% of the product price, making these items more attractive to consumers [10].

Group 1 - Gross profit is a crucial financial metric that reflects the viability of a business model and indicates whether a business is fundamentally sound [2][3][22] - Higher gross profit is always preferable, as it provides a buffer for management decisions and operational flexibility [4][9][62] - During due diligence, the primary focus should be on gross profit, examining what is sold, at what price, and the associated costs [5][23][62] Group 2 - Businesses can be categorized based on gross profit and turnover rates, with high gross profit and high turnover being the most desirable combination [10][11] - Low gross profit or flawed logic in gross profit calculations can lead to business failure, making it essential to validate gross profit calculations during analysis [8][14][39] - Many companies struggle with accurate cost accounting, which can lead to misleading gross profit figures, necessitating a thorough review of cost calculation methods [46][49][54] Group 3 - The importance of gross profit extends to secondary markets, where significant fluctuations in gross profit can indicate underlying issues [35][36] - Accurate gross profit calculations are vital for understanding a company's financial health, as they can reveal discrepancies in revenue and cost recognition [55][57] - Positive gross profit can still indicate value even if net profit is negative, as it contributes to cash flow and overall financial stability [58][61]