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Wal-Mart buys products from cheap manufacturers, then resells them. The manufacturer's keep their prices low through mass production. Its easy to make millions of one product, so they can sell them cheaper.
Also, Wal-Mart has a lot of customers. If Wal-Mart makes 1 cent profit from an item, and 100 people buy it, that's 1 dollar of profit. In contrast, if Bill's Fruit Mart has the same item, but only one person buys it, Bill would have to charge one dollar more than Walmart.
Basically, cheap products makes cheap prices, but the fact that a lot of people buy from Wal-Mart allows them to have even cheaper prices.
What really happens is half of the Walmart's products are direct vendor controlled, so the vendors determine the price. Since they only rent shelf space, they don't have too much overhead for all those locations. For example, Pepsi supports the manufacturing plant, but they don't have to pay for everything at all the stores it sells in, so it can keep the price fairly low.
Walmart buys most of the rest of the products fairly cheap through overseas manufacturing or consignment sales. They order so much volume that buying in bulk gets it cheaper, but what they don't sell they send back.
The few products that are left are quality high end items that they have to pay a higher price for, but they charge what all the other higher end stores charge for it.
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