Why does higher traffic sometimes mean lower profits? Unveiling the profit traps behind mass-market businesses!

Many people believe that traffic equals money, but the reality is that the more a business serves the masses and generates a large amount of traffic, the closer its profit is to zero.

Why is your business busier but less profitable?

Now I'll break down the truth about commercial traffic, reveal the profit traps behind high-traffic businesses, and teach you how to escape the vicious cycle of single-digit profit margins and achieve a true breakthrough in business profitability. A must-read for entrepreneurs; don't let inefficient traffic consume your core resources.

Yesterday, while shopping at the mall, I saw an event where people could get a free cat. The place was packed with people.

I stood there watching for ten minutes, and I had only one thought in my mind: this thing is amazing.

The only successful model for giving away physical items for free is pets.

Why? Because anyone who's ever owned a cat knows it's addictive. Those who love it will love it forever, unable to stop for a moment. And once you have one, it's hard to stop. Cat food, litter, toys, vet visits—it's all a continuous expense.

This shopping mall event instantly created a large number of pet owners.

But have you ever wondered why the shopping mall was willing to give away cats for free? It's not because they're kind; it's because they've done the math.

Think about it: giving away a cat for free could potentially generate thousands or even tens of thousands of dollars in subsequent spending. But the question is, what are the prerequisites for this model to work?

It's because of the large traffic volume.

Sometimes I feel that all high-traffic businesses are currently unprofitable. The more a business serves the general public, the closer its profit margin will get to zero. Single digits.

Why are high-traffic businesses not profitable?

That might sound harsh, but think about it for yourself.

Large-scale businesses targeting individual consumers (C-end) with hundreds of millions of users are generally unprofitable; they are high-traffic businesses, and monetization is typically very difficult. Serving business owners and enterprises, on the other hand, yields high profits, but the traffic is much smaller than that of individual consumers.

Why? Because serving the general public requires controlling prices, scaling up operations, and marketing, and each step eats up your profits. But serving a specific demographic, especially those with high purchasing power, is completely different.

The boss values ​​quality and service, and needs trust. Once that trust is established, your profits will be high, as this customer base has a much higher repurchase rate than the average customer. The boss's time is also very valuable and they won't easily give it up.

Business Logic for High-Purchasing-Power Consumers

I have something to tell you.

Waxberries plus the owner's price, 20 yuan per fruit. These are usually purchased by owners who pursue extremely high quality; they are a special supply. They are very expensive, but the quality is also very good. One customer is worth 100. Basically, as long as the owner doesn't go bankrupt, those who have enjoyed them will buy them again the following year.

Think about this logic.

So the idea is actually very simple: first, think about who the high-purchasing-power group is, and then combine them with other product categories to create a segmentation + high-purchasing-power.

Product category overlap creates segmented high-purchasing-power consumer groups

For example, there are people with purchasing power, such as business owners, pet owners, and jewelry enthusiasts. Adding another category, clothing adorned with jewels, which is generally sold to celebrities and ranges in price from hundreds of thousands to millions, represents a highly segmented consumer group within the clothing market with significant purchasing power.

For example, if a T-shirt is printed with a pet, it can be sold for 69 instead of 29, doubling the profit. This is a rapidly growing segment of consumers with purchasing power.

The boss + all categories, after crossing, all belong to that category, segmented, high-purchasing-power customers.

Honestly, this idea isn't new, but most people are thinking about it backwards. They first decide what product to make, then who to sell it to. But the truly high-profit approach is the opposite: first find people with high purchasing power, then see what they need.

The scripts, content, and products are all designed for this specific demographic. They may not generate much traffic, but the profits can be very high.

Think about it yourself, isn't that the truth?

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Thank you for reading my article. See you next time.