Inventory is a necessary evil of the marketplace's fluctuating supply and demand.
But mass merchandisers have charted a path around it to bigger profits. It sounds counterintuitive, but last year, about 70 percent of the products sold at Wal-Mart hadn't yet been paid for by the company. That meant manufacturers bore the burden of inventory. That gives them an enviable negotiation position, because there are probably 25 companies knocking on their doors trying to sell them their products. In the case of the giant retailers, that means handing over the goods without immediately getting a check in return.