WHAT IS A CARTEL AGREEMENT? DEFINITION, EXAMPLES, AND WHY IT’S ILLEGAL

 

• What Is a Cartel Agreement? Definition, Examples, and Why It’s Illegal
• Cartel Agreement Explained: How Companies Fix Prices and Break Antitrust Law
• Price Fixing and Cartels: How Secret Deals Hurt Consumers and Lead to Millions in Fines
• Is a Cartel Agreement Illegal? US Antitrust Laws, Penalties, and Real Examples
• Cartel Agreement 101: How Companies Collude and What Happens When They Get Caught

 

1. The Basic Point: 20% of Stock Gives 80% of Sales

What your article says is very straightforward:

"Look brother, out of all the items you sell, only 20% are the ones that sell more than 80% of the total."

In business terms, these are called Fast Moving Items or Fast Running Items. These are the products that sell every day, repeatedly, without stopping.

For example:

If your shop has 100 different items, usually only 20 of them are the ones customers ask for daily. The remaining 80 items sell once a week, once a month, or occasionally.  And the interesting part is that this same 20% of items also generate 80% of your total sales. Meaning, the money is actually coming from here.

 

2. Where Does the Problem Come In?

Most small and medium business owners make this mistake:

They have limited money, but they buy a little bit of everything. The result is that Fast Moving Items run out, and Slow Moving Items just sit on the shelf.  A customer comes in asking for the item that sells every day. When it’s not available, the customer walks away. You lost a customer just to buy cheaper stock. And losing a customer is the most expensive deal of all.  That’s why the article says: "If money is tight, take your attention off the mobile and put it on your business." Meaning, first figure out what your 20% is.

 

3. How to Find Your 20%? Basic Method

For this, you need 30 minutes and a notebook. 

Step 1: Collect Data

Check your sales for the last 30 or 60 days. Write down for each item how many units were sold and how much revenue they generated. 

Step 2: Sort It

Put the highest-selling items at the top, and the lowest-selling at the bottom. 

Step 3: Draw the 80% Line

Add up the sales from top to bottom. When you reach the 80% sales mark, draw a line there. Whatever items are above that line are your 20%.

 If you have a computer system, this report takes 2 minutes. If not, you’ll have to do it manually. But it’s necessary.

 

4. Basic Level Strategy: Never Out of Stock

Once you have your 20% list, your only goal should be:

"None of these items should ever go out of stock."

 For this: 

• Keep separate safety stock for these items. 
• When stock drops to 30%, reorder immediately. 
• Invest more in these, less in the rest.

 This is the point where a small business can beat a big business. Big stores keep everything, but if a small shop only keeps what customers actually ask for, customers will always come back to it.

 

5. Intermediate Level: Bulk Buying vs Cash Flow

There’s another important point in the article:

"Buying in bulk often gets you a cheaper rate, but if it causes other items to run out, it’s not cheap—it’s very expensive."  This is where the principle of Cash Flow comes in.

Let’s say you have 100,000 rupees.

Option A: 

Spend 80,000 on one cheap item in bulk, and run the rest on 20,000. Result: 20 items run out, customers get upset.

Option B: 

Spend 60,000 on Fast Moving Items, and keep the remaining range complete with 40,000. Result: Customers find everything, and they come back.  The 80/20 Rule says Option B is always better, until your cash flow becomes strong.

 

6. Advanced Level 1: Profit Margin Filter

Basic 80/20 only looks at sales. Advanced 80/20 looks at both sales and profit.  Some items sell a lot but have only a 5% margin. Some sell less but have a 40% margin.

 You need to make a matrix:

Quadrant 1: 

High Sales, High Margin → Focus on these the most. 

Quadrant 2: 

High Sales, Low Margin → Keep them for volume, but look for alternatives. 

Quadrant 3: 

Low Sales, High Margin → Keep for customers, but don’t overstock. 

Quadrant 4: 

Low Sales, Low Margin → Remove them immediately.

This is also called the 80/20/30 Rule. 20% of items give 80% of sales, and within that, 30% of items give 70% of profit.

 

7. Advanced Level 2: Customer Segmentation

The 80/20 Rule applies not just to products, but also to customers.

Usually, 20% of customers make 80% of your sales.

Who are these customers? 

Wholesalers 

Regular retail customers 

People who buy in cash

Identify these 20% customers. Give them credit, discounts, and special service. Don’t waste too much time on the other 80%.  Similarly, 20% of suppliers provide 80% of your stock. Build strong relationships with them, your credit period will increase and rates will improve.

 

8. Advanced Level 3: Marketing & Display

Place only these 20% items where the customer’s eye goes first.In front of the counter, at eye level, near the gate. 

If you’re online, show only Fast Moving Items on your website’s homepage, WhatsApp Status, and Facebook posts. Create a separate "Clearance" section for Slow Moving Items. 

Your marketing budget should also follow 80/20. Spend 80% of the budget on advertising the 20% products that give immediate sales.

 

9. Common Mistakes People Make

Feeling-Based Stocking:

"This item looks good, I’ll keep it." Stocking without data is the biggest mistake. 

Fear of Out of Stock:

Stocking 6 months’ worth of everything. It blocks your cash. 

Ignoring Slow Movers:

Don’t completely ignore the 80% items. They give customers the feeling of a "full range." Just don’t tie up money in them. 

Not Reviewing:

80/20 changes every 3 months due to season, trends, and prices. Do the analysis again every quarter.

 

10. Practical Action Plan: Start Today 

Sit down tonight and pull out the last 2 months’ sales data. 

Make a Top 20% list. Call it your "A Category." 

Make a separate stock register for A Category. Check every week that no item drops below 20% stock.  Set a Minimum Order Quantity for B and C Categories. 

Set aside 1 hour at the end of every month just for this analysis.

 

11. Conclusion: Big Business with Little Money

The real message of the article is this:

If money is tight, instead of putting a little into everything, put it into the 20% that’s giving you 80% of the results.  Companies like Amazon, Walmart, and 7-Eleven use the same principle. The only difference is they have software, and you have a notebook and pen. The principle is the same.  Once your cash flow improves and your system is set, gradually expand your range. But the foundation will always be this 20%.