Learn How To Vend

[Avogadro]

Chapter Seven: Seriously, don't ever get into a price war in only one town

The comment about "Don't open a shop in Umbala or we'll out-price you" outlines a very important note that many people have failed to learn: Don't ever get into a price war in only one town.

In fact, don't ever get into a price war unless you're planning on covering at least 75% of the possible market.

Why not???Well it comes down to effort.??Imagine you've decided that you're going to open a shop that will sell for cheaper than the other shop in town and that the defining factor of your shop is that it's always cheaper.

In the time-honoured words of bullies everywhere: "Stop hitting yourself.??Stop hitting yourself."

Here's how this scenario is typically plays out, based on multiple examples from 7-11 in the past:
1. You open your shop and undercut everyone in town by 1z, because apparently being nominally cheaper is more important to everyone than not being an idiot.
2. 7-11 lowers prices in the town in question.
3. You lower yours to be 1z lower.
4. steps 2 and 3 repeat until such a point where 7-11 stops lowering prices.
5. You think to yourself "I win!"
6. 7-11 buys all your stock and transfers it to a branch where there is no such competition, paying for four kafra transfers.
7. At the new branch, the new break-even point is calculated, taking into account the fact that you spent the time and money travelling the world to buy items, and new prices are set to make a reasonable income on the items.
8. The prices are either kept low in the original town, so that as soon as you set up a shop you're losing money per sale (remember, it was 7-11 who stopped at a price and you beat it by 1z... ask yourself why that odd price was the one that was picked) or the prices are raised, if it's determined that you don't check your shops significantly often enough that a reasonable profit can be made before the whole thing starts again.

Note: In this case, the supply costs to the person buying from you are significantly reduced, because now they don't even need to warp to different towns, they just need to wait until you restock.

If you're serious about undercutting someone, do it in every town, otherwise there is a good chance that if they're paying attention, they're already selling your items in a better location for better money while you're actually just wasting time and money supplying them with profit.??Alternatively, this illustrates a downside to the chain business: a lot of profit can be made despite a price war, it just requires a much greater time invesment than even running a chain.

Stop hitting yourself indeed.