Learn How To Vend

[Aaronock]

You know Hugel is like the elitist hotspot on almost any server I've been on over the years. My last server I tried out had the elitist group hanging out there even, and that was just a few months earlier this year! XD

It must be something about them blue gems being a quick stop on the way to pwn WoE or something.

[Naruhodo]

Well-written, well-done guide

A grad student studying economics could probably write their thesis with this stuff!

[Avogadro]

Judging by the response to the original "Learn How To Vend" post, it seems that a few people are ready for the advanced class.

Well, at least one person is, and a few have picked up on how intensely bad an idea it is to under-cut people in one town only.??And considering the future... and The Future.... I don't have time to abuse the money-making scenario which has appeared so now is the best time to write this.

Chapter Six: Why shouldn't I just buy a lot of stuff?
So if you've been paying attention up to this point, you have probably noticed that at no point was it ever mentioned HOW you'd stock these shops.??I assume that most people put two and two together and got four and realized that you should buy things with max DC.

That works fine when you're running two or three shops, but 7-11 ran the business with particularly large values of two, so he put two and two together and got approximately five.

So how did he do it???Well every merchant account you made needs up to two support characters.??The first is essential and will be discussed right now.??The second is optional.??The first one will be your stockroom alt who sits off in a corner of the world next to a kafra and does nothing for 99% of the time.??This alt will be your link between the branch and your central supply, taking items from a separate "buyer" account and distributing them out to the associated branch.??If every stockroom alt is located in the same place, the supply chain looks like this:
1. Determine the required items for your chain, per shop.??Use a spreadsheet for this one.
2. Travel the world on the buyer alt and pick up the necessary stock from npcs*
3. Return to the central stock room and distribute the necessary stock to the first stockroom alt
4. The stockroom alt deposits the items in Kafra and the branch retrieves them in the associated town.
5. Set up your now-stocked shop
6. Repeat steps 3-5 for each shop you need to restock.

So why is this the most efficient method???Simple.??You need to spend zeny to get your items, including kafra fees and ports.??Ports are, clearly, much more expensive and cut into your profit margin more, so you want to limit the number of those.??And your profit margin can get fairly slim, so it's a good thing to know that you're not losing cash.

If you have a single buyer alt, you only need to make one trip to each city to pick up items.??If we assume that kafra storage cost is less than half the cost of a warp, then the cost of depositing, retrieving in a different town, depositing again and finally retrieving in the desired city is still less than the cost of a single round-trip warp**.??It is also cheaper than using one character to buy and then distribute with a friend's help (like PnP did for a while), as even if you optimize your trip you will still likely need to make one warp per city to pick up items, then one warp to each branch to drop off items.??Each of those additionally requires at least two kafra withdrawls and a third if you're stocking more on your shop than you can carry, adding up to a larger supply cost than the method here, which requires half the number of warps for only one additional kafra storage fee.

PnP, you're welcome.??This guide just did your work for you.... again.

Also, of course, there are additional benefits to the stockroom method: you only need to level one buyer and the entire stock process can theoretically be done by one person without dual clienting.??Only money transfer needs help, and that's a once-every-few-days thing at best.??The fewer people you need in the supply chain, the easier it is to do at all times.

The downsides, of course, are that over time (and a short time at that) your money will migrate from your buyer character to your individual shops.??Again, you could just grab a friend and transfer the money back, but this is where the second support alt comes in.??You need one alt per account in a central location next to a banker, so that as your money pools on the shops, they can offload it to the banker in their associated town and it can be collected by the accounts alt in the central bank location.??Then, your friend just needs to sit there and wait for each accounts alt to appear and trade the money, then they can trade the total money to the buyer account for a total cost of one round-trip warp.??You don't even need to do the math to know that for 30 shops, you're going to save a bundle by only doing one round-trip.

But you may have noticed that all of this hasn't answered the question: why not just buy a lot of stuff?

Well, there's no reason that says you shouldn't, except that when you're putting ten million zeny into a buying run just to keep the shops stocked it's a bit tough to get around the idea that you should throw another ten million into buying stock even if you know you're going to do it again next week.... or tomorrow.??It's a better idea, sure, but it increases the amount of stock you have on hand, and by having all your cash tied up in stock, you limit your flexibility somewhat.??There's also something to be said about buying as you go.... especially when you can frequently get it cheap AND hurt a "competitor" at the same time.

And that's the subject of our next chapter...

*7-11 used to spend between 6 and 10 million every stock run, so keep some money on hand.

**Obviously, if you can get guild recall, you can start to do even cooler things with this technique such as dragging your shops around the world to pick up items, which should reduce costs even further.

[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.

[mahawirasd]

totally pwns...

+1 go go go!


-w-