E-Commerce

Digital Age DLC for Capitalism Lab
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brianwiz
Level 3 user
Posts: 78
Joined: Wed Aug 18, 2010 3:21 am

E-Commerce

Post by brianwiz »

Guys,

How do you make money with the E-Commerce.

I lose hundreds of thousands and only sell 50-170k with of stuff.

Any tips.

This internet company bugs me.

Love search engine, Video, and most of the rest so far
rmphoenix
Posts: 8
Joined: Fri Aug 11, 2017 8:57 pm

Re: E-Commerce

Post by rmphoenix »

I've probably put in 12 hours into the game and I'd say I'm a fairly seasoned capitalism lab mods... so whatever that's worth...

Answer: You need to make sure the quality of your product is relatively high.. 70+ probably and have it well priced so that your overall product quality in market (brand + product quality + price) is higher than local vendors and other AI competition. This can be seen in the product window where you see you and other competitors in the space. It also helps if your e-commerce has wide acceptance/market penetration. Now, what I've noticed is that products (even when of uber quality) do not immediately sell well in e-commerce and it helps immensely if you pair e-commerce with physical stores (I think it even says that in the developer documentation for e-commerce). What I surmise is that customers will not actively look for your item without seeing it in stores. I'm not sure! I have no idea what the game's algorithm/logic is.

With that being said! Let me tell you what I've noticed/think about e-commerce. E-commerce benefits over conventional physical stores in 1) No freight fees 2) E-commerce products are sold to ALL cities 3) way easier to micromanage than physical stores, i.e. price adjusting since price affects product price in ALL cities and 4) (probably most important) lack of upfront capital to introduce products to all cities.. since you're not having to build stores.

However, there are some HUGE downfalls in e-commerce in that if everything is priced the same, you may be selling your product dirt cheap in high quality of living cities if you're pricing for the lowest quality cities. This means you're losing profit margin. The freight costs, by in large, are negligible when you compare that to profit you're missing out by having such cheaply priced products. Even for automobiles (the highest cost freight) I think is negligible if you're pricing for the lowest city. Cost of stores are also not too expensive after the initial investment, about $650K per month (in ~2017) for selling 4k smartphones which amounts to like $170 savings with e-commerce. I could go on for awhile, but suffice it to say, e-commerce will NOT maximize profit UNLESS (and I'm just theory-crafting here) you're competing in a highly competitive market where freight costs eat into the majority of your profit margin.

Discuss away everyone!
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