RE: [Epic] GW BOYCOTT (MUST READ IMEADIATELY) (fwd)

From: <oki_at_...>
Date: Thu, 5 Jun 1997 10:04:34 +0800

At 06:23 PM 6/4/97 -0500, you wrote:
>> Hell,
>> they took a friend of mine's stockist status as they learned he was selling
>> for cost +5%
>
>Very odd, that. The only profit margin you friend was cutting into was
>his own. He still paid the same to his supplier, regardless of what
>he sold to his customers for. Why did GW even care about this practice?
>
>

Let's see :) A very simplified model of reality.

Assume that GW sells to a non-GW store a set of miniatures at $50.
The manufacturing cost to GW is $ 30.
The retail price is $ 100.
Now if a store gives a discount of 25%, selling price would be $75.

Then assume that there are 100 customers serviced by two shops, a non-GW and
a GW.
Odds are GW will get half (50) of the customers.

GW shop selling at no discount, will then get 50customers x $100 = 5000 sales.
Out of which $70margin x 50customers = 3500 is profit (due to GW selling direct)
 
The non-GW selling at no discount, have a sales of 5000.
Out of which GW gets $(50-30=20) margin x 50customers = 1000 profit.

Total profit for GWUK (?) is 3500 (profit from GW shop) and 1000 (profit
from selling to GW shop) - for a total of 4500.

Now, if the non-GW shop can sell at a 25% discount, it will then draw more
customers.
Which will correspond to a loss of customers for the GW shop.
Assuming that now 75% of customer go to the non-GW shop.

The GW shop will then sell 25customers x $100 = 2500 worth of miniatures.
Out of which GW get $(100-30=70) margin x 25customers = 1750 is profit.

The non-GW shop will sell 75 customers x $ 75 = 5625 worth of miniatures.
Out of which GW get $(50-30=20) margin x 75 customers = 1500 profit.

Total profit for GWUK (?) is 1750 (profit from GW shop) and 1500 (profit
from selling to GW shop) - for a total of 2250.

A big difference of (4500-2250=2250) loss of profit. Of course, this is a
very simplified model, we have not look into the cost of setting up GW shop,
overheads, staff cost etc. But I think this is a fair enough model.

Therefore it is in the interest of GW to make sure that customers buy from
1) mail order (no rentals to pay even ! customer pay shipping !)
2) GW shop

But GW still needs non-GW shop to help spread the popularity of its
miniatures, especially in remote place like Singapore :). So it still sells
through non-GW shop. But once the critical mass of gamers is there, it will
try to move in to take over the market.

Their motto probably is "Coming to an area near you."

Regards
Oki
Received on Thu Jun 05 1997 - 02:04:34 UTC