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ils411 on 26 October 2011
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Booh! said:
Machina said:
Troll_Whisperer said:
Machina said:
I think you may be ignoring at least 2 factors. 1) there are going to be efficiencies inherent in shipping to a smaller number of countries vs. a larger number (this is an extension of thrusting's point above), and 2) there are going to be self-through differences between (to simplify things) the States and the 'Other', smaller countries (a smaller market is going to sell through at a slower rate, and this will be duplicated across multiple countries, which means there'll be more on the shelves at any one time for that product... i.e. more stock).

But if these countries sell more slowly, wouldn't they alse require less stock?

That's my point, if you sell less units you order less. You don't need 1m PS3's if you need 1 year to sell them.

I don't think Sony wants outdated PS3's in these countries either, so they must be aiming at a similar shipping rate.

No because there are inefficiencies inherent in shipping to more countries/smaller stores. I think it's a gross over-simplification of the whole process to (essentially) say that Shop 1 sells 100 units of Product X each week, whilst Shop A and Shop B both sell 50 units each week of competing Product Y, therefore the stock levels will be equal for both products. If replicated on a large scale Product Y is - almost all of the time - going to have more stock in the channel. All shipment turns to sales eventually, of course, but there will be a greater disparity between shipped and sold for Product Y in the meantime.

He made an oversimplification, but you made wrong assumptions, which is worse. First you suppose that smaller market have smaller stores, wrong: Singapore is a pretty small market but it is a 8 million city and have for sure bigger stores than, say, Montana or every other big plains US state, so shipping to Singapore (a small market) is more efficient than shipping to a big part of the US (a big market). Second, you think that shipping to a number of small countries is less efficient than shipping to just one big country, also wrong: not only small countries can benefit from point one (high density population), but also from the fact that you don't need a shipping channel per country. In fact the Republic of San Marino is a small country, but it is much easier to ship to San Marino from Italy than to ship to Hawaii from California, and so you don't need a warehouse in San Marino, you can just use your warehouses in Italy. Third, and this really does not make sense, smaller markets don't sell at slower rates, why should they? Take a look at Singapore, Arabian countries or other smaller markets, they're all megastores with lots of costumers.

Smaller Market - Region or country where in the product is available but sales is small. Size of store or size of country has nothing to do with it. And yes, a "Small Market" does tend to sell at a slower pace. (and by smaller market, i mean market with small sales)

Your description of Rep. of San Marino using the warehouse in Italy is what is usually considered as a distributon center. This warehouse would have to have enough stocks to cater to Italy and to Rep. of San Marino and to whatever market/coutnery/ region it caters to.