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 Post subject: The retailing guide
PostPosted: Wed Mar 26, 2014 6:25 pm 

Joined: Dec 12, 2008
Posts: 3558
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User avatarVaculus
The Retailing Guide



Before reading this guide you should read Encyclopedia Simunomica, especially chapters 3, 4, 5, 6, 10 and the guide about Economy Statistics. I will go on assuming that the reader is familiar with some terms and basic aspects of the game. I will try to include as much information as I can without blabbering too much.


Introduction

There are 81 retailable products on 17 retail categories, 8 of them are made in a farm, 9 of them are used as inputs for other products. Check details about categories and products through the options "Product Retail Information" and "Category Retail Information" on the "Ranks & Stats" page for a city. Check the PHIL page for the production line of each product. The best land for a store is city center. Lands with lower "Time Adjustment" pay off better in the long run. You can’t change the land type unless you pay 1 ticket per 4000ft² (rezoning offer).

There are 26 types of stores:
- 17 can sell only in one category (3-8 products) for 100% efficiency on sales
- 6 can sell in two categories (8-13 products) for 96.2%,
- 2 can sell in three categories (13 products) for 92.6%
- megastore can sell in all 17 categories (81 products) for 86.2%

Check details on the chart in the construction options for stores. Higher efficiency means selling higher quantity under the same conditions, in proportion to the efficiency of each store. A home goods store can sell 100/86.2=1.16 times the quantity a megastore can sell (or 16% more quantity). A megastore can sell 86.2/100=0.862 times the quantity a home goods store can sell (or 13.8% less quantity). Changing the type of your store takes 15 minutes per 100ft² and it can speed up only with tickets (1 ticket per 6 hours).

There are 2 kinds of retailers, those who buy products to retail and those who make products to retail. The first one makes more money because retail stores are the most profitable buildings, and he doesn't have to invest on research. He is more dependent on suppliers though. He can gain a competitive advantage by making steady and trustful partners. The second one is less dependent on suppliers but he makes less money and he has to invest on research. He can gain a competitive advantage by investing heavily on research to create unique quality on his product. Sometimes he makes one or more inputs by himself. Making everything yourself is not good because other product lines eat up your resources (cash and buildings) that you would use on your main product. In the long run all retailers tend to specialize on 1-4 products and establish some supply lines, in order to maximize their profits and monopolize their markets.


Making use of the statistics

Before getting into a retail market you need to get some information. Go to the “Ranks & Stats” page and click "Product Detail Statistics". All statistics update daily at 11:30 PM (UTC+0). You should pay attention to the values for "Daily Sales" (daily supply), "SSC Share" (Allmart share), "SSC Threshold" (daily demand), "Average Price" and "Average QA" (average quality). Those values are all zero for non-retailable products. Click on the name of a product to see the graphs. The values for daily sales and Allmart share on the graph page are always inaccurate for some reason. Daily demand follows the population of the city (if population rises by X% then daily demand also rises by X% and vice-versa). Daily sales is the sum of the recorded sales for the last 7 days, divided by 7 (therefore, every sale happening today will have a full effect on the market after 7 days). As recorded sale counts every sale that was completed until the moment statistics update. A sale of X product units at Y price for Z hours is actually X consecutive sales, each one taking Z/X hours to complete. Average price and average quality are based on the daily sales. Allmart exists only to fill the gap and disappears as soon as daily sales meet/exceed the daily demand. Allmart always sells q0 products for a quite low price that is affected only by retail spending. Allmart share never goes below zero, even when daily sales exceed the daily demand.

There are 4 factors in a retail market that affect the profitability of your stores: retail spending, average price, average quality and market coverage (market saturation). Higher retail spending means better sales (better ratio between time, quantity and price). Currently Canjara is the only city with a positive retail spending index. Higher average price means better sales. If you sell for a price lower than the average price you get an unknown bonus to your price. If you sell for a price higher than the average price you get a negative bonus to your price. In both cases, a higher average price means that you will get a better bonus. Although the exact effect on price is unknown, it is certainly weaker than the effect of the market coverage. There is a similar effect with average quality. When your quality is higher than the average one, you get a bonus equal to 2.125*(QA-QAav)-0.125*(QA-QAav)² but it will not go below 0% or above 9% (therefore, getting your quality up to QAav+9 is enough to get full bonus). Market coverage means how much is the daily demand covered by the daily sales. As daily sales increase, sales price decreases proportional. When the daily sales exceed the daily demand the price falls faster. The effect is calculated according to the following formula:

if coverage<1 then 1,2-(0,4*coverage)
if coverage>1 then 0,8*(1/coverage)

Value__Coverage
120%_____0%(empty)
100%____50%
_80%___100%(sales=demand)
_40%___200%(sales=2xdemand)
_20%___400%(sales=4xdemand)

This formula was posted by the developers on this forum long time ago. Value refers to a basic sales price. They said they were going to change it, I don’t know if they did though. The main concept here is that when the coverage is higher than 100% the price falls much faster. Market coverage is equal to 100*(daily sales/daily demand).


Choosing a product

Before going for a product you should check its availability (quantity, quality, price) in the wholesale market. If you plan to make it yourself then you should check the availability of the inputs, plus the way its quality is distributed among the research and the inputs (X% coming from research, Y% coming from input A, Z% coming from input B, and so on). Choosing a product that receives most of his quality from research gives you better control on quality in the long run, but it requires higher investment on research. You should get your products (or inputs) from more than one supplier if possible, in order to avoid being dependent on one person for a single product. If you plan to make some of the inputs as well, you may prefer products that require inputs made in the same type of building (factory or farm) as the main product, for flexibility. Also making a product with a simpler production line (less inputs and sub-inputs) will be easier to manage. Making everything yourself is not recommended. Specialization brings more profit and gives you unique advantages against your competitors, but increases risk as well. Don’t get into the trap of choosing a half-occupied retail market over an empty market just because the average price is much higher. Sooner or later you will have to fight with your competitors for your market share. Lastly, keep in mind that everything in this game that requires higher investment tends to pay off better in the long run. Therefore, choosing a product from a retail category that can be accessed through a single-category store which has a higher base price could pay off better in the future, under the same conditions.


Operating a retail store

There are more ways to boost your sales and they depend on your actions. Quality, brand awareness, brand reputation and store reputation will give a direct bonus on sales price, check chapters 3, 6 and 10 of Encyclopedia Simunomica. Increasing the salary will increase the efficiency of the store, but it will increase the operation cost as well (operation cost increases faster). You need to be level 5 (Dealer) to adjust salaries. Training level will increase the efficiency of the store to a maximum value (100%) for a fee. Training decays by 2% per day until it reaches 0%. The fee is not affected by the current level of training (you may be at 0% or 98% and you pay the same fee to reach 100%). The result of training is calculated by this formula:

E=sqrt(1-((T/100)-1)²)*20+0.2*T+60
E=efficiency
T=training level

The T in the formula is integer, not percentage (use 95 for 95% instead of 0.95). Using this formula we get the following values:

Training__Efficiency
100.00___100.000
_98.00____99.596
_96.00____99.184
_94.00____98.764
_92.00____98.336
_90.00____97.900
_88.00____97.455
_86.00____97.003
_84.00____96.542
_82.00____96.073
_80.00____95.596
_78.00____95.110
_76.00____94.615
_74.00____94.112
_72.00____93.600
_70.00____93.079
_68.00____92.548
_66.00____92.009
_64.00____91.459
_62.00____90.900
_60.00____90.330
_58.00____89.750
_56.00____89.160
_54.00____88.558
_52.00____87.945
_50.00____87.321
_48.00____86.683
_46.00____86.033
_44.00____85.370
_42.00____84.692
_40.00____84.000
_38.00____83.292
_36.00____82.567
_34.00____81.825
_32.00____81.064
_30.00____80.283
_28.00____79.479
_26.00____78.652
_24.00____77.798
_22.00____76.916
_20.00____76.000
_18.00____75.047
_16.00____74.052
_14.00____73.006
_12.00____71.899
_10.00____70.718
__8.00____69.438
__6.00____68.023
__4.00____66.400
__2.00____64.380
__0.00____60.000

The effect of training is calculated just like the efficiency coming from different stores types. Therefore, if the training level of the store is 20% and then goes to 100%, you should expect your store to be able to sell 100/76=1.316 times more quantity under the same conditions.


Optimizing a sale

When you set a sale you choose 2 out of 3 parameters (time, price and quantity) and the system will calculate the 3rd one, plus your net profit. If you set maximum value for time (192 hours) an error will appear. You can still make that sale but you will miss the calculation of the net profit. You need to set time at 191.99 hours (that’s 36 seconds less) until you decide the exact values to set for the sale. When statistics update, economy and retail markets change. The new statistics can’t affect a sale that started before the statistics update. Your choice on the 2 parameters depends on your needs and your strategy. Of course you want to maximize your profitability, but what are your priorities? Do you want your sales to end before day X and then go on with another product? Do you want to boost the average price? Do you want to keep your market share at a certain size? I prefer setting time and quantity. I prefer time because I can set it at 192 hours and later decide when is the best time to cancel my sale and set a new one. I prefer quantity because it helps me understand if I need to increase/decrease my production/supplies. Also quantity is an integer, if the system calculates quantity I will suffer a small loss. After choosing 2 parameters you need to find the values that will maximize the net profit. The formula that calculates the 3rd parameter is unknown, so you have to keep one parameter steady and keep trying different values for the other one. The steady parameter is time in my case. You can be as accurate as you like with your tries, depends on how much profit you are willing to miss in order to make this process less tiring. Starting with the value you set in the last sale saves some time. Paying attention to how much net profit changes will help you see how close you are to the optimum value and save more time. When you figure out the values that maximize net profit, you keep them steady and start trying different salaries. Again, starting with the salary you set on the last sale saves some time. There is also a small shortcut here. When you change the salary you can see how much "Employee Effectiveness" changes. This percentage has at least 2 decimal digits but only 1 appears. First you change the salary as much as needed to make effectiveness move by 1% (or close to that, since the percentage is rounded). Then you check your net profit again. If your net profit increased then you can change the salary by the same amount without checking the net profit, until you reach a point where effectiveness doesn’t move. After that point you need to keep checking net profit on every change. If you manage to reach the maximum salary (which means that your store is really small or the economy is really great) then you check "Economy Auto-Adjust". This will push employee effectiveness even higher. This is the only case were you must use the economy auto-adjust option. After setting the salary to the optimum value you can start the sale. You better have similar stores making similar sales, so that you can get the optimum values for one store and apply them to all.


Calculating net profit correctly

The net profit is based on the warehouse cost, which includes transportation cost but it doesn’t include research cost. If you buy the products you retail then your warehouse cost is accurate, and net profit is calculated properly in your stores. If you make the products you retail then things get complicated. The best approach is to divide your company into sub-companies that sell products to each other, which covers all possible cases. You will have to decide the trading prices based on wholesale market conditions (number of buyers and sellers, availability, quality) and not on average wholesale prices. The warehouse cost for the retailing sub-company should be the price it pays to get products. You need to invoice the products to another player and get them back for the right price (invoicing to yourself will not change the warehouse cost). With warehouse displayed correctly (for the retailing sub-company) the net profit will be calculated properly. Otherwise you will have to calculate net profit with a spreadsheet, which will make optimizing even more painful.


Training the stores

You need to decide when to train your store. The training effect is applied to all 3 slots and it will be usable for at least as long as your sales last. I already said that the effect of training is calculated just like the efficiency coming from different stores types. Therefore, after training your store will be able to sell 100/TL times more quantity than before (TL=current training level). Getting training level to 100% must increase the net profit enough to cover the training fee.

TL=current training level
TF=training fee
N=net profit
N’=new net profit
E=expenses
Q=sales quantity
Q’=new sales quantity
P=sales price
C=warehouse cost

N=Q*(P-C)-E

Q’=Q*(100/TL)

N’=Q’*(P-C)-E
N’=(100/TL)*Q*(P-C)-E

(TF/3)<=N’-N
(TF/3)<=(100/TL)*Q*(P-C)-E-Q*(P-C)+E
TF<=3*Q*(P-C)*((100/TL)-1)

If this inequality is correct then you should train your store. Even if the training fee is equal to the increment of the net profit, it can still result to a higher optimum sales price, which will increase faster the average price and will create better market conditions the next day. Q and P don’t have to be the optimum values. You can try the values of the last sale and if the inequality is correct, after training you should expect higher net profit for any combination of quantity, price and salary. If the inequality is false then you should find the optimum values for price and quantity and then try again. If it’s still false then don’t train this time. If you want to do dissimilar sales in the store slots then you should sum their net profits for N and N’, and replace TF/3 with TF.


Locking prices

You actually lock prices on every sale you make, since the new statistics can’t affect a sale that has already started. The term "locking prices" refers to a specific strategy, where you set a sale for the maximum time (192 hours), while knowing that your daily sales will exceed the daily demand many times, thus creating very bad market conditions during the days that will follow. After your sale ends, you will have to wait for 7 days for the market to "cool off", and have the effects of your sale disappear. If you manage to exceed daily demand more than 14-16 times, you will have to wait 7-9 days for the market to cool off. During that time you can either expand your stores or retail another product. Depending on how much you can exceed the daily demand, you may find out that on the first day of your sales market conditions are better than the previous day. That’s because average price increases along with daily sales. Therefore, you may be able to relock prices for a better net profit on the first day, maybe on the second and third as well. Just check on one slot and if you can get a better net profit then you reset all slots in all stores. You can try to create better conditions market 1-2 days before the final lock, by selling for a high price and trying to not cover the daily demand more than 100% until the 2nd day. Since you know how much quantity you sell each day, you can calculate how fast coverage will increase. For this method to be more profitable than a simple lock, you need to make sure that your stores make higher daily profit during the "cycle". And by cycle I mean the number of days that pass from the day you do the first lock (small or final) until the day market has cooled off enough to relock. For a simple lock the cycle could be 8+7=15 days. For a lock that prepares the ground 1 day before the final lock it will be 1+8+7=16 days. If the time you lock is many hours before the time statistics update, you can relock a few minutes before the update to add some hours to your sales time. Or, you can choose to lock prices at such time, so that when the market cools off it remains with 50%-80% coverage (instead of zero) and a higher average price, in order to start the next lock with better conditions (and without preparation). This method requires precision with time, assuming that you are available to log in your account anytime. Locking prices works better when the daily demand is much lower than your daily production/supply (assuming that your stores can handle all your production/supply).


Boosting average price

"Boosting average price" refers to the strategy of trying to create better market conditions by increasing the average price. For that you need to set your sales price as high as possible, and sacrifice today’s profit to achieve higher profit in the future. It is up to you to decide how much you want to sacrifice in order to boost the average price faster (setting higher salaries, training more often, paying for higher research or higher quality inputs, using extra stores for a while if possible). Also you must restart your sales every day, because the next day the average price will always be higher. For this to work you need to keep market coverage steady. For that reason, locking prices and boosting average price at the same time is not possible. This strategy works better when the daily demand is not much lower than your daily production/supply. A higher average price always attracts competitors. In order to repel them you will have to keep the average price under some level and have something to help you with boosting that the other don’t have, like more or bigger retail stores, or single category stores, or higher quality (higher research or exclusive access to high quality inputs). This strategy definitely pays off in the long run. The real question is how long? How many days must pass to get back the profits you sacrificed to reach this level of average price? How long will you be able to keep that level with the economy changing constantly? If your daily production/supply is lower than the daily demand then you better maximize your net profit until you kick Allmart out of the market. The average price will naturally increase in the process.


Hit-and-run

This strategy is rare, and there is a reason for that. Hit-and-run means that you find out a market with very good conditions, you get some products, and then you go and make some good sales until the market conditions get bad. And then you go to find another market to repeat the process. The best case is when you find a market where someone boosts the average price and you go to lock prices for as long as you make good profits. Depending on how fast your presence will worsen market conditions, you could make more profits if you relock every day until you see price changing really fast (and then you do a full-time lock to avoid a much worse price). This strategy will bring you fast and easy profit, and many enemies as well. No one likes it when someone comes to steal his market share, and making enemies for a market share that you don’t plan to keep is not wise. Plus, if you keep jumping from market to market you will not be able to make steady suppliers. If your reputation goes low you may not be able to get suppliers at all, so you better keep some small factories that don’t need much time to change focus. You should forget about research, since you will not have a steady production line. And without research or high quality inputs you will need to find some really good markets to make good enough profit to cover the conversions of your factories. Also you should learn how to use the ignore option, because some of your enemies may attack you verbally. Hit-and-run is not really a viable strategy, but you could try it while your company is still really small and new, in a market where the daily demand is many times higher than your production/supply (so that your competitors will not bother with your puny market share). You could pretend that you don’t know how to play the game and collect some cash to use on a better strategy later. Maybe some nice trade group recruits you in the process.


War tactics

So, the enemy has come to your doorstep. Another company is trying to take a share of the market that you consider yours. No need to panic. First of all you need to find out his motives. What does bring him here? Maybe he came for profit (hit-and-run). Maybe he came to get a retail award, which requires him to keep the highest share in the market for a number of days (if he wants a category award he doesn’t necessarily need the highest share). Maybe he has come just to create bad conditions in the market and hurt your profit (he, or someone who pays him, has a grudge against you). Maybe he just needed to dump some useless products. Whatever his goal is, he may decide to claim a permanent share in your market. Pay attention to the statistics. You know what you sell and when, so you can get a good estimation about his daily sales (quantity, price, quality). Because statistics are based on the average of the last 7 days, you will have to wait at least 3 days to get a clear picture on the situation. Does he make those products by himself? If not, who could be supplying him? Check production graphs in all cities. Keep in mind that factories and farms behave differently from stores, so the graphs will peak on the day that players click the "get products" button. After getting a better picture about his daily sales and his supply/production, it’s time to get info about his background. Ask his old and current partners/friends about his business and his goals. Check the forum for his posts, and posts that refer to his name (or to his trade group). No need to say that you should ask discreetly. Contact his supplier as well and pretend that you are interested in some deal. Always be polite. Do not contact your competitor before 8 days have passed (unless he contacts you first). If this was a one-time sale then his daily sales will start to decline on day 9. If his daily sales do not decline then you could ask politely about his plans on the market. There is a high possibility that he will reply sincerely, especially if you pretend that you are interested in a cooperative deal. A message like "hey, want to buy some products" could also do the job. If he tries to get you angry with offensive language you should not reply, but not use the "ignore" button either. People get angrier when they know that you read their messages and you still manage to ignore them. And when people get angrier they make mistakes easier. Plus, offensive language can get you a few-days ban (developers react slow sometimes but they do react). Keeping a cool head and have patience is essential to win against another retailer.

You don’t have to wait too much to take precautions though. No matter what his goal is, making the market less profitable for him will help you to get rid of him faster. If he is not interested in a permanent share then he will want to end his mission as soon as possible, and any delay will make him uneasy. Attacking to another part of his business will not help you much, you will both burn your cash faster and you may start a vendetta (or a war if this involves trade groups, friends and partners). Having a better profit margin will be a great help when the market becomes less profitable for both of you. Unique quality and big specialized stores certainly help with that. Otherwise you will have to sell near cost, waiting for him to burn his cash or give up and go to another market. Decreasing the average price and increasing your daily sales is the way to make the market less profitable. If you lock prices in a small market you can also change your locking habits. Relocking prices on day 4 instead of day 2 to prolong a high coverage of the market, or lock prices before the market cools off completely. If you competitor wants to hurt your profits he will probably try to disturb your cycle. If he wants to gain dominance or make a profit he will try to follow your cycle and lock prices on the same day you do. If he wants to kick you out of the market he may try to lock prices 1-2 days right after your lock (assuming that he gets some good info about your locking habits). Do not be afraid of a bigger company. The attacker needs much more power to destroy the defender. If you see that you can’t shake off a competitor no matter what you do (because he is too big for you, not because he is more persistent than you) then you should try to work out some cooperative deal and coexist in the market (if you can’t beat your enemy then make him your friend). There is no need to say that a battle starts the moment Allmart gets out of the picture. Neither you nor your competitor can do much with market conditions while Allmart still has a share, as it will be dragging down both of you. If you grow your business in a market where other competitors exist along with Allmart, you will not have to compete with each other until Allmart leaves. If your competitors have similar sizes and shares to your own company, then cooperating with them will be better than competing with each other. After all, no one is willing to leave a market where he has been growing his company in for a long time. Make sure that you read the guide about The Art of the Business of War, it is one of the best and the oldest guides in the forum.


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 Post subject: Re: The retailing guide
PostPosted: Wed Mar 26, 2014 7:00 pm 

Joined: Mar 25, 2013
Posts: 1019
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User avatarHatuey Enterprise
 
great job. I will put some of this to the test. :grin:

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[b]I was gone for years, but had too many good memories and felt compelled to check the game and its community once more.


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 Post subject: Re: The retailing guide
PostPosted: Thu Mar 27, 2014 7:27 am 

Joined: Jan 22, 2012
Posts: 574
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User avatarIMPOSSIBLE
Abalesk Chamber of Commerce
Awesome guide :eyeroll: Its big :bounce:


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 Post subject: Re: The retailing guide
PostPosted: Mon Jun 09, 2014 10:30 pm 

Joined: Jan 2, 2014
Posts: 23
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vidhan inc
 
hey the competetor grewed so big in less than 3 days and threw allmart out of the picture,will making the market unprofitable workout fast or somethin else


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 Post subject: Re: The retailing guide
PostPosted: Mon May 11, 2015 5:30 pm 

Joined: Jul 30, 2013
Posts: 608
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User avatarRonak Holdings I
 
A few changes are required in this guide after the recent updates, seeing that this guide was made more than a year ago.


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