Merchant Archive
Thread: Consignment, is it an endless cash machine for merchants?
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Mkappus
Thu Jun 17, 2004 3:59 pm
#1
I am an advocate of the consignment system to replace the ability to poach vendors. However, will we get a consignment system?
One reason I can see the devs not implementing it, is that it is a zero effort, zero risk cash machine for merchants. Think about it, you set up a vendor, and other than possibly setting an option or two, and maybe having to accept every item offered, there is nothing for you to do and no risk. Talk about an amazing job, have someone else craft stuff and we just sit back and collect a commission with no risk?
To me that isn't being a merchant. A merchant is someone who goes out and speculates on goods, creates relationships, develops supply chains and customer bases. As I said, consignment is something I like because it is easy and allows us to avoid all risk.
But is it fair for us to get something this easy that will lead to potentially unending wealth?
DocSavag
Thu Jun 17, 2004 4:29 pm
#2
Mkappus wrote:
I am an advocate of the consignment system to replace the ability to poach vendors. However, will we get a consignment system?
One reason I can see the devs not implementing it, is that it is a zero effort, zero risk cash machine for merchants. Think about it, you set up a vendor, and other than possibly setting an option or two, and maybe having to accept every item offered, there is nothing for you to do and no risk. Talk about an amazing job, have someone else craft stuff and we just sit back and collect a commission with no risk?
To me that isn't being a merchant. A merchant is someone who goes out and speculates on goods, creates relationships, develops supply chains and customer bases. As I said, consignment is something I like because it is easy and allows us to avoid all risk.
But is it fair for us to get something this easy that will lead to potentially unending wealth?
Its an interesting question. You still have to make deals with crafters and negioiate percentages, try to keep business coming into your shop. You have to make decisions about what kinds of vendors you want to have and what prodcuts you would like to sell even on consignment..there is no huge financial risk but you get nothing if things don't sell and that potentially damages your reputation with the suppliers you are trying to sell for. I think there is still room for challenge without a huge financial risk.
Ke_la
Thu Jun 17, 2004 5:29 pm
#3
I agree that while there may not be a Dircet risk, you still have the reputation risk and what if your suppier quits now you have an Empty Vendor where you used to stell weopons, and one Empty Vendor in your Mall could be a cause you to lose lots of Customers.
p4Samwise
Thu Jun 17, 2004 6:42 pm
#4
Most of the risk for real-life merchants is the operating cost ofa shop - the income from sales needs to not only cover the wholesale cost of the goods, but also the shop itself. Right now, maintenance costs for houses and vendors are all but negligible compared to what even small-time merchants can rake in.
Perhapsdifferent "tiers" of vendors and shops, with varying maintenance costs, but also varying ability to sell at high volumes? For example, a low-tier shop might only hold or sell a small number of items per day/week, but cost very little to run - perfect for a novice merchant who's just starting out and doesn't have high sales volumes. A high-tier shop can hold a huge inventory, but it only pays for itself if that inventory moves at a brisk rate.
This would add a more realistic dynamic to the job of running a shop - do you invest in the big superstore/vendor that can hold a bunch of stuff, hoping that it'll pay off big by selling everything you stock it with? Or do you play it safe with a small mom-and-pop place, and upgrade once you find that you're selling out your stock consistently?
EDIT: Replace "small number of items" with "small value of items". That way sellers of big-ticket items like rare loot, harvesters, and whatnot don't have an unfair edge over bulk sellers of more inexpensive items. Base the limits instead on the total value of what's listed on the vendor in that time period. Of course, limits aren't necessarily even the best way to differentiate "vending capability", I just use that as an example.
Message Edited by p4Samwise on 06-17-2004 06:44 PM
lisasdarren
Fri Jun 18, 2004 7:49 am
#5
p4Samwise wrote:
Most of the risk for real-life merchants is the operating cost ofa shop - the income from sales needs to not only cover the wholesale cost of the goods, but also the shop itself. Right now, maintenance costs for houses and vendors are all but negligible compared to what even small-time merchants can rake in.
Perhapsdifferent "tiers" of vendors and shops, with varying maintenance costs, but also varying ability to sell at high volumes? For example, a low-tier shop might only hold or sell a small number of items per day/week, but cost very little to run - perfect for a novice merchant who's just starting out and doesn't have high sales volumes. A high-tier shop can hold a huge inventory, but it only pays for itself if that inventory moves at a brisk rate.
[Snip]
Message Edited by p4Samwise on 06-17-2004 06:44 PM
Nice idea, nice counter option to my secure loan idea I posted just today... Since the other risk most RL merchants have to take is their loans to secure their stock this would add that needed financial risk into the business of being a merchant.
My god after all those disagreements i am actually agreeing with you... 
Songe
Fri Jun 18, 2004 11:15 am
#7
The difference is that in RL merchants make much more money than in the game. Here, I don't think many crafters will want merchants to sell their items for more than 30% above their price, or they will just not sell, or the crafters won't get much money for their wares. Even 30% seems a bit much, when in RL merchants gets way more than 30%. If there was a bigger risk, would it be worth it for the merchants to just resell goods for a mere 20%? I don't think so. Also, we need to encourage merchants to work with crafters, not discourage them.
p4Samwise
Fri Jun 18, 2004 11:41 am
#8
That's a matter of providing incentives to sell via a merchant. Suppose, for example, that a Business III vendor can only move 10k credits worth of merchandise in a day. Sure, the crafter could sell 10k per day... or he could sell 1mil per day, let the merchant take 30% off the top, and still net a nice 700k per day. 700k > 10k.
Now, why doesn't the crafter dabble in Merchant and set up his own jumbo vendor? Glad you asked. Because the more diverse the store's stock, the better able it is to weather peaks and valleys in demand for different types of goods. A crafter who sells only his own goods, rather than devoting himself to acquiring diverse stock and adapting to the market, isn't going to reliably move everything off those vendors, and they won't always pay for themselves. Suddenly, the 30% fee paid to the merchant seems worthwhile, because the merchant is the one who has to worry about keeping the shop profitable and minimizing the financial risk - all the crafter has to do is deliver the goods.
Of course, the numbers on vendors can be tweaked to any degree to balance it out, just like a combat system - cost of vendor vs. amount of money it's possible to make with that vendor vs. level of skill needed to operate it. Eventually, a happy medium could be worked out that would make dealing with a merchant the most attractive option for a crafter, and make the actual operation of running a shop challenging but lucrative for the merchant.
This, to me, sounds like a much more fun economic game than the current system. 
Songe
Fri Jun 18, 2004 1:13 pm
#9
Yeah I agree. But you won't find any merchant to bother reselling good if all they get is 2% of the sales. They need to make money too.
p4Samwise
Fri Jun 18, 2004 1:50 pm
#10
Again, I think risk/reward really needs to be examined when/if the new merchant system is designed. It's a large part of what makes a game fun, especially an economically-based one. (The allure of the risk/reward correlation can be seen in Vegas, where people play risk/reward even though the risk actually outweighs reward, simply because it's fun to do so!) The merchants who are making the most money should be the ones who have put a lot on the line to do so. Under the current system, it seems like the largest sources of income are generic, low-risk commodoties like power.
Mkappus
Fri Jun 18, 2004 2:20 pm
#11
Songe,
How can you say we make no money at 2%? Someone puts upa million worth of goods on your vendor for consignment, you get 20,000 credits for doing next to nothing. I agree if I pre-pay for something and have to take the risk I like for 25-30% profit. I buy resources for 1.5cpu and resell for 2.0 cpu since I have the risk of not selling them for a long time, and I need to be compensated for the opportunity cost of the money I have tied up in them. But with consignment there is none of that.
I imagine that vendors post fix will have multi-million dollars in inventory, and hopefully be doing more than a million a day in business. How much does a house and vendor cost you per day, maybe 2500 credits? 4000 at most if you have a large house? If you have 5 or 6 vendors running, and sell 5 million in goods across all of them that is 100k per day in consignment fees, and at most 25k in costs. 75k per day in profit is awfully nice. Houses don't decay, vendors don't decay, so there is nothin we have to do but put in the maintenance and we have a cash machine of 75k per day with no work.
Message Edited by Mkappus on 06-18-2004 03:25 PM
Songe
Fri Jun 18, 2004 4:20 pm
#12
Most merchants don't make 2 million of sales every day. If they only get 20k off that, for the points invested they would be better off taking some combat skills and run one mission to get the same money, without having to bother with the responsibility of selling other people's stuff and having to'waste' one vendor to get 20k a day. It's the main problem : if we want merchants to bother selling other people's things, it must be worth it. The more risk you put in the equation, the more likely people will take an easier way of getting money than selling other people's stuff.
For people who are saying that there should be a risk - why? No profession at all runs any kind of risk when they are just trying to make money. There is no risk at all running 30k missions on Dantooine. Why should merchants have to take risks to earn their money?
p4Samwise
Fri Jun 18, 2004 6:04 pm
#13
So because the combat classes have a boring game (grinding quenker missions... woo fun!), you want to make sure you have one too?
The combat classes still do have a bit of risk/reward going on. Consider that to go and run missions for lots o' cash, you'll probably want:
- Buffs.
- Armor.
- A good weapon.
- A vehicle.
- Round-trip shuttle fare to the adventure planet of your choice.
If you die during the course of running missions, you'll most likely need to fly back to a populated world (shuttle fare) and get more buffs (probably not free). There's also the issue of maintaining weapons, armor, vehicles, and whatnot. All of these costs are paid in advance of getting the payoff, and if things go poorly, money can be lost on an outing instead of gained.
Of course, some characters run very little risk of dying, but that's why we're having a combat revamp, I suspect.
Now, Songe, I think your concerns come from the worry that crafters will only be willing to give up 1-2% of their sales for consignment. Dispense with that worry - it's not possible to objectively evaluate an idea of you do it under an artificial restriction like that.
I propose that if large-scale retail has risk that takes some actual effort to mitigate, merchants willset their prices accordingly, and crafters will pay them, much like combat classes pay crafters the big bucks for good equipment (because there's a lot of effort and risk involved in chasing resource spawns, investing in harvesters and factories, and whatnot, and it's easier to shell out 10k for a gun,which is probably a 100x markup over the rawresource cost,than it is to set up an alt and craft it yourself).
In other words, give merchants a game to play. Give them a job to do. Give them the tools to do it well and have fun doing it. Other people will then be happy to pay them a reasonable price for their time.
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