Lessons in Purchasing Economies from Costco, JD and Pinduoduo (142)
This week’s podcast is about economies of scale in purchasing power. I go through Walmart and Costco as traditional examples. And point to JD, Apple, and Pinduoduo as digital examples.You can listen to this podcast here, which has the slides and graphics mentioned. Also available at iTunes and Google Podcasts.Here are types of economies of scale.CA11: Fixed Operating and Capital CostsCA12: Purchasing Economies and Bargaining Power with SuppliersLarger companies can demand cheaper prices and/or better terms from suppliers than their smaller competitors. This is about bargaining power for important and/or sizeable inputsCA13: Geographic and Distribution DensityCA14: Geometry EffectCA15: Learning ScaleCases of purchasing economiesNewsfeed of offers plus C2M results in purchasing economies. Pinduoduo.Privileged technology access by ApplePurchasing economies. This was JD's biggest lever.Platform business models power over suppliers.——-Related articles:Why I Really Like Amazon’s Strategy, Despite the Crap Consumer Experience (US-Asia Tech Strategy – Daily Article)3 Big Questions for GoTo (Gojek + Tokopedia) Going Forward (2 of 2)(Winning Tech Strategy – Daily Article)Why Netflix and Amazon Prime Don’t Have Long-Term Power. (2 of 2) (US-Asia Tech Strategy – Daily Article)From the Concept Library, concepts for this article are:Competitive Advantage: Purchasing Economies and Bargaining Power with SuppliersFrom the Company Library, companies for this article are:JDPinduoduoWalmartCostco----------I write, speak and consult about digital strategy and transformation.This content (articles, podcasts, website info) is not investment, legal or tax advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. This is not investment advice. Investing is risky. Do your own research.Support the show