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Thursday, 15 August 2013

Price blocks

I see this quite often in slow moving, low priced but high margin items.

Someone will put a block of 30 or more items to sell where the normal sales per week are only say 4 items.  The price of the order itself will be reasonable.

 
 



This has a number of effects.

  • Firstly, everyone priced above that block sell order must either price below or wait several weeks before their sell order has a chance of being filled – therefore, everyone else is likely to re-price lower the moment they notice and indeed be in a rush to head for the exit.

  • Secondly, the supply has suddenly shot materially above demand which will put downward pressure on the price anyway.

I am never quite sure what the intention of the seller is in this case though a possible strategy may be to drive the other competitors out of the market and so keep this market to themselves.

Personally, i suspect they have seen the very high margins and just shipped in a block and plan to leave it there until it sells without taking a look at the volume of sales per day.  It is when they notice the sales are not coming in and the other competitors are undercutting as fast as they can when things start to get messy and the price heads towards cost very quickly.

an example of where this has happened is nicely shown below:

 
 
 


when I started in May 2013 this was a good earner, now it has collapsed to zero profits following a high volume sell order.  In time, the sell order will clear and the price will normalise - but for now it is likely to remain at these levels, perhaps rising to 1.2m ISK in a week and then staying there for a couple of weeks or so.

the one below will, though I fear, take longer to clear given the large sell order at the current price.

 
 
 
 

2 comments:

  1. I've seen things like this happen fairly often. There's been three times now that after careful consideration I decided to buy out the competition and reset the price to it's formerly profitable level. So far its worked but I have to admit that it's a risky move. It can cause someone to think "hey, all that stuff sold fast, I'll do that again."

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    1. myself also - unless I know the market of that item very well or if I can find another buyer quickly (I often see items in one trade hub very low and normal buyers sitting in another trade hub) then I tend to leave these also and let them sort themselves out.

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