Warehouse

[infoscott]

Sorry for the thread necro, but I see two issues here that do not seem to be addressed by this or other threads.

1) Is branding exclusively a retail function? IIRC buying product from the AI requires private label unit for your brand to apply, but not sure the reverse is also true? If the reverse is true, it's not so much to help the AI "find" your product, but that his retail stores would perpetuate your brand identify and not his, unless he in turn private labels your product. My guess is that the AI gets private labelling for "free" and wholesale branding is a waste of money.

2) Regarding margins, implied, but not adressed. Typical in the real world is for wholesaling to enjoy a range of after tax profit between 0.5% and 10%, depending on the maturity of the market. Retail can get a gross margin of 45% - 65%, but more like 5% - 12% after operating expenses and taxes. That would probably equate to more like 10% - 25% in this sim world. Williet4038 should have lowered his warehouses prices and passed on the margins to his retail. Then his retail could conduct an advertising campaign where the expense would be applied to the appropriate P&L statements.

[azxcvbnm321]

No, when the AI buys products from you, it clearly shows that it is your product they are selling. Yes, I've had AI advertise my products giving my products free branding before.

To me, it really doesn't matter where profits and expenses are realized in my firm, as long as I know where they are coming from. I sometimes lower my warehouse prices to that of cost including shipping, but it's all just for accounting and information purposes.

[counting]

1) Is branding exclusively a retail function? IIRC buying product from the AI requires private label unit for your brand to apply, but not sure the reverse is also true? If the reverse is true, it's not so much to help the AI "find" your product, but that his retail stores would perpetuate your brand identify and not his, unless he in turn private labels your product. My guess is that the AI gets private labelling for "free" and wholesale branding is a waste of money.

No, AI doesn't have "free" labeling, it has exactly what human player has. And labeling some other AI's better quality goods with your better brand rating, and selling to a third party at a higher price due to higher overall rating, could be a profitable business like a true wholesaler. It could be done via corporate/ranged brand, even unique brand if you own enough media firm to not care about advertisement expenses. However, it's going to be quite intense, since you would have to constantly watching price and quality of upstream goods, and examine downstream sales volume, and find new source if necessary, even more exhausted than pure retailing.

2) Regarding margins, implied, but not adressed. Typical in the real world is for wholesaling to enjoy a range of after tax profit between 0.5% and 10%, depending on the maturity of the market. Retail can get a gross margin of 45% - 65%, but more like 5% - 12% after operating expenses and taxes. That would probably equate to more like 10% - 25% in this sim world. Williet4038 should have lowered his warehouses prices and passed on the margins to his retail. Then his retail could conduct an advertising campaign where the expense would be applied to the appropriate P&L statements.

This is the problem of contract in real life, where there's are auction market for wholesalers acting as medium in between for small upstream sellers where they don't have scale, hence are forced to accept the bargaining price and power of wholesalers. This is quite difficult for this to be represented in game since we don't have hundreds/thousands of producers like in real life. However players in game can actually uses a exhausted method to force downstream AI's to buy from you, if you are able to buyout all the goods on every upstream source, artificially create shortage, thus making your source the only viable source afterward, you don't even need to have better brand, just create demand by reducing the amount of goods circulated (a lot like in real life though, where wholesalers really could stockpile to create shortage, and there are laws to regulate this kind of behaviors).

Another function of wholesalers in real life is the information and quality control of goods, where retailers couldn't gather with reasonable cost (and the real trade secrete for wholesalers), and another part of the contract where's good's quality are generally guaranteed and held reliable as wholesalers. However, this is not the case in game, since everyone can get information for free, and no need to test goods' quality, even dealing with customer services for faulty/bad products. There are lots of the aspect in supply chain where the game mechanics simply doesn't included yet, like the packing freight price due to transportation, or even futures' market. Perhaps you could suggested some idea of which mechanics you see fit can be included in the transportation expansion pack as well.

[infoscott]

Re: Freight rates

I had thought about suggesting different freight rates depending on the size of the shipping and receiving firms. In real life when you get to a certain scale you can avoid high common carrier charges (Fedex, UPS) and go with direct truck freight (usually LTL carrier; Less Than full Load, i.e., boxes on pallets). If CapLab were to implement that, it would be like lower freight to retail above 2x2 foot print from factories/warehouses at Level 5 or higher. So Apparel shops would not be eligible but the Megastores would. Factories to warehouses would get it automatically since they usually have pallet jacks and forklifts.

But after thinking about it for awhile, I'm not sure that level of detail adds value to the game. There are some things like freight rates that are probably left better abstracted away, and just left as a more or less linear function of distance.

The fact that people can decide whether to report profits at the wholesale or retail level is great! After going through more posts, I found some players who keep most margin at retail in order to weather business cycle fluctuations. I think this practice is exactly right when you're trying to mirror real life conditions.

[counting]

Freight is quite a complex matter with lots of history, regional dependency, and content-oriented. And they played by very different rules with different basic types, via trucking, rails, shipping, or air. Hence indeed we will need an expansion pack with in-depth mechanics if we want to address the issue of freight more realistic. I've proposed a freight mechanics to integrate freight (actually just trucking part) with freight company as its core, so it would fall within the same mechanic like current "product price competition" for freight cost. But I think we'll have to want a bit longer after the city simulation expansion.

As to whether to report profit in retails or manufacturing, or even in warehouses (if player's corporation is integrated vertically), it doesn't really matter much as profit goes, but only with different revenue. This is quite flexible for players to choose, however is something that can be used as an exploit to artificially "bloated" non-existence revenue.

[infoscott]

Well, my first concern with a freight expansion pack would that it turns Capitalism into a multi-modal Railroad Tycoon. Not that this is a bad thing in general, just not sure it would well serve the CapLab community.

My second concern is one of the cities usually being on different continents. Continental truck/rail is best left as an abstraction, but intercontinental air/sea cargo is a good place to start. Right now it seems that goods travel overseas more or less instantaneously, while in the real world having a global supply chain usually means trying up a lot of capital in the form of product in a status of "in transit". If the default were to be transport by ship, then "standard" rates would apply but there should be a several weeks delay until the product shows up. If a player wanted the option to pay a hefty premium for expedited freight, it would go by air and arrive to a bonded warehouse in just a few days and ready for resale.

As for a trucking company, I kind of see it similar to a media company. At the transportation firm level, a player can set a slider for "logistics development" similar to "content development" that offers better rates (or margins) and faster transit times to either the locals, AI players, or the game players. To engage a third party logistics company may also require a square in the 3x3 layout similar to the Advertisement square to negotiate special contracts with a shipper, or perhaps a global setting in a new Logistics module at Headquarters?

[counting]

Well, my first concern with a freight expansion pack would that it turns Capitalism into a multi-modal Railroad Tycoon. Not that this is a bad thing in general, just not sure it would well serve the CapLab community.

My second concern is one of the cities usually being on different continents. Continental truck/rail is best left as an abstraction, but intercontinental air/sea cargo is a good place to start. Right now it seems that goods travel overseas more or less instantaneously, while in the real world having a global supply chain usually means trying up a lot of capital in the form of product in a status of "in transit". If the default were to be transport by ship, then "standard" rates would apply but there should be a several weeks delay until the product shows up. If a player wanted the option to pay a hefty premium for expedited freight, it would go by air and arrive to a bonded warehouse in just a few days and ready for resale.

As for a trucking company, I kind of see it similar to a media company. At the transportation firm level, a player can set a slider for "logistics development" similar to "content development" that offers better rates (or margins) and faster transit times to either the locals, AI players, or the game players. To engage a third party logistics company may also require a square in the 3x3 layout similar to the Advertisement square to negotiate special contracts with a shipper, or perhaps a global setting in a new Logistics module at Headquarters?

This is my proposal of trucking company mechanism, you could evaluate it yourself.
http://www.capitalismlab.com/forum/view ... =35&t=1836
The intercontinental transportation, i.e. via rails or ships, or airplanes are still quite abstract, you could add different mechanics on top of it.

And the thing about expansion pack, is that it's separated with the main game, so people don't like the new mechanism could still play the core game without it.