What would it take to set up a weapons & armor shop?
Let's look at the unit economics.
For instance the Paris Sabre is sold by Yasutsuna Corp for 11615.94 credits. A bit of social skills, reputation and haggling might give me up to 16% discount, so I might pay "only" 9757 credits.
If I sell the exact same item to most of the vendors, I get only 378 credits. This is 30% of the official price of 1260 credits as determined by the Froody's interstellar rating agency.
With the same kind of discount as when buying (applied again in my favor), I actually get payed 438 credits, but that's still not stellar for such a decent weapon.
Heck, the ratio between those prices is 22. That's a great margin if you manage to buy at the lower, and sell at the higher price. Even if there are storage costs, shipment, taxes, rent for the shop and employees to be payed, a unit margin of 22x is fantastic.
Surely there's a way to disrupt that industry? Take a smaller margin, offer better conditions to both buyers and sellers, and make up in volume what you lose in margin?
There is, but it's not straight forward.
The key is that there are other sources for weapons and armors, and some prolific adventurers have obtained quite the stores full of items. I, for instance, have 55 copies of the Paris Sabre in my various storage lockers.
If somebody offered to buy them for a more reasonable price than the 438 credits I get now -- say, 80% of the nominal price -- , I'd happily sell, say, three quarters of my stock.
When the retailer sells his goods through the Public Market, he pays a 10% fee, so now we're at 90% of the nominal price. Everything above that is profit for the retailer.
(This is somewhat simplified math, because the 10% apply to the selling price, not to the nominal price. I want to give a broad overview, not make a detailed business plan).
If the retailer manages to sell equipment at 150% of the nominal price, they roughly make 70% of the nominal price as margin.
From the retailer's perspective, here are the challenges:
- You need to know what to put on the market so that it gets sold fast.
- If it doesn't get sold fast, you are either blocked from selling other items, or lose the 10% market fee for good.
- Offering just one item at a time really hurts the throughput; offering multiple items quickly costs considerable amounts of bonds.
- You need to have a pretty good selection of gear to sell so that you can fulfill market demands, which means you need to keep a good inventory.
- Inventory size is limited by storage locker size.
- You need to be close to your inventory, ideally on the same station, otherwise travel and/or shipment costs will eat you alive. This is in conflict with potential travel plans for exploration, syndicate campaigns or picking up University courses.
- If you want to buy and sell epic items as well as regular items, you need a way to price them, even though the trading volume is too low for the market to establish reliable prices.
If you manage to deal with all these challenges, I'll be happy to sell you lots of equipment to kickstart your shop :-).