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 Costs
CA12: Purchasing Economies and Bargaining Power with Suppliers
- Larger 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 inputs
CA13: Geographic and Distribution Density
CA14: Geometry Effect
CA15: Learning Scale

Cases of purchasing economies

Newsfeed of offers plus C2M results in purchasing economies. Pinduoduo.
Privileged technology access by Apple
Purchasing economies. This was JD's biggest lever.
Platform business models power over suppliers.

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Related articles:

From the Concept Library, concepts for this article are:

Competitive Advantage: Purchasing Economies and Bargaining Power with Suppliers

From the Company Library, companies for this article are:

JD
Pinduoduo
Walmart
Costco

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Lessons in Purchasing Economies from Costco, JD and Pinduoduo (142)