Case analysis: Mollie Used Books Store(physical) TAAZE Used
Books Store(online) Group members: Managerial Economics Issue -
Used Books Market 101205020 101205065 100205030 100702049
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Agenda 1.Introduction 2.(a)Scale of used books market in Taiwan
(b)What kind of groups would buy used books? 3.Analysis of used
books market 4.Pricing strategy (a) Mollie Used Books Store(
)(physical) (b) TAAZE Used Books Store( )(online) 5.Conclusion
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Introduction In Taipei, there are more than half of used book
stores located in area, which near some universities, NTU,
NTNU...etc. Students can buy used textbooks and other used books in
this region. However, in recent years, physical used book stores
are affected by gradually rise of online used book stores, and we
want to find how online used book stores affect physical stores and
further investigate their pricing policy.
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What kind of groups would buy used books? Factors: 1.Price
Elasticity 2.Income Elasticity 3.Other Factors
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Price Elasticity 1.People who are sensitive to price They are
elastic. Compare to new books, used books are much cheaper. Higher
expenditure on used books than new books. EX. Students who dont
really care about whether books are new or not, or maybe they just
use books for one semester, so they care much about the price.
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Price Elasticity 2.People who are not sensitive to price They
are inelastic. Compare to new books, used books are much cheaper.
They dont really care about the price. Fewer expenditure on used
books. EX. Book collectors, who care much about books quality, and
they hope books that are clean and not damaged, so they are willing
to pay more and buy new books instead of used books.
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Income Elasticity If we define new books are normal goods, used
books are relative inferior...... 1.People who have more income
because used books are inferior good demand for used books would be
lower fewer expenditure on used books more expenditure on new
books
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Income Elasticity 2.People who have less income because used
books are inferior good demand for used books would be higher
higher expenditure on used books EX. Students who do not have
regular salary now, their income resource maybe just pocket money
from their parents, so they are more likely to choose to buy used
books which cost them less.
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Other Factors 1.Cultural and social factor environmental
protection, reduce to chop down trees and recently, there are lots
of environmental protection groups that promote the concept of
recycling. EX. In many universities, take NCCU for example, to
promote the concept of recycling used books, if there is any book
that you dont need or read anymore, just take them to the library
and you can get a dessert by one book you donated. 2.Mental factor
past experience, individual preference 3.Cost factor time cost,
transportation fee
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The market scale of used book Domestic market(Taiwan) The scale
of domestic book market is about 25 billions, compares to foreign
second-hand books accounted for 10% or more, Taiwan should have 3.0
billion second-hand book business opportunities, but have not yet
met.-the reason why TAAZE established,2010.
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How does TAAZE operate? 1.The website:
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How does TAAZE operate? 2.The price policy: The price of book
decided by the sellers themselves, but charge a 35% management
fee.
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How does TAAZE operate? 3.The market demand and supply Through
the convenience of the Internet, which gathers the majority of
buyers and sellers. There is more complete books on all kinds of
books to fit more diverse individual preferences. Therefore, the
cost of seeking, selling second-hand books becomes lower.
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How does TAAZE operate? 4.Price analysis Seller may own
pricing, indirectly deprive of consumer surplus, but there will be
other sellers of lower prices, rendering more transparent prices
for both buyers and sellers. For the buyer this market just as the
auction market. 5.The main cost Warehousing, website management,
and freight.
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How does TAAZE operate? 6.In cooperation with the new book
industry, second-hand books try to attract demand preference for
those books (other than the high price elasticity of demand of
student in textbook market), if the price of second-hand books and
discounted new books is almost the same, then these consumers will
turn to purchasing this new book selection.
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Analysis of Used Books Market A. Mollie Used Books Store B.
TAAZE Used Books Store C. Main difference D. Analysis
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Mollie Used Books Store I Feature The store owner used the same
business philosophy as convenience store to manage Mollie Used Book
Store. Mollie Used Books Store is a physical used book store, which
provides not only physical books but also a clean and comfortable
place to customers. Some branches even offer meals.
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Mollie Used Books Store II Price Mollie purchases books at
0.1-1 % original price and sells books at roughly 50-70 % original
price. Products Mollie cleans the used books first and display them
on the shelf. It makes the products accessible and touchable for
buyers.
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TAAZE Used Books Store I Feature TAAZE Used Books Store is an
online used book store which provides an online trading platform to
both seller and buyer. TAAZE even has an app which offers the
members to check their transactions.
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TAAZE Used Books Store II Price TAAZE allows sellers to set the
price. Products TAAZE shows their products appearances by
video.
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Main Differences Asymmetric Information Books of Mollie are
accessible, providing more information to buyers. Books of TAAZE
are untouchable and can only be seen on the screen, providing less
information to buyers. Pricing Mollie purchases at a relatively low
price from customers. TAAZE allows members to set the price.
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Pricing Strategy A. Mollie Used Books Store B. TAAZE Used Books
Store C. Comparison
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Pricing strategy- (a) Mollie Used Books Store( )(physical)
Imagine that you are going to sell or to buy second hand book, what
the price you should pay? The used book store, Mollie would charge
you the second hand books from 30% of the price to nearly 60%. And
if sell, you can only get 0.1% to 30%, which depends on the
popularity of the books.
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Pricing strategy- (b) TAAZE Used Books Store( )(online) You can
set the price at will(Maximum is 70%), but the 35% of the price
will be charged by TAAZE as some kind of management fee. To buy
second hand books, you can get a list of prices which provided by
the book seller. Just like a auction market, the price is more
transparent, and this business model is both beneficial to sellers
and buyers.
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Comparison of the pricing policy Mollie physical used bookstore
TAAZE online Used Books Store Purchase price 10%~20% of the
original pricePrice at will set by book seller (Max:70% of the
original price) Selling price 40%~50% of the original price The
analysis of the pricing policy Restricted to booksellers price,
even the highest- selling book, the purchase price is only 30%,
resulting in unstable supply of second-hand books. Seller may set
pricing, indirectly acquire consumer surplus, but there will be
other sellers providing lower prices, rendering more transparent
prices for buyers. For the buyer this market just as the auction
market. Main cost Personnel costs High store rent Warehousing,
website management, freight
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Conclusion The cost behind the price The price always reflect
on the main cost. Q:How can Mollie physical used bookstore lower
its cost Store cost: Merge small stores into a bigger store(joint
cost) The cost of warehousing: Focus on certain specific popular
books instead of college textbooks(incentive for higher profit also
can reduce huge warehousing cost) Loss opportunity on the book
lover: Since they are lower price elasticity to books. They don
even care much about the price, if the price of second hand book
are relative to the new ones, they are willing to pay more to get
them. Therefore, corporate with a new book store may be a good
idea.