When Insider was launched the wholesale pricing indicated about 30-35% margin for retailers.
I am now trying to work out how this can succeed. Will still be competing against ALM, ILG, Paramount, eBev, Bidfood, Motus, NOC etc.
Big brands such as Diageo would have a list price less X percentage discount for the various wholesalers they supply. Depending on the volume they would adjust the percentage discount/rebates accordingly. So ALM, ILG, Paramount etc that buy & hold stock may have varying pricing. The wholesalers add their mark up & on sell the products. Dan Murphy's would be on say list price less 35% so they can make 35%. The wholesalers must be on a larger discount such as 50% so they can on sell for list less 35% & make 15% or so.
Diageo can list products on Kaddy for list price less 35-50% on Kaddy but will then be competing directly with the wholesalers. Diageo can make the same margin or an extra 15% margin at the expense of using wholesalers. But the wholesalers have the buyer network. When Kaddy has the buyer network Diageo may consider going direct to market & cutting out wholesalers by selling for list less 35%.
Paramount will have to continue buying via Diageo to maintain big brand supply to their buyers. If Diageo wants 15% higher margins they can reduce discount structure to Paramount from list less 50% to list less 35%. By the time Paramount add their 15% margin they will be selling at list price less 20% making them not competitive.
It's the big brands that can sway this into Kaddy's favour. The numbers indicate extra margin would be possible for Diageo. Paramount would eventually have decreased revenues as items will be cheaper to buy from Diageo via Kaddy.
It usually how disruption occurs. We'll have to wait & see.
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