Question: To calculate cannibalization: The case says that it will be between 10-20% cannibalization. That means each different retailer they currently have will lose that amount
To calculate cannibalization:
The case says that it will be between 10-20% cannibalization. That means each different retailer they currently have will lose that amount of sales if the company sells online. Use 15% to make it easy.
Other important numbers.
860,000 total sold
$30.64.average price per pair.
I believe, there is data in the case about what percentage of total sales goes through certain types of retailers. The total is given on Blackboard, the average price, and the % of cannibalization.
Total units x avg price = total sales volume in dollar terms
Cannibalization total = 15% x total sales volume
The major partner stores have some % and then all the small retailers have the rest.
Major partner stores % x cannibalized total = amount major partners lose
Small retailer stores % x cannibalized total = amount small retailers lose.
Small retailer loss + major partner stores loss = total cannibalized
Who is the biggest loser? Who can actually continue in business with that loss?
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