vs. Rdio
Spotify
Switching costs and scale terms with labels
- What it did
- Churn fell as Spotify programmed 31% of listening (2017)
- Rdio
- Losing about $2M a month on thin label margins
Purchasing power
What is Purchasing power?
Volume can improve supplier terms.
How Purchasing power works
Measure net landed cost after inventory, financing and commitments. Supplier discounts only establish a barrier if an economically viable smaller buyer cannot reproduce the same net terms.
How companies won with Purchasing power
From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.
Also tagged: Global-e
The question to ask of a company
Are discounts greater than the extra costs of buying at scale, and can a smaller rival match them through a buying consortium?
Who names it
| Author | What they call it / where it appears |
|---|---|
| Neumann | A Taxonomy of Moats — Purchasing power |
Note. The diagnostic and scenario are Strategy Canon’s analytical application. Test the firm’s benefit and exclusion mechanism separately; this category alone does not establish Power.