Sim Companies - Entering Electronics

V.G.V CO

V.G.V CO was one of the first companies entering the electronics market after it was introduced back in September 2017. The company quickly grew and became the major supplier of electronic devices. To this date, V.G.V CO remains by far the largest retail seller. We bring you this interview so you can read his thought on how to enter, what you need to enter and if electronics market is right for your company.

Interview

SIM COMPANIES
Why did you decide to enter the electronics market?

V.G.V CO
New market, new opportunities, new dificulties, to be the one of early explorers of that market.

SIM COMPANIES
What was most surprising thing you realized after entering, whas there anything you did not expect to see?

V.G.V CO
The first thing that I produced was a laptop. And I thought it was the most profitable, unit production cost was $580 surprisingly, and I sell them for $1,400 (which was $1,250 net profit from sore). But after 2-3 days I saw that something was wrong with the unit production cost, cause money did not grow as they should with that kind of profit. So I calculated it myself and saw that unit laptop produciton cost was incorrectly reported in the warehouse.

SIM COMPANIES
Yes, I remember, there was an early, temporary, issue with recently introduced resources.

V.G.V CO
Thanks to the fast response of the developers, that issue was solved very fast.

SIM COMPANIES
Glad you found the response fast. How much cash did you have to start with?

V.G.V CO
I've destroyed everything that I had, and my cash was $330,000 at that time.

SIM COMPANIES
I find it a bit low, what do you think is a good cash reserve to enter. I know other players that consider entering are wondering.

V.G.V CO
Here was the tricky part, I understand that alone producing and selling all the stuff will be difficult, not too difficult but time consuming, so I decided to be final product maker and seller, while the resource supplier was FURIA. So I did not bother with resource making, just thought about making components, batteries, CPUs and dislays, and final products. I started building just electronic stores and e-factories.

SIM COMPANIES
How many electronics factories and retail stores do you have?

V.G.V CO
Now I have 5 e-factories (1x lvl 4, 3x lvl 3 and 1x lvl 2, 5x store lvl 7, and one physics Laboratory lvl 2. FURIA is a good supplier and we both rely on each other now.

SIM COMPANIES
Cool! So you buy the input resources like Silicon and Chemicals from a 3rd party.

V.G.V CO
Yes

SIM COMPANIES
How many electronics stores for each electronics factory do you think it's best?

V.G.V CO
It depends if you're producing all the staff yourself, or like me, buying from 3rd party, you need at least one lvl 2 store for one e-factory Anyway, if you want good profit in short time, don't hesitate, and upgrade your stores.

SIM COMPANIES
So, probably, lvl3 store to a lvl1 electronics factory?

V.G.V CO
No, in my case I'm producing final product much faster than if I produced everything from zero. So lvl1 or lvl2, but as I said, upgrade the stores, don't think about the money that you spend on it, they bring it back fast :)

SIM COMPANIES
Makes sense, which devices do you recommend to start with and which are bringing the most profit?

V.G.V CO
Again, 2 possible approaches. If you're all-in-all producer and you already have refinery, start from monitors, unit cost will be approx. $520-$560, and you can sell the quickly in stores for $700. The production time is the lowest.

But if you are the seller and final product maker, I recommend you to start with the smartphones, and switch to tablets from time to time, for not ruining the market.

SIM COMPANIES
What do you mean by ruining the market?

V.G.V CO
I mean if you sell too many smartphones, the demand will get lower, and after that the selling time will grow and the net profit will get very low.

To avoid that, just switch to tablets and than to phones, and so on.

SIM COMPANIES
Thanks for clarifying, it's good to have alternative so you can react to shifting retail demand. Do you invest in SW research?

V.G.V CO
Yeah, a lot.

Now I'm producing Q2 phones and tablets, and thinking about Q3s, it returns cause I checked a couple of days ago. When I want to sell phones for $800, net profit with Q0 was $673, with Q2 it's $703.

But don't go too hard on the research in the beginning. Try to get good profit daily and invest part of it, for example 10%, into the research.

SIM COMPANIES
This is great to know. So people really pay more for higher quality?

V.G.V CO
Yeah, and sorry I forgot, they are selling faster too.

SIM COMPANIES
I have one last question: Would you do it again? Do you recommend entering the electronics market?

V.G.V CO
Yeah I'll do it again, but with a partner like FURIA, try to find someone who wants to enter too and decide, which one of you will produce resources, and which one of you the final product. I assure you, both are good and you both will grow up faster than if you decide to enter the market on your own. I encourage everyone to enter the market.

SIM COMPANIES
Thank you very much for the interview. I am sure players will find this information interesting when deciding how to enter.

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by Patrik Beck
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