Have you ever heard of Bewakoof.com? if not go and find out. They make t-shirts, mobile cases, bags, slippers, badges and a lot of stuff. But you want to know what’s the economics that they apply to market their product. Let’s find out.
Bewakoof.com has various designs but they make a various product with the same design. This is called using the same resources to produce various products. This is known as Economies of Scope.
Economies of scope occur when product share common inputs and diversification leads to cost savings. Taking the case of Bewakoof.com we can see them applying the same design(input) to produce a wide range of products.
When they apply Economies of scope they reduce their average fixed cost(AFC) which in turn reduce the average cost(AC) of the product. So a design or a template is their fixed cost which is used in various SKUs to reduce their cost. The cost of designing a new design is usually high. This is a very cost effective method and in turn, provides a higher profit margin.
Most products at Bewakoof.com is between ₹200 to ₹1000 which is very much affordable for the targeted audience i.e. the youth. Their design is trendy and edgy which is preferred by most Youth these days. They are using this to their advantage to make maximum sales and by applying Economies of Scope they are reducing their cost and increasing their profit.
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