In any open financial market, you probably know that price is merely a byproduct of two polarized principles.
As you probably learned in grade school, the greater the supply of any given product, the less expensive it becomes. This is because if nobody is asking to buy it, suppliers will be left holding on to them.
The opposite is true when demand in a product rises. Greater demand leads to fewer products being available, which creates scarcity. This increases the perceived value of the product and increases the asking price.
In order to understand both the general implication and specific effects inventory has on the price of any product, you must look at the market’s liquidity. The healthiest, and most perfectly priced, markets possess a larger percentage of liquidity.
Liquidity is measured by the overall amount of activity in a market.
Dissecting this further, if many people want to supply and purchase one product, liquidity would be higher, and the price for that product would be widely agreed upon by all those involved. This makes sense when you consider how competition plays a role in such a market.
Why Does This Matter?
I didn’t intend to give you an elementary school Finance lecture in this article. Instead, I wanted to provide this metaphor and shine a brighter light on our very own supply of auto parts.
If you apply the above principles to our over 10 million auto parts in stock, you are left with a healthy and competitive market (a PartsMarket to be exact).
In other words, our parts end up being competitively priced.
PartsMarket customers also benefit from choice. Here are a few examples:
- Tony is shopping for a used engine. He can pay a higher price for one that has 30K miles of use or less for one with 120K miles.
- Alexandra needs a transmission. She learns that she can buy used, OEM, or reman. These different options yield different prices that will match her budget and price point.
- Doug knows he could find an ABS Unit in many different places. However, when he finds out PartsMarket sells such a high volume of parts, he realizes he will benefit from the lesser priced options caused by the increase of supply in PartsMarket’s inventory
In each of these examples, the customers will save themselves time and money shopping where they know the supply is higher.
Any time you are looking for the best price and the widest selection on a product, search for the vendors that have the most supply. You’ll end up benefiting in more ways than you even consider today.