It has been few days without a single post but the last week seems to have run away too fast. I tried to help my potential customers by offering a much lower price than my competitors, but the suppliers have crippled my approach.
After speaking with the suppliers, I realised that price can’t be low, unless off course I run the business as a non-profit, which I can’t afford at the moment.
The only way to get the price down is if I buy the machinery outright. But apart from the fact that it’s too expensive, it’s a specialty item that not many people require. So, it will be hard to resell it in the future (that is if let’s say my business goes to hell and I need to sell off assets). It will be very hard to even accomodate the massive thing, let alone the overheads related with it.
So, after days of turmoil, research and negotiation, it hit me that there are too many big players in the market who are bulk ordering to keep young businesses (like mine) out of business.
These big businesses started off by outsourcing operations to China. They then kept losing money for a while since it costs a lot if you only order 2-3 products a week from suppliers. But big companies could afford to lose money. Once they got their customer base, it was like Christmas since they bulk offered and saved tonnes of money.
So now suppliers only want to deal with people who are going to bulk order and everyone else they charge a price that is mind numbing.
But it was a business lesson well learnt. Do not try to enter a market that is under domination by massive companies, unless you can substantially provide a better featured product. Competing only on price is going to put you in the category of the 99% start-ups that fail.
However, this only means that I will have to make a slight change of direction towards another industry. It is absolutely fascinating how many times we start over again, if we really want to achieve something.