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When is it okay to compete on price?
I work for a sub-trade, and recently found out that we pay a ridiculous amount for some of the supplies we use every day. Upon seeing some invoices I quickly checked Alibaba and found that one of the products has a 1,500% (give or take) mark up, with some of the other products also having very large mark ups. Let me re-emphasize that we use these products every single day and they have huge margins ($60-$400 profit a piece). We pay ridiculous price's for theses items because they come from large reputable brands. However, these particular product's are completely non brand dependent. They are bare bone simple tool's that have one job to do and are about as complicated, and as brand dependent, as a coat hanger. It's just that no one is offering a more cost effective solution.
I smell opportunity.
I'm in the fortunate position of working for the largest company in this particular sub trade in my city, and I also have a good relationship with my boss. I have samples on the way and plan on sitting down with my boss, showing him a side by side comparison of the products and offering him a favourable price.
Here's my problem: I always read people preaching about the importance of not competing on price. But in my specific situation I see this as the only way to position myself, seeing as the big boy brands charge so damn much. After all, why would my boss (and other similar companies) ditch their beloved big boy brands for a no namer charging the same price? They wouldn't...or at least I doubt they would. I see this price competition as my entry point in the market where I can then start to build a reputation and add more products at a premium price.
The goal is to test drive these private label products with my company then set up an e-commerce site and, with the use of FBA, start expanding to other companies, then cities, then provinces. There are almost an infinite amount of products I can add in this niche once my brand has some authority. This isn't a very sexy trade and I'm confident that with some good direct marketing, good copy, and quality products that I can quickly position my self as the quality, affordable , Canadian alternative to the expensive american brands that currently run this niche.
Think FBA meets IceCreamKid's carpet cleaning post.
Is competing on price in this instance OKAY?
I work for a sub-trade, and recently found out that we pay a ridiculous amount for some of the supplies we use every day. Upon seeing some invoices I quickly checked Alibaba and found that one of the products has a 1,500% (give or take) mark up, with some of the other products also having very large mark ups. Let me re-emphasize that we use these products every single day and they have huge margins ($60-$400 profit a piece). We pay ridiculous price's for theses items because they come from large reputable brands. However, these particular product's are completely non brand dependent. They are bare bone simple tool's that have one job to do and are about as complicated, and as brand dependent, as a coat hanger. It's just that no one is offering a more cost effective solution.
I smell opportunity.
I'm in the fortunate position of working for the largest company in this particular sub trade in my city, and I also have a good relationship with my boss. I have samples on the way and plan on sitting down with my boss, showing him a side by side comparison of the products and offering him a favourable price.
Here's my problem: I always read people preaching about the importance of not competing on price. But in my specific situation I see this as the only way to position myself, seeing as the big boy brands charge so damn much. After all, why would my boss (and other similar companies) ditch their beloved big boy brands for a no namer charging the same price? They wouldn't...or at least I doubt they would. I see this price competition as my entry point in the market where I can then start to build a reputation and add more products at a premium price.
The goal is to test drive these private label products with my company then set up an e-commerce site and, with the use of FBA, start expanding to other companies, then cities, then provinces. There are almost an infinite amount of products I can add in this niche once my brand has some authority. This isn't a very sexy trade and I'm confident that with some good direct marketing, good copy, and quality products that I can quickly position my self as the quality, affordable , Canadian alternative to the expensive american brands that currently run this niche.
Think FBA meets IceCreamKid's carpet cleaning post.
Is competing on price in this instance OKAY?
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