Author Topic: Bargain Culture  (Read 1649 times)

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Offline kimmy

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Re: Bargain Culture
« Reply #60 on: December 08, 2017, 03:23:08 am »
The Amazon effect.
Quote
Wyze’s low prices are instead born of two ideas, both connected to Amazon. The company’s three founders all worked at the retail giant, and they said they had been inspired by Amazon’s high-volume, low-margin approach to sales.

To hit the $20 price, Wyze licensed the camera’s hardware from a Chinese company, then created its own software. It also cut out just about every middleman, including most retailers. And it’s banking on long-run success. While Wyze is just breaking even on its first camera, its founders believe internet-connected home devices will be a growth category. They plan to establish a trusted brand with the first camera, then release a succession of products that they hope to sell in large numbers, at low prices.

But how do you establish a brand online? That’s the second place Amazon comes in.

Though they snubbed every other retailer, Wyze’s founders recognized that they needed an Amazon storefront to help them establish an instant presence next to the big guys. Customer rankings and reviews on Amazon have become just about the most important factor in how consumers buy electronics products; because Amazon pages come up high on search results like Google’s, a positive rating on Amazon can effectively make a brand — and a negative rating can break one.

“That’s why we had to sell on Amazon,” said Yun Zhang, Wyze’s chief executive. “You just can’t ignore them.”

Wyze is now one of dozens of companies relying heavily on Amazon to create online brands. There’s Anker, which makes low-priced, well-regarded accessories for electronics. There’s Yi, which makes, among other things, action cameras that rival GoPro.


https://www.nytimes.com/2017/12/06/technology/cheap-consumer-devices-amazon.html


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Offline TimG

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Re: Bargain Culture
« Reply #61 on: December 08, 2017, 05:29:05 am »
https://www.nytimes.com/2017/12/06/technology/cheap-consumer-devices-amazon.html
Lots of companies give away products in return for the personal data you provide and/or the the sale of additional services. I can't see how any company can build a business model today by only selling cheap low margin hardware. There has to be an angle that the article is not discussing.

Offline kimmy

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Re: Bargain Culture
« Reply #62 on: December 08, 2017, 10:39:42 pm »
Lots of companies give away products in return for the personal data you provide and/or the the sale of additional services. I can't see how any company can build a business model today by only selling cheap low margin hardware. There has to be an angle that the article is not discussing.

Why?  Are you clinging to some outdated notion that a "company" has to be a big brick-and-mortar building with a factory and a whole bunch of employees?


Argus earlier talked about his reasons for not buying Chinese-made products that don't have a reputable brand behind them.  They might be junk. They might burn your house down.

Fair enough. Understood.  So one of the companies, Anker, mentioned in the article, understanding that issue, sees an opportunity for value-add.  They  search through Chinese hardware, find some that they really like, and say "ok, we'll sell this in North America, and we'll stand behind it and provide warranty replacements."  So while they're not making money on hardware, they're making money in 2 ways.  First off, they're adding assurance to the customer that if the product fails they can get their money back. And the second way they're making money is by building a brand. People go on Amazon, they search for a product, and they find that these Anker products have good customer ratings and good prices.

And the guys at Wyze... they found Chinese hardware they liked, but realized that the software sucked, so decided they could value-add by creating better software.  So the

I have been looking into 3d printers lately. One of the companies that sells 3d printers is called "Monoprice".  They retail lots of products-- HDMI cables,  computer parts, and not coincidentally 3d printer filament.  In all likelihood, all this stuff comes from China.   Monoprice also sells 3d printers-- they take a Chinese-made 3d printer, wrote lucid English instructions for it, assemble it, calibrate it,  provide a disk with software, even do a demo print with your assembled unit before they ship it.   All of this is value-add. They figured out that the biggest headaches people have with 3d printers is getting the damned thing to work in the first place. They deal with that for you and ship a product that works right out of the box.

You can't compete with China on manufacturing.  That much is obvious. If you're starting a new business today and your plan is to manufacture stuff at a better margin than China does, you're toast. You can't do it.   These companies-- Wyze, Anker, and Monoprice-- understand that much.  Their business model is to not even try to beat China at its own game. Their business model is to add value in areas that China sucks at--  trust, functionality, usability-- while leveraging the cost-efficiency of Chinese manufacturing.

I wrote earlier about the Kershaw knives and my knock-off Kershaw knives that are actually Kershaw knives without Kershaw badging.   Kershaw sells these $7 knives for $40+ in North America... what value are they adding to justify a 500% mark-up?  Nothing, basically.   Anker, Wyze, and Monoprice are all adding value to the Chinese raw materials to make their business model work.  Kershaw just adds a big mark-up and works on the assumption that people trust their brand-name enough to justify the cost. That will continue to work as long as there are enough rubes around, but it might not work forever.


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Offline TimG

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Re: Bargain Culture
« Reply #63 on: December 09, 2017, 05:26:56 am »
Why?  Are you clinging to some outdated notion that a "company" has to be a big brick-and-mortar building with a factory and a whole bunch of employees?
The need to generate recurring revenue from existing customers is a imperative for any business today no matter what their distribution model. These guys have one product that they sell cheap and provide no added value other than price.

If they establish that there is a market for cheap cameras then the market will be flooded with me-too competition and they will find that building a brand based on being cheap means your customers are very quick to switch to the guy you sells the same thing for dollar less. A 20 dollar camera does not provide a lot of revenue to justify premium service.

Kershaw sells these $7 knives for $40+ in North America... what value are they adding to justify a 500% mark-up?  Nothing, basically.   Anker, Wyze, and Monoprice are all adding value to the Chinese raw materials to make their business model work.
This is a completely different business model because they are charging premium prices to cover the cost of warranties and other things that build brand loyalty. The Wyze business model is based on selling cameras cheaper than everyone else.

It is worth noting that Vizio televisions use the Wyze model. They have carved a niche for themselves branding Chinese made televisions and selling them cheaper than everyone else. And guess what: they got  caught selling data collected from their SmartTVs:
https://www.cinemablend.com/television/1622269/why-vizio-has-to-pay-out-millions-and-millions-of-dollars

I guess they realized there are limits to how profitable a company can be selling cheap hardware and Vizio has the advantage over Wyze in that they selling products with a price point in the hundreds of dollars.
« Last Edit: December 09, 2017, 06:53:07 am by TimG »

Offline kimmy

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Re: Bargain Culture
« Reply #64 on: December 09, 2017, 11:48:39 am »
The need to generate recurring revenue from existing customers is a imperative for any business today no matter what their distribution model. These guys have one product that they sell cheap and provide no added value other than price.

The recurring revenue will come from cloud services associated with their device, as with other network-enabled security cameras.  The low price will help build a customer base of which at least some portion will want to subscribe to the optional cloud services.  This is similar to the model of video game companies who make "massively multiplayer online" games. They give the software away for free, but you pay a monthly subscription fee to play or buy in-game extras. That's basically what Wyze is doing. Nest and Blink are getting people to pay for the subscription and the in-game extras, but they're also charging a large up-front fee for the game itself. Wyze is clearly thinking that Nest and Blink are turning off a lot of potential customers with the large up-front fee, and gambling that they can get more subscribers by selling the camera itself very cheaply.  You're convinced there has to be some kind of secret angle here... I think the angle is pretty apparent.


And once Wyze has established a customer base for their security camera and cloud-based services, that would be a good starting point to expand into other smart-home services. "Know what would work great with your Wyze security cameras? Wyze smoke and CO2 detectors! Works with your existing Wyze account! Get alerts on your smart-phone if something is wrong in your home."


If they establish that there is a market for cheap cameras then the market will be flooded with me-too competition and they will find that building a brand based on being cheap means your customers are very quick to switch to the guy you sells the same thing for dollar less. A 20 dollar camera does not provide a lot of revenue to justify premium service.

The "me too" competitors might be able to offer a security camera with an SD card for less than Wyze is selling their product for. But if a "me too" competitor wants to compete with Wyze or Nest or Blink then they'll be starting at the same place Wyze did, which is to take the cheap hardware and find a way to value-add to put it in the same league as its more expensive competitors. Maybe it can be done, but whichever competitors want to try will be playing catch-up.


This is a completely different business model because they are charging premium prices to cover the cost of warranties and other things that build brand loyalty. The Wyze business model is based on selling cameras cheaper than everyone else.

It is worth noting that Vizio televisions use the Wyze model. They have carved a niche for themselves branding Chinese made televisions and selling them cheaper than everyone else. And guess what: they got  caught selling data collected from their SmartTVs:
https://www.cinemablend.com/television/1622269/why-vizio-has-to-pay-out-millions-and-millions-of-dollars

I guess they realized there are limits to how profitable a company can be selling cheap hardware and Vizio has the advantage over Wyze in that they selling products with a price point in the hundreds of dollars.

With Wyze, the subscription services make that a bad comparison.  Anker would be a better comparison, because like a TV you just buy a USB hub once and there's no recurring fees.

Can Anker continue to make money doing what they're going?   ... I dunno, can Kershaw?  Anker and Kershaw are essentially doing the same thing here. Kershaw takes a higher margin, but Kershaw needs a higher margin to stay in business. Anker, for all I know, might be one college kid who checks his email a few times a day while he's studying for his classes.


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Offline TimG

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Re: Bargain Culture
« Reply #65 on: December 10, 2017, 01:06:12 am »
The recurring revenue will come from cloud services associated with their device, as with other network-enabled security cameras.  The low price will help build a customer base of which at least some portion will want to subscribe to the optional cloud services.
I did not get that impression from the article. It seemed like they were giving away all of the important features and it is not clear what was left for people to buy. In theory, this would address my point. The question is are the services that people would pay for?

And once Wyze has established a customer base for their security camera and cloud-based services, that would be a good starting point to expand into other smart-home services. "Know what would work great with your Wyze security cameras? Wyze smoke and CO2 detectors! Works with your existing Wyze account! Get alerts on your smart-phone if something is wrong in your home."
Lots of companies doing this already. Who is in a better position to take advantage: ADT which already offers all of the above features and adds Wyze cameras to its line up or Wyze developing completely new services which do not appear to be part of their sale pitch today.

Can Anker continue to make money doing what they're going?   ... I dunno, can Kershaw?  Anker and Kershaw are essentially doing the same thing here. Kershaw takes a higher margin, but Kershaw needs a higher margin to stay in business. Anker, for all I know, might be one college kid who checks his email a few times a day while he's studying for his classes.
Anker appears to have fairly wide product line. That gives them bigger potential volumes and avenues for repeat customers. Kershaw has high margin which is the typical business model for service/support driven sales. If Wyze succeeds selling a lot of cameras (they should) and then expand rapidly into wide range of remote monitoring products then it would be a compelling business model.

That said, i did look more carefully into the s/w that they offer and it is underwhelming compared to what comes for free with more expensive cameras. For example, you have to have a mobile phone - there is no option to control via a PC or Laptop. This alone would mean I would not touch them.


Offline kimmy

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Re: Bargain Culture
« Reply #66 on: December 10, 2017, 01:18:02 pm »
I did not get that impression from the article. It seemed like they were giving away all of the important features and it is not clear what was left for people to buy. In theory, this would address my point. The question is are the services that people would pay for?

It appears I misread the Wyze website.  At first glance I thought they were giving a 14 day trial on cloud storage, which subscribers would then have the option of paying for.  It appears that they are actually giving away 14 days of rolling cloud storage for free. (ie, the last 14 days of footage from your camera are stored on the web, for free.)  That's pretty astounding, as Nest charges $10 a month for that.

Apparently their plan is simply to own this market by killing the competition on price, and to make money on low-margin, high-volume sales.

I can't imagine somebody who's sitting on the fence about trying a home security camera looking at a system that's $250 plus $10/month vs one that's $20 period, and deciding to go with the $250 system.  A $20 price would probably lure people who hadn't even considered buying a security camera to give one a try.  I sometimes have panic attacks that I might have left the stove on... why not spend $20 and point one of these right at my stove so that whenever I have a panic attack, I can whip out my smart-phone and look at my stove to assure myself that it's off.

Personally, with a 700 sq ft apartment, I would probably want one for the main entrance, and possibly a 2nd facing my balcony entrance.  For somebody with a bigger home or a yard, they might not stop there. If they really liked the product, they might buy one as a baby monitor, and another one to cover the front yard to catch the neighbor in the act of letting their dog poop on your lawn, and another one out back to record the antics of the neighborhood raccoons. There's some potential for recurring sales just from people thinking "another one of these would be handy in the rec-room." At $20 a pop, it becomes something people might add on a whim rather than a substantial investment and recurring financial commitment.

And it does have an obvious potential to expand into related products (smoke and CO2 sensors and door sensors obviously come to mind).


Lots of companies doing this already. Who is in a better position to take advantage: ADT which already offers all of the above features and adds Wyze cameras to its line up or Wyze developing completely new services which do not appear to be part of their sale pitch today.

ADT has been around for a long time, and hasn't exactly set the home market on fire.    The existence of companies like ADT hasn't deterred companies from attempting to sell their own security systems directly to consumers. When I was a Costco member I used to always see Swann or Lorex products for sale in Costco.  So apparently Swann and Lorex felt that ADT and their peers aren't delivering what the home consumer is hoping for. And the existence of consumer products like Swann and Lorex hasn't deterred people like Nest and Blink from jumping into the same market. So apparently Nest and Blink feel like the Swann and Lorex didn't get it right either.  And the existence of ADT, Swann and Lorex, Nest and Blink, has not deterred Wyze either.

They obviously think the hassle and expense of existing devices in the market is a big barrier for consumers, and are gambling that their low-cost, high-functionality devices can make a big impact on what's a potentially large market that's not being well served.

Anker appears to have fairly wide product line. That gives them bigger potential volumes and avenues for repeat customers. Kershaw has high margin which is the typical business model for service/support driven sales. If Wyze succeeds selling a lot of cameras (they should) and then expand rapidly into wide range of remote monitoring products then it would be a compelling business model.

Wyze is already back-ordered, so they're apparently selling these faster than they can supply them right now.  How long the demand will remain high remains to be seen.  Maybe you're right, maybe it will fade off quickly, or maybe these guys will be around for a while.

That said, i did look more carefully into the s/w that they offer and it is underwhelming compared to what comes for free with more expensive cameras. For example, you have to have a mobile phone - there is no option to control via a PC or Laptop. This alone would mean I would not touch them.

You don't have a mobile phone?  Are you from the '90s?  You'll be able to access the Wyze cloud services through your web browser.  If they don't have it already, they soon will. That's the easy part of the project.


My reason for linking the article wasn't to make the case that Wyze specifically is going to be a success.  It was because I thought the role of Amazon in changing how people shop is interesting.

Once upon a time if you wanted to sell a consumer product, you needed to convince a whole bunch of brick-and-mortar retailers to make room for your stuff on their shelf. That's probably a full time job in itself. You go to London Drugs, and Best Buy, and Canadian Tire, and Home Depot and at each place try and convince the management that your stuff should be on the shelves in their stores. How do you even start to go about doing that? "Sorry, we've never heard of your company, and we already sell another product that's a lot like yours, so we're not interested. Better luck next time."    You have to advertise so that people even know you exist.  You have to physically get your product to consumers.  All of this sounds like a tremendous barrier for anybody who is just starting out.  And that's without even considering the primary barrier, which is making a product to sell in the first place.

Amazon doesn't solve the last item, but it does help with the rest.

Distribution? Amazon is probably the best in the world at distribution.  Space on the shelf?  They have acres and acres of shelves. If you want space on their shelves, you just give them a cut of your sales, and the space is yours. Give them a bigger cut and you can be a "Prime" partner. Space on the shelf at one of the world's biggest retailers is yours.

Marketing?  I don't know how you guys shop.  But for me the first step isn't to walk around brick-and-mortar retailers.  My first step is to get on Google and do a web search for the kind of product I'm interested in. 

So I'm looking for a USB hub. I go on Google, I type in a search, and the results that come up are... ok, some sponsored results from Newegg.  Right below that, an ad from Amazon.  I click on that, because I get free shipping from Amazon.  Their results come up with... ok, a couple more sponsored results from a company called "Cable Creations", and the "Bestseller" result is ... Anker. A grand total of 3 clicks and I've arrived at some company that for all I know could be a college student who answers a few emails while he studies for his classes.  (this is pretty much exactly how I bought an Anker USB hub a couple of years ago, without putting any thought into how it landed on my desk.)    Wyze, same type of thing.  Wyze isn't sold in Canada yet, but if I go on US Amazon, same sort of deal... some sponsored results, some gift-guide results, and Wyze listed as one of the bestsellers.


I have a hunch that I'm not the only one who shops this way when looking for consumer products.  If I'm looking for clothes and shoes, I have to go shopping in person.  If I need something large I still go to a brick and mortar store.  If I need something in a hurry, or if I'm buying food, I go to the store.  But most kinds of consumer products, online shopping is now my preference.  And the way Anker has done things-- leverage Chinese manufacturing plus the distribution and customer reach and marketing potential of Amazon to build a brand-- has the potential to bring Bargain Culture to consumers in a way that traditional retailers don't.


 -k
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Offline kimmy

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Re: Bargain Culture
« Reply #67 on: December 19, 2017, 12:54:21 am »
A $150 pressure-cooker doesn't exactly sound like a "bargain" to me, but this product also seems like an example of a company utilizing Amazon's possibilities in distributing and marketing its products:

https://www.nytimes.com/2017/12/17/business/instant-pot.html

Quote
In 2010, after several months of sluggish sales in and around Ontario, Mr. Wang listed the Instant Pot on Amazon, where a community of food writers eventually took notice. Vegetarians and paleo dieters, in particular, were drawn to the device’s pressure-cooking function, which shaved hours off the time needed to cook pots of beans or large cuts of meat.

Sensing viral potential, Instant Pot sent test units to about 200 influential chefs, cooking instructors and food bloggers. Reviews and recipes appeared online, and sales began to climb.

(...)

Amazon has played a particularly large role in Instant Pot’s rise. Early on, Instant Pot joined the “Fulfillment by Amazon” program, in which Amazon handles the packing and shipping of a seller’s products in exchange for a cut of each item sold. Eventually, Instant Pot sent Amazon wholesale shipments directly from factories in China, and Amazon began promoting the machines in its major annual sales. At one point, more than 90 percent of Instant Pot’s sales came through Amazon.

“Without Amazon, we wouldn’t be here,” Mr. Wang said.


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Offline MH

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Re: Bargain Culture
« Reply #68 on: December 19, 2017, 05:35:32 am »
+Gadget Culture

Offline kimmy

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Re: Bargain Culture
« Reply #69 on: June 05, 2018, 12:46:40 am »


"Luppo Dream Bar".  2 for $1 at Dollarama.

BUY NOW

 -k
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Offline MH

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Re: Bargain Culture
« Reply #70 on: June 05, 2018, 07:53:51 am »
Are they GOOD ???  50 cents ???  Where are they from - NK ???

Offline ?Impact

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Re: Bargain Culture
« Reply #71 on: June 05, 2018, 08:46:35 am »
One just has to get it for the name. Buy a dozen, and give them to your appropriate friends.

I remember:

Chocolate bars 10 cents
Pop 10 cents, and 2 cent deposit on the bottle
Large pop (32 oz?) 25 cents, and 5 cent deposit on bottle
Popsicle 5 cents
Fudgesicle, creamsicle and chocolate covered ice cream 10 cents
Bubble gum trading cards (NHL, MLB, etc.) 10 cents, with 3 cards in pack
Bazooka bubble gum 1 cent
Small bag chips 5 cents
Large bag chips 10 cents
Family bag chips 25 cents
Quart milk around 35 cents , and 10 cent deposit on bottle
Loaf bread 32 cents
50lb bag potatoes 99 cents
« Last Edit: June 05, 2018, 08:49:32 am by ?Impact »

Offline MH

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Re: Bargain Culture
« Reply #72 on: June 05, 2018, 08:50:49 am »
My God... so ancient...

What flavours/snacks do you remember being implemented ?

I remember telling Joan we didn't have Kiwis growing up.   I also remember corn chips coming out in the 1970s.  Yum.

Offline kimmy

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Re: Bargain Culture
« Reply #73 on: October 25, 2018, 02:45:00 am »
"Luppo Dream Bar".  2 for $1 at Dollarama.

BUY NOW

These are still delicious.  BUY AT DOLLARAMA.



 -k
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Offline kimmy

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Re: Bargain Culture
« Reply #74 on: October 25, 2018, 03:06:16 am »
Ever browse Amazon and find something hilariously overpriced? Some product where 5 sellers have it listed for $20-30 and a sixth seller has it listed for $387.46? 

I always picture some guy thinking to himself "I only need to sell one of them!" but in reality it's probably somebody's currency conversion script has a bug in it, or some application posted the listing and screwed up, or something of that nature. Probably no human really expects to sell a pair of off-brand slippers for $387.46.

I stumbled across the opposite today.  A brand name product listed by some Chinese seller at what has to be a mistake.  It's a Timbuk2 bag that usually retails for $80 or more, and it one seller had it listed at $6.80 (+$5 shipping).  I ordered it, just to see what happens.  Best case, I actually get what I ordered at the price I ordered it at.  Worst case I'm out $12.  In between case is I complain about it to Amazon and I get my $12 back.   I don't even really need the bag very much, I'm just stoked at the idea of getting it for $12.

 -k
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