Author Topic: Bargain Culture  (Read 1701 times)

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Offline kimmy

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Re: Bargain Culture
« Reply #60 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  Are you clinging to some outdated notion that a "company" has to be a big brick-and-mortar building with a factory and a whole bunch of employees?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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