On Jan 13, 2014, at 12:10 AM, J wrote:
The products we sell –bulk liquid chemicals- are very easy to substitute and replicate. As we are distributors we constantly look at products where there are not many competitors –generally speaking when there are not more than 3-4 producers worldwide; At this stage I am still wondering how we can achieve greater competitive advantage.
*** Two problems:
1. most of world trade in commodities is about avoiding taxes and laundering profits... people who can do that can beat you on price, and you are in a business that competes on price.
2. If Chinese traders want the business, they will always offer a lower price, no matter what.
If you cannot win the price game, get out.***
For certain products we do have a very good position especially for (named company) for which we are the exclusive distributor in Europe of the largest manufacturer worldwide for this product.
***No such thing as exclusives in int'l trade, no way anyone can control distribution of a fungible product. Anyone can buy through straw men and re-export, re-label, whatever... if there is profit to arbitrage, it will get arbitraged.***
We use Piers mainly to spot what manufacturer is selling which product and also to find new customers and get to know their product needs. It gives us a map of the market.
***And so is everyone else... so everyone is looking at the same info and coming up with a plan, probably the same plan...***
How can we compete on design as a distributor? This sector in Europe is very old fashioned and conservative but we could definitely innovate. We do not focus on commodities anymore where there is a high product substitution and a war on prices. We go for specialities which require more patience due to longer testing periods and approval processes for Pharma, Food and beverages industry.
What would you do in our case?
***I would "go for specialities which require more patience due to longer testing periods and approval processes for Pharma, Food and beverages industry." Consultants always find the answer is already within the company they are assisting.
Shift from competing on price to competing on design.
This takes re-org, and obviously your company has figured out the profile they can serve... compete on design... find customer problems then crowdsource solutions paying a royalty to anyone worldwide who works up a solution... then you are not only the best at what you do, but the only one who does it. You are a price maker, not a price taker...
Ask your customers what they need that they are not getting....
You'll make more money handling less product.
Here is an example of commodities sold as designer items...
make sense?
Feel free to forward this by email to three of your friends.
2 comments:
"Seek to further develop commodities as specialty designer items."
This is a good way to think of getting ideas for new products. Anything and everything can be improved upon: Never think that any item has reached its "final" form - it can be modified for further particular tastes, uses and aesthetics (this would be a good habit to get into). As an example, the website sells different types of sugar for varying specific tastes (or flavors).
http://www.huffingtonpost.com/2014/01/13/incredible-bookcases-photos_n_4588105.html
Just thought this was interesting: competing on design for book cases. Anything can be modified and improved upon, even something as mundane as a book shelf.
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