Archive for September, 2008

Spoiling the market?

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I do regularly ship some items back to Malaysia for resale especially electronics. One of the main reason is that the price in the US is much cheaper even after the cost of shipping and taxes. Just now I received a message from the sole distributor of one of the items that I’m sending back. The message stated that I was spoiling the market by selling items at lower than market price and the company is bearing the cost of what I’ve done. I actually don’t care what happen to them as they are my competitors. However, what keep me thinking is the effects to the community. So here is an analysis of my current business practice:

Am I practicing predatory pricing?

Predatory pricing can be best described as selling an item at a very low price with the intention to drive other competitors out(wiki). Competitors with lesser resource would close their businesses and this gives monopoly power to those who’d survived. In my case however, the price I’m to offer is strictly based on my personal cost estimation and expectation of demand. With such a low volume, no business will go out of business due to my activity.

Is free market is a bad thing for consumers?

I would rather think my act as a balancing activity in a free market. Right now the price of the items is heavily inflated as a result of distributor’s monopoly strategy. I received the price list sent by authorized distributor and I was shocked to find out that the dealer price is even more expensive than my selling price. This shows that distributor is cutting out the lion’s share for themselves. With the pressure that I introduce to the market, I hope retailers would also pressure the distributor to lower its price.

Concern for future demand

I do concern about the effect of the demand to future customers. As I’m selling items at much cheaper price, current and future customers would seek the same discounted price even after my bulk has completed. If none is available, this would curb the demand in anticipation of lower price, and thus would reduce the presence of the brand in the market. The next order in the effect chain would be up to the distributor. If they’d realized that the demand is diminishing, they’d either ramp up the advertisement and introduce cheaper price, or they would just increasing the price to cover total operation cost. I hope it would be the former as the later is unsustainable and leads to greater loss.

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Remembering September,11

Castle Point encompassed by Stevens campus is the highest point in Hoboken. When the horrified tragedy of September 11 occurred, Steven’s students and faculties gathered here to witness the attack with their own eyes. We as Muslims students at Stevens condemn this attack as a betrayal of humanity. Standing at the same spot, we offer this picture as the symbol of peace.

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