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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  1. #1 by kampunginvestor on September 16, 2008 - 11:19 pm

    Well written brother. Competition is healthy for any business. Winner takes all 🙂

  2. #2 by norisa on September 18, 2008 - 4:07 pm

    Irwan, you’re smart. I’m proud of you. I hope my son will be as smart as you when he grows up.

  3. #3 by sheikh on September 25, 2008 - 12:29 pm

    all the taukes in malaysia are all greedy!!! if they can sell something that cost 10 cent for 10000 bucks , they will do it..

    So screw them la…

  4. #4 by laliga on September 25, 2008 - 12:59 pm

    Haha.. you should have taken a business major rather than engeneering.

  5. #5 by jamal on September 26, 2008 - 12:00 pm

    BECAREFUL OF THE TAUKE.NOT ALL ARE SINCERE.WE’RE BEING NICE AND TRUSTED,THEY PLAY WITH OUR SINCERITY AND HONESTY. TO THEM MONEY IS EVERYTHING. I HAD BEEN CHEATED BY ONE TAUGE ROGUE, CHEONG CHAN WAH; AN ADVERTISER IN MUDAH.COM. BECAREFUL OF ANY DEALING,TRANSACTION AND INTERACTION WITH THIS CHINESE GUY @ GAY(CAUSE CHALLENGGED HIM YET DONT DARE TO COME FORWARD!???)CIMB ACCOUNT UNDER THE NAME BEING USED, NO:1406-0547427-529

    THIS PUBLIC NOTIFICATION BROUGHT TO YOU OUT OF SINCERITY. PLEASE CONVEY/E-MAIL/SMS TO OTHERS FOR PRECAUTION. TO THE LAW ENFORCER AND THE MALAYSIA LAW DECISION MAKER ;PLEASE KNOW HOW TO DIFFERENTIATE BETWEEN CRIMINAL AND CIVIL CASES!THANK YOU.

  6. #6 by kampunginvestor on September 30, 2008 - 3:34 am

    Hey Jamal, the Cheong Chan Wah is sell hand phone one?

  7. #7 by jamal on November 13, 2008 - 1:24 pm

    He might be the same rogue,so becareful.If selling somewhere,tell me where? Had lodged police report in Putrajaya,then case trans- ferred to Cyberjaya.Had been 2 months,no news of investigation development.He is conning people since 2006. Felt sorry for the enforcement systems & agencies for losing to this guy. Perhaps this is just another civil matters. Please also becareful with another rogue,Chew Peng Cheong (male).INFO,tell me!

  8. #8 by demonsinme on December 3, 2008 - 7:22 pm

    SALAM.

    BRO. Browsing the internet to find out the Iphone 3G, I stumble on your entry.

    I am interested to get one – such as the one from NZ, but I do no t have contact for this purpose.

    So I wonder if you could help. Much appreciate it.

  9. #9 by jawatan kosong on June 22, 2009 - 10:28 am

    What do you sell btw. If you dont mind to share it. How much is the price different between the one that you sell and the one in market?

    • #10 by Irwan on June 22, 2009 - 1:08 pm

      Right now I’m selling garmin gps units, computer peripherals and I’m taking some Iphones 3GS in.

  10. #11 by craps spiel on January 24, 2011 - 2:24 pm

    Dude, please tell me that youre going to create extra. I notice you havent written an additional weblog for a while (Im just catching up myself). Your blog is just too important to become missed. Youve got so a lot to say, such knowledge about this topic it would be a shame to see this weblog disappear. The internet needs you, man!

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