This is my third year getting myself involved into entrepreneurship.
Initially, and naively guided by my own shopping requirements, I thought selling small quantities at low prices is the best way to go for my business. I used to think that what I want is exactly what others want. I always try my best to hunt for deals where the price offered is below the value of the item or service.
Over the past three years of running a side business, I painfully found out that people, especially Malaysians will never understand the price is reflective of the value (sometimes including me). As a business owner, I have to put in so much efforts (where most of the time completely unseen) but only to be cut in price by the already hard-to-come-by customers, no matter who they are representing (individuals or companies).
Please set aside some time (about 57 minutes) to watch and digest the video below. Rossmann perfectly highlighted his (as well as mine) experience for the past years.
Low prices that do not reflect the real values will always attract hard-to-please customers. While working as a pharmacist in the public hospital, I have encountered plenty of typical cheapo patients who are taking ‘cheap’ medications for granted. While the costs of medications are heavily subsidised by the Malaysian government (close to 7% of GDP), patients tend to horde or throw medicines that they do not need or use. This practice directly increases healthcare costs due to resources wastage.
Looking at my T-shirt design and printing business, basically all of my customers who have no idea about the difference between silkscreen and sublimation printing, will request a high-quality sublimation printed (full colours) polyester shirt (market price around RM40) at a price of a silkscreen printed (single colour) cotton shirt (market price RM10). While I am selling mine at RM35 that is below market price, nobody will appreciate it. In fact, most of the potential customers will just walk off without listening to my explanation. The minority will take my explanation as a lesson but ended up not buying anything (though I am willing to teach). In reality, I have only one long term client who happened to be my Lady’s education centre, as the centre’s logo is way too colourful for other printing methods.
To put it simply, when we are offering something for a low price, not many will appreciate its value, despite our tremendous efforts in making something happen. Nobody will use a RM6K iPhone to crack a crab right?
The majority of wealth is not owned by the bottom 90%, where I come from (and most likely including you my dear readers). Therefore statistically speaking, it is not feasible to try to make and circulate wealth aiming at the bottom 90% of the population. Instead, providing services or making products that are worth the values to earn from the top 10% and redistribute the wealth generated to push the economic gears among the rest of population is the logical way to do business.
For the past three years, I was trying to please my potential clients by putting in more efforts but selling at the same low prices. I have sacrificed my health and time to make it works. In return, I am gaining weight (due to stress and sedentary life, I believe) and the relationship with my family is getting strained (my boy has seen me lashing out multiple times). No, trying to please the impossibles does not worth our time.
Look again at the situation in the hospital. As a result of the bad compliance of medications, illnesses are bound to worsen and quality of life is going to suffer. Hence, more medications and treatment that cost more are necessary. Therefore, it is part of my job to emphasise compliance on treatment and medications repeatedly to my patients.
In term of red ocean strategy, I find it extremely hard for small and medium entrepreneurs to earn enough market shares for a comfortable expansion. The more we push, the harder it becomes, the lesser the sustainability. On the flip side, blue ocean strategy might work, but it presents so many challenges and unpredictability. We need to have the determination, essential skills and gut for taking risks. Yet again, we are not Amazon who can afford to sell cheap and make it out of it.
Personally, I am now making my mission to balance between price and value. It is going to be hard, especially when it comes to eCommerce where face-to-face interactions are few and far between. We can probably utilise videos to pitch, or some other creative strategies to close the deals.
Before I end this, I am introducing Dan Lok to you. He might be a scammer, but once in a while there could be a gem from him.