Competition advise?

[flashgordon12345]

I sell toys and have done for 4 years in a shop, its basically cabinets in a large store.

I sell certain items diecast toy cars and i'm the only person who sells them for the last 4 years, the manager said everyone has there own product and no ones steps on each others feet.

In the last month a new cabinet owner has come in and bought a lot of space and is selling 4x more stock then I sell, they have under cut my price too.

Which in turn I've now under cut them.

I've spoken to the manager about hes stepping on my feet and selling what I sell, they have just gone oh well. There is no contract in place.

My sales have been cut in half and i've found out he takes in as much as I do.

Originally I was taking in £400-£1200 a month and now each month is £100-£200
I know he pays £400 a month rent for his space and I only pay £45, an I know sept-Mar are very bad months.

What options do I have?

 

[Nochexman]

Are they selling the exact same die-cast toy cars as you are?

 

[Bello_1]

Spend some money on making you look a lot better.

Smarten up. Uniform. Friendly smile. Handshakes. Do whatever you can to make your space look more appealing and professional. Spend money on it. Get a logo, what ever it takes.

Then put your prices up.

The worst thing to do is lower your prices.

 

[Mitch3473]

Spend some money on making you look a lot better.

Smarten up. Uniform. Friendly smile. Handshakes. Do whatever you can to make your space look more appealing and professional. Spend money on it. Get a logo, what ever it takes.

Then put your prices up.

The worst thing to do is lower your prices.

Is without doubt the correct answer.

 

[flashgordon12345]

Are they selling the exact same die-cast toy cars as you are?

Yes

 

[flashgordon12345]

I can buy what he sells and undercut him, as he has a range of products like dr who, etc

Or can try get a better location.

 

[Mr D]

You sell, he undercuts you and you then undercut him.
Not sure what you want to achieve here, your buyers will love you but you are acting the same way the other seller is.
How low do you want to go and can the other seller go lower? Might find it harder to sell later at your previous prices.

Cannot see it mattering to this manager who does what so long as there are people renting / buying cabinet space. Why do you not have a contract for what by the sound of it was a commercial service you were buying?

 

[Copperwood]

There's no point in creating a price war with the other seller because you can't win.

If, as you say, this seller has 4 times more space and many different items that already make him money he could sell the items that crossover with yours at cost and put you out of business quickly then raise his prices.

If I was in your position I would concentrate on finding new product lines.

 

[flashgordon12345]

thanks for your help,

is there anyway I could make if difficult for him in the long run as winter months are the worst.

 

[Mr D]

Business is hard enough without competitors trying to make things difficult.

 

[japancool]

No, DON'T put your prices up. And don't undercut him either.

If he is selling the *exact* same items as you, then putting your prices up will drive customers to him, and undercutting him will simply create a race to the bottom that the person with the deepest pockets will win, to the detriment of you both. Consumers have little to no loyalty and if they can get the same item for less by walking a few metres, they will.

And then make your offering look better, nicer cabinets, more professional look etc, free gifts, loyalty cards, whatever.

If he's selling counterfeits, get Trading Standards involved. If he's selling similar, but different items to you, you can make a big song and dance about how your items are better.

Failing that, break his legs.

 

[tony84]

I would sell at cost. If you are buying for the same prices then he is going to get bored of shelling out £400 a month soon enough.

 

[menetworkjadaltd]

I would sell at cost. If you are buying for the same prices then he is going to get bored of shelling out £400 a month soon enough.

I think he means cost + division of cabinet rent + VAT

 

[tony84]

The point remain, if he can afford to sell to the point where the other person makes no profit, the other person is going to get bored at some point.

 

[menetworkjadaltd]

The point remain, if he can afford to sell to the point where the other person makes no profit, the other person is going to get bored at some point.

but his competitor can lower his prices as a loss leader on the items shared, and then make the markup on the unique items.
Best advice is to be better than your competitor, but that doesn't mean price only.

 

[Mr D]

The point remain, if he can afford to sell to the point where the other person makes no profit, the other person is going to get bored at some point.

Which of them will get bored first? One has a smaller range of stock than the other to work with. Covering costs can be done when you do not need any profits for living on.

 

[tony84]

Our poster is on the back foot, they can not compete on price, they do not have a landlord who will support them and they are competing against someone with a larger range.

For me its either sticking and earning peanuts long term and being at the whim of someone else, or going all in and trying to get them to think its not worth the hassle.

 

[menetworkjadaltd]

When you can't compete on price, what can you compete on, eh kids?!

 

[tony84]

Look at this from the competitors view, he/she is paying £400 a month out.
If the only products they are earning money on is the products our poster does not sell then he is going to stop paying for space for everything else is he.

That then means our poster can put the price back up and the world goes back to how it was...more or less.

 

[menetworkjadaltd]

Oh right, so how everyone makes money is by putting their prices down... haha

 

[japancool]

Oh right, so how everyone makes money is by putting their prices down... haha

OK, and your erudite suggestion to him is...?

 

[japancool]

OP - consider selling your stock online at sensible prices rather than competing in this one location.

 

[menetworkjadaltd]

OK, and your erudite suggestion to him is...?

Spend some money on making you look a lot better.

Smarten up. Uniform. Friendly smile. Handshakes. Do whatever you can to make your space look more appealing and professional. Spend money on it. Get a logo, what ever it takes.

Then put your prices up.

The worst thing to do is lower your prices.

What they said...

 

[japancool]

What they said...

Balls. Have you ever sold toys and collectibles?

I'll repeat what I said earlier. Customers have NO loyalty. They'll go to the guy with the biggest range and the best prices, not the guy with the fanciest store, especially if they only have to walk a few metres to do it.

 

[menetworkjadaltd]

The main thing you should be looking for is the line "The worst thing to do is lower your prices"... the rest is just fluff.

1 toy with two prices will likely be sold for the lower. But then what happens? Someone looking for the same can only find one 'cos the other has been sold, right?!

 

[japancool]

The main thing you should be looking for is the line "The worst thing to do is lower your prices"... the rest is just fluff.

1 toy with two prices will likely be sold for the lower. But then what happens? Someone looking for the same can only find one 'cos the other has been sold, right?!

Yeah, so the guy with more stock wins. Which is the other guy.

Suggesting he put his prices up is idiotic at best.

 

[menetworkjadaltd]

No you misunderstand... Two guys want the same thing, they come a day after each other. Day one, Guy one , finds the thing in both cabinets and goes for the cheaper one. Day two , guy two comes to the cabinets, sees the thing he wants and buys it... Not a matter of man with more stock, more a matter of man with best stock. If OP has any old tat then he shouldn't be bothering us with his question, but from my understanding he is not, so we should be encouraging him that his stock is worth his time and investment.

 

[tony84]

Im suggesting he reduces his prices short term. Lose a battle but win the war so to speak.

He is fighting a battle he can not win without taking a bit of a hit. The other bloke has more stock, more ranges and can compete on price. Upping the price is moronic, unless you both agree to up the price, but even then you are not going to sell as much as there is a 50/50 chance they will buy from you or the other seller.

Just to be clear, I am not here to say reduce the price to win sales - I charge more than most of my local competitors and I am turning away business. I am saying he needs to earn nothing for a few months in order for the other person to just think its not worth outlaying £400 a month. Once he has left, then put the price back up to where they were.

I read somewhere once that Tesco do something similar when they open a new store with local competition.

 

[menetworkjadaltd]

If he feel the competition is selling below market rate, of course, the OP could always buy the competitions duplicate stock ;-)

 

[japancool]

No you misunderstand... Two guys want the same thing, they come a day after each other. Day one, Guy one , finds the thing in both cabinets and goes for the cheaper one. Day two , guy two comes to the cabinets, sees the thing he wants and buys it... Not a matter of man with more stock, more a matter of man with best stock. If OP has any old tat then he shouldn't be bothering us with his question, but from my understanding he is not, so we should be encouraging him that his stock is worth his time and investment.

And if, on day two, the other guy has another one available at the same price as on day 1, where is the customer going to buy it from?

So it's the guy who has more stock of the item that's going to win that little battle, and from the sounds of it, that's the other guy.

 

[japancool]

If he feel the competition is selling below market rate, of course, the OP could always buy the competitions duplicate stock ;-)

Which then allows the competitor to pocket the profit, get more in, and sell at the same below-market rate, and the OP is stuck with stock he can't sell. Lather, rinse, repeat, and guess which of them is going to be out of business sooner?

 

[menetworkjadaltd]

If there are many of the same items then they become less collectable, ergo the price of the items goes down. If the OP is selling items over market value then they are trying their luck and there will be an issue, but as he has been making good money in the past, i can't see this as being the problem.

Obviously there are too many variables in this topic for each of us to come to a sane, economic or business minded point of view, so we should probably have to wait for some response from the OP to be able to further assist them in this matter.

 

[japancool]

If there are many of the same items then they become less collectable

Only if they're rare collectibles. There are plenty of collectibles that are not particularly rare but are still collectible nonetheless.

And the OP doesn't say he's selling collectibles. He's selling die-cast toys. And the competitor sells the same items he does, and more. There is no reason whatsoever to assume that either he or the other guy only has one of each item.

 

[menetworkjadaltd]

Only if they're rare collectibles. There are plenty of collectibles that are not particularly rare but are still collectible nonetheless.

And the OP doesn't say he's selling collectibles. He's selling die-cast toys. And the competitor sells the same items he does, and more. There is no reason whatsoever to assume that either he or the other guy only has one of each item.

Like I said, we are just assuming until the OP gets back to us.

 

[japancool]

Like I said, we are just assuming until the OP gets back to us.

Maybe, but my assumptions are based on practical experience in this market.

 

[menetworkjadaltd]

Maybe, but my assumptions are based on practical experience in this market.

Assumpt away my friend...

 

[japancool]

Assumpt away my friend...

On the evidence provided so far, the assumptions are justified.

Go on, prove me wrong.

 

[menetworkjadaltd]

On the evidence provided so far, the assumptions are justified.

Go on, prove me wrong.

Haha, calm down dear. I said I'm waiting for the OP to clarify... Please, put your willy away

 

[japancool]

Haha, calm down dear. I said I'm waiting for the OP to clarify... Please, put your willy away

So... you haven't had any experience with actually selling toys and collectibles then. Hence the nonsense about raising prices. Gotcha.

 

[menetworkjadaltd]

...Hence the nonsense about raising prices. Gotcha.

The main thing you should be looking for is the line "The worst thing to do is lower your prices"... the rest is just fluff