Will you ever buy such sub-standard material for yourself and your family? Assuming your answer is NO, your response is also the future of such businesses!
The top two volume products for wood panel trade are Plywood & Laminate. These two products constitute around 80% sales volume of an average plywood retailer thus earning of a shop depends on them. During 2018, the market for these products turned extremely competitive, hence pulling down operating margins with each passing month. Either manufacturers, distributors or dealers, profits have come down for everyone due to rise in supply and mindless price cuts. People reduce cost and pass on the price to its next in chain for retaining/ capturing market share. This is when consolidation begins, and factories get sold or shut down. Following is an ongoing example.
There is a desperate attempt to sell under-thickness category of laminate instead of standardised “1.0 mm or 0.8 mm” in India. Offering 0.9 mm or .85 mm is just a way to reduce sales price per sheet by Rs 100 or more, but ironically the cost of “1.0 mm Vs 0.92 mm” has no such big difference except some change in décor paper cost. But it extends a chance for a dealer to earn that extra Rs 60-100 bucks that he thinks is an extra profit or smart way to operate. Following this shortcut many aspirant HPL manufacturers believe, bringing .9mm folder is a smart move because it can be accepted by dealers faster and this is what many distributors advise.
In fact a manufacturer must think and realise that “if he is reducing the 20-25% price for 0.9 mm at place of 1.0mm then can’t he keep the thickness standard at 1.0 mm and reduce that amount?” Same way a distributor must think that “Is it not a better way to keep the thickness as 1.0 mm and sell cheap because at least it offers a standard thickness if not décor quality on that product”. Think!!! Who are you fooling on thickness as there is no end to thickness game. One may go on reducing from 1.0 mm to 0.92, 0.9, 0.85, 0.76, 0.7, 0.65, 0.55. 0.45, 0.4mm etc but does it help to earn or does it offer better surface quality? Have you seen any successful company or brand or a showroom selling substandard material?
Will you ever buy such sub standard material from such a shop or a player?
It is important to understand that price competition is always market driven and helpful to market expansion, but product deterioration or tricks only lead to market contraction and rise of substitutes. Whether you are a manufacturer, or a dealer, Genuine product, Profitable selling and Goodwill are only way to sustainable business. Ask Yourself ‘ARE YOU BUILDING A SUCCESSFUL & LASTING ENETRPRISE? Aim for Volumes but getting trapped by reducing price and quality may remove you from the game permanently. I firmly believe, many of you will note and take wiser steps in coming year. Best whishes... Enjoy reading The Ply Reporter
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