3 ms·

I understand the tractor repair example to some degree, though "difficult to enter" in the case of Deere is largely because Deere is making it difficult. But h

I understand the tractor repair example to some degree, though "difficult to enter" in the case of Deere is largely because Deere is making it difficult. But how is the market for fruit labels difficult to enter?

AlbertCory 5y ago
Well, I can only speculate, not having tried. It could be that the farmers & handlers already know the main suppliers and they're satisfied with them: low prices, good service, acceptable quality. And they're not looking for even lower prices. If you have a monopoly and you've ridden the learning curve far enough that you're making a good profit while not pissing off your customers, and the market is pretty static, you're in. But I could be wrong.
- ethbr0 5y ago
  I'd hazard it's probably due to order of magnitude different absolute profit amounts. E.g. you can double your margins on fruit labels, and still be a rounding error for fruit producers Consequently, being invisible and fanatically attentive to what your customers want (e.g. ease of use) means the hassle of switching suppliers outweighs the cost savings.
  - AlbertCory 5y ago
    I was pondering this while walking the dog: family-run businesses, small business, etc. In some businesses, having been around for a long time, being part of the community, and knowing your customers is worth WAY more than a few points of profit. In fact, those businesses are everywhere. Look and see who buys the ads for the high school sports teams. Tractor repair ought to be like that. Not the monopoly of John Deere. (I don't know anything about who owns fruit-labelling, and it might even be some giant conglomerate.) But let's say someone owns such a loyalty business, everything is great, and then they die or retire. Then what? It's the source of a million dramas, like Yellowstone or King Lear. Maybe a son or daughter takes over. Then they're incompetent. Or not. Maybe the kids fight over it. The possibilities are endless. Or maybe the giant conglomerate DOES buy it. Promising "nothing will change" of course.
    - ethbr0 5y ago
      I think often... it just ceases to exist. E.g. What happens when the local diner goes out of business? There's no Law of Diners that mandates someone else step up. Sure, a McDonald's or Wendy's might drop in. But that's not really the same thing. (Restaurants are the obvious example, but it could just as easily be a machinist or florist. Flavor analogy to desired niche industry) As an example: Royall Machine, Lottsburg, VA https://www.google.com/maps/place/2461+Northumberland+Hwy,+Lottsburg,+VA+22511/@37.9627178,-76.5196366,3a,75y,79.68h,90t/data=!3m7!1e1!3m5!1sGcS9Vcq_B10gVw6KwkcXNg!2e0!6shttps:%2F%2Fstreetviewpixels-pa.googleapis.com%2Fv1%2Fthumbnail%3Fpanoid%3DGcS9Vcq_B10gVw6KwkcXNg%26cb_client%3Dsearch.gws-prod.gps%26w%3D86%26h%3D86%26yaw%3D79.67581%26pitch%3D0%26thumbfov%3D100!7i16384!8i8192!4m5!3m4!1s0x89b7569c05eab757:0xfd3982578edc427c!8m2!3d37.9627719!4d-76.5192646 https://www.google.com/maps/place/2461+Northumberland+Hwy,+L... Was there for 30+ years. Could make about anything you needed out of metal. Now, just isn't. And moreover, the customers, having become cultured to dealing with the existing business, now have to radically alter their expectations when interacting with a more corporate entity. McMaster-Carr is great, but it's a darn sight different than bringing in a broken part, and having a duplicate made in about a week.
      - AlbertCory 5y ago
        Yeah. Depends on the family. Kids these days... Maybe it's different in rural areas. I think restaurants tend to have a certain layout that's especially good for another restaurant. But then: near me, there was a Rite Aid that closed shop 3 or so years ago, and a brand new Grand Dynasty dim sum restaurant just opened up. God only knows how much they spent renovating that place, It must have been at least 2 years worth of work.

AlbertCory 5y ago

Well, I can only speculate, not having tried. It could be that the farmers & handlers already know the main suppliers and they're satisfied with them: low prices, good service, acceptable quality. And they're not looking for even lower prices. If you have a monopoly and you've ridden the learning curve far enough that you're making a good profit while not pissing off your customers, and the market is pretty static, you're in. But I could be wrong.

ethbr0 5y ago
I'd hazard it's probably due to order of magnitude different absolute profit amounts. E.g. you can double your margins on fruit labels, and still be a rounding error for fruit producers Consequently, being invisible and fanatically attentive to what your customers want (e.g. ease of use) means the hassle of switching suppliers outweighs the cost savings.
- AlbertCory 5y ago
  I was pondering this while walking the dog: family-run businesses, small business, etc. In some businesses, having been around for a long time, being part of the community, and knowing your customers is worth WAY more than a few points of profit. In fact, those businesses are everywhere. Look and see who buys the ads for the high school sports teams. Tractor repair ought to be like that. Not the monopoly of John Deere. (I don't know anything about who owns fruit-labelling, and it might even be some giant conglomerate.) But let's say someone owns such a loyalty business, everything is great, and then they die or retire. Then what? It's the source of a million dramas, like Yellowstone or King Lear. Maybe a son or daughter takes over. Then they're incompetent. Or not. Maybe the kids fight over it. The possibilities are endless. Or maybe the giant conglomerate DOES buy it. Promising "nothing will change" of course.
  - ethbr0 5y ago
    I think often... it just ceases to exist. E.g. What happens when the local diner goes out of business? There's no Law of Diners that mandates someone else step up. Sure, a McDonald's or Wendy's might drop in. But that's not really the same thing. (Restaurants are the obvious example, but it could just as easily be a machinist or florist. Flavor analogy to desired niche industry) As an example: Royall Machine, Lottsburg, VA https://www.google.com/maps/place/2461+Northumberland+Hwy,+Lottsburg,+VA+22511/@37.9627178,-76.5196366,3a,75y,79.68h,90t/data=!3m7!1e1!3m5!1sGcS9Vcq_B10gVw6KwkcXNg!2e0!6shttps:%2F%2Fstreetviewpixels-pa.googleapis.com%2Fv1%2Fthumbnail%3Fpanoid%3DGcS9Vcq_B10gVw6KwkcXNg%26cb_client%3Dsearch.gws-prod.gps%26w%3D86%26h%3D86%26yaw%3D79.67581%26pitch%3D0%26thumbfov%3D100!7i16384!8i8192!4m5!3m4!1s0x89b7569c05eab757:0xfd3982578edc427c!8m2!3d37.9627719!4d-76.5192646 https://www.google.com/maps/place/2461+Northumberland+Hwy,+L... Was there for 30+ years. Could make about anything you needed out of metal. Now, just isn't. And moreover, the customers, having become cultured to dealing with the existing business, now have to radically alter their expectations when interacting with a more corporate entity. McMaster-Carr is great, but it's a darn sight different than bringing in a broken part, and having a duplicate made in about a week.
    - AlbertCory 5y ago
      Yeah. Depends on the family. Kids these days... Maybe it's different in rural areas. I think restaurants tend to have a certain layout that's especially good for another restaurant. But then: near me, there was a Rite Aid that closed shop 3 or so years ago, and a brand new Grand Dynasty dim sum restaurant just opened up. God only knows how much they spent renovating that place, It must have been at least 2 years worth of work.