Changing Competition Landscape

Week 47.1 Changing Competition Landscape

Long time ago, people sell silver as numismatic product in ebay, I came in and starting selling it as bullion market and cornered the market. My market is primarily started from ebay and it has growth to other website such as lelong.com, mudah.my and some local forum in Internet etc.

Initially most of the customers are coming from ebay. After ebaying a while, since they are reselling their product to others in their own social networking, they will deal direct with me. After that some sellers pop up mostly in XXX.lot.my and also mudah.my.  I have tried some forum in the past but the sales are not that good because the number of users has not reached the critical masses for a reasonable sale to be materialize. Things started to change in late 2010.

Prior to 2011, most of them do not have a big capital. By 2011, many of them are from government department took a competitive personal loan from Bank rakyat, Bank Islam and start to become dealer like me. It’s really hit me hard. Come and teach me back a good lesson. “Ajar sama itu silvermalaysia”. Everybody starts slashing price like no tomorrow, all my agents just died like that. I have to do extra work by selling direct. Aiyah, how to sell lah some customer only want to buy few oz only.

To profit in the market now is like gambling, if you pick the right time to buy then it is easier to sell for a profit. If you pick the wrong time, you are stuck with it until the price rise again. To profit you must be able to replace your product at a lower cost than the price you sold. However, the sales volume may not be there. Let said for small time dealer, you need to buy 100 oz each time but your sales till date is just 40oz. You need to buy extra 60 oz (that is a risk). If you wait the spot price may go up and you risk losing your silver without any replacement. If you buy now, you risk holding extra stock 60oz without any buyer for a substantial period of time.

Some sellers want quick profit, if the spot price goes up like mad, normally they will just sell below their replacement cost. All that matters is the fiat currency they earned. So it’s also not easy to sell in rising market.

Well, what is the next thing? With properties prices at the peak, stock market performance so so only, business every-where is getting slowed down. There are millionaires with plenty of cash who will come into the market and become a dealer. It’s much better than putting $ in safe deposit. On top of that, some big investor is trying to become a small time dealer because when the time comes they must have an exit strategy to sell to everybody. How to fight a tank with a knife? Sure loss one. I wonder what will happen to those dealers who took a big personal loan. They have to keep selling no matter how low is the profit as there is interest to be paid. Angry BIRD. Well in long run, I’m sure they will make some $ but maybe a lot lesser than what they initially dreamed. 

For me I have no choice but to slow down lah. Look for the next big thing.! What is it? Can’t tell you yet!