Racing to the bottom, junk products, high profits = Business

[zombiess]

I'm not sure exactly where I'm going with this post, kind of a brain dump/grip session. This really kicked in this weekend when I had one of my wireless routers die setting off a chain of events I'm still trying to resolve. The root cause of the issue... junk products engineered for maximum profitability and obsolescence.

Some on here know me as a tech guy, hot rodder or as someone who sells parts. I'm all three, but it's the last one I really want to talk about. I'm getting fed up with junk. So many products are designed or made so horribly that you might as well through your money away. Then there are the just good enough products, these are the ones that work as advertised, until they just die and head to the land fill.

When I started my business 3 years ago my number one rule was and still is, "Don't get greedy". Some would say that this is a poor business strategy and they might be right, but if no one tries to change the norm, then the norm never changes.

Like many on here, I'm for proliferation of EVs and I'm trying to make some money along the way to fund my ideas. Part of that strategy is finding mid level products to sell that perform as advertised and won't end up in a land fill. This is actually much harder than one would expect.

I spend a lot of time talking with companies and customers trying to figure out what the EV sector needs to grow. Right now I see the following demand in this order batteries, BMS's and controllers.

I know for a fact that I could make more money importing lower power lower quality motors, Xie Chang controllers and questionable batteries, but that just doesn't seem acceptable to me. I'm not sure if my strategy will pay off in the long term or not but so far things have been working OK. I'm making just enough profit to make it worth my while to continue selling products and investing the time. Those profits are then being invested into developing some of my own products and research. Anyone who has visited the technical sections knows I'm big into controllers/inverters and this is where I'm trying to focus my design work.

Right now I'm trying to pull together a complete high power EV system to start selling early next year, most likely through a Kickstarter campaign. I'm speaking with a marketing person right now that has run several smaller campaigns which all funded. Right now I'm sourcing products, talking with engineers, having manufacturing changes made to products to improve them, etc. I've been involved in this market now for some time and while it's still niche, it's expanding. I want to try and make it easier for others to experiment and obtain quality parts. I find from talking to and supporting customers that many people are good mechanically but get concerned when it involves wiring, batteries and charging. I'm in talks with some companies to fix this issue, but I'm only one person and the work is almost endless.

I think I've started to focus more on the business side lately because I'm rarely able to ride due to chronic pain. I've lost my ability to do lots of physical things I enjoy so I started spending more time thinking. Most of that thinking is engineering oriented on ways to do things better and also on how I believe a business should operate.

I know others have tried a similar strategy, but I think good intentions didn't match up well enough with business needs to reach sustainability, but it wasn't for lack of trying. Some of those same people also helped me along the way telling me their business horror stories which I'm glad they did as it helped to change my own ideals.

I'm finding that the EV market doesn't offer the product quality I desire at a reasonable price point. We all know batteries are expensive and will be for a while, but it's improving. This is the number one driving factor which is stopping wider scale adoption.

I think another driving factor that is getting to me is the ridiculous emphasis put on consumerism. Many retailers are now open on Thanksgiving... Seriously? Hello greed and screwing over the low wage earning retail employees who now have to work instead of having a paid holiday. I'm 37 so I'm not old yet, but I'm getting there and my priorities and thinking are changing. I don't understand the waiting in line for hours or days to buy a $200 low quality big screen LCD TV. What are you really saving?

I already own all the material junk I could ever want and so do many other people. At this point if I somehow came into a large amount of cash I'd want to figure out how to use it to improve the world, even if only a little bit.

I'm starting to feel like I have outdated ideals.

Happy shopping... I mean Thanksgiving (for those of us in the USA and a belated happy Thanksgiving to those in Canada).

 

[100volts+]

Just keep doing what your doing. I've bought 2 cro's (one laced in a fat rim), a 150v controller, cwashers etc..from you and All still work as advertized.

 

[rider95]

Bet you hate harbor fright lol I do

 

[Sunder]

Not everyone goes for the lowest bidder. I certainly don't any more, but recently my wage has gone up a fair bit, so I can afford quality now.

I think the trick is to demonstrate quality without looking like you're trashing your competitor's... trash.

The problem is differentiation. You've got all these shitty vendors claiming exaggerated specs, graphs stolen from elsewhere (you can see the blur/cut off marks) and basically it's fraud, so the genuine guys can't really compete except on price or reputation. Which is partly why I get so pissed when someone with zero prior posts come on here to whine about a reliable supplier like HK or Grin.

Just keep doing what you're doing, and don't compromise, and realise you will lose a little bit of business - but even if you do, those are likely the same people who would complain that "I sent him 20 emails over the weekend, and he didn't answer a single one of them!".

 

[zombiess]

Does anyone else wonder what happened to responsible businesses? Why have so many changed? Has the greed gotten that out of control? The need for the latest gadget so intensely strong that the one we purchased 6 months ago is no longer good?

I switched mobile carriers 2 years ago and of course got locked into a contract. Now that my contract is up, they are offering me a free upgrades or $30 off my bill. I have a Galaxy S3, the current version is an S5 now I think? The S6 is coming out soon? How much better is the new phone going to be than the s3 I currently use? I just update the software and it does everything good. They sell millions of these phones around the world and the obsolescence is built in. Same goes with most tech. I work in the tech industry and I see the average user on a daily basis. They can barely remember a password let alone how to max out a PC or a smart phone.

I also think about what happens to all those old phones and the resources that went into making them, where do they go? Probably back into the ground from whence the raw materials came. Sounds a bit greeny wieney which typically is not me, but it's something to think about.

What if just 10% of the money and effort spent on making companies massive profits were put to use to improve society and progress science? I'm not talking about socialism, marxism or taxes; I'm talking about more businesses working to improve the situation. It's OK to make profit, it's what makes business work, employs people and drives development. There are many corporations that have programs and give donations, but few have it as a major focus. Many are just symbolic in nature due to the tiny fraction they typically represent. Yes, there are exceptions.

I'm a major tech nerd and love science, but I also have a love of art, have studied it and even tried going to school for it. I recently went to the LA County Museum of Art with my wife and my friend. While I was looking at the craftsmanship that went into some really old Samurai swords I started thinking about the amount of labor and resourced required to manufacture the blade. Have a good blade was not enough, it was then decorated with fine detail. This all had to be done by hand since it was the 1600s. I'm not sure how many total man hours went into a single sword, but it was a lot. I have no idea of the financial value this item holds, but I'm guessing quite a bit.

While thinking about the sword I realized I could contract a company to manufacture identically functional replicas of this sword in months for next to nothing. They could be sold in the gift shop or home shopping network. How far we've come in just a few hundred years that 1000's of man hours can be compressed down into just a few hours and a very high quality product could be produced for a low cost. It saddened me to realize how much potential goes unused or under utilized which then led me down the path of thinking how shoddy and worthless so many things have become.

It's pretty easy to go buy products make +100 yrs ago that still work well today. How many of today's items will be working in 100yrs? Is having everything as cheap as possible the best solution? Is it really a good idea to have so many thing so cheap we just throw them away without a care? There must be balance some where. I'm thinking we have a pendulum effect where things use to be hard to manufacture and expensive to purchase and now they are near the top of the arc on the other side. Do you think the pendulum will reverse?

I believe I am seeing a shift in the thinking of many newer companies, sometimes for misguided but with good intentions.

I myself am hypocritical of the above at times, but I try to minimize it. I lack the money and influence to impart some of the change I would like to see, but I'm attempting to work my way up.

 

[made_in_the_alps_legacy]

I am a stupid guy, I came to a point to believe that there can't be any "profit" without a kind of "extortion",
nevertheless, I agree with Sunder and it's up to the consumer to "buy wise"

Not everyone goes for the lowest bidder. I certainly don't any more, but recently my wage has gone up a fair bit, so I can afford quality now.
.

 

[Punx0r]

Unfortunately, your impressions of consumerism are accurate IMO. My impression of the business/engineering world is increasingly along the lines of the Dilbert cartoons.

One thing has changed: Up until the 20th century, materials were relatively expensive and labour relatively cheap. Of course, greedy companies are still searching the world for almost-slave labour, but in the developed world things have changed: Labour is expensive and materials are cheap. Hence, the absence of craftsmanship and the proliferation of automation that reduces manufacturing time, more than anything, to a minimum.

Your example of the sword is like many finely crafted objects. It was made by poor people for the exclusive use of a minority of very wealthy people.

There are still examples of things built to last, but I admit they are in the minority. There were also some very junky products turned out during the industrial revolution that required modification and frequent maintenance to operate. I suppose the difference between that and the junky tools from, say, China nowadays is that you could get spare parts and weren't expected to simply throw away the product.

That is perhaps part of a cyclical problem. The average person today is less practical and DIY oriented, so products are more likely to be designed to be disposable. However, in a world of disposable products, there's little motivation to be a DIYer.

 

[dogman dan]

It just makes you want to puke if you dwell on it.

As a construction worker, I watched the quality of basic hardware going into house go lower and lower over a 30 year period.

Stuff like doorknobs. You know, the house will be lived in at least 50 years, and quite possibly 100 years. Yet we start having to come back in 360 days, because the fracking doorknobs don't last through a 1 year warranty period on the house. Seriously? won't last a year? Well some of them anyway. This is not some no name brand either, I'm talking brands that have been #1 or #2 choice for at least since 40's. Same brand doorknob that was still working fine in the house I grew up in that was built in the 60's. Those 1960 model knobs and latches still working fine in 1990 when dad sold the house.

But post 1990 knobs from the same company, you look at it, and it's made of tinfoil, so much metal removed from the basic structure to save a penny per unit. Pretty sad, you have a $500,000, plus custom home built, and the contractor cannot buy a quality doorknob for you. Keeps the handyman in business, replacing all the knobs and latches every 5 years or so.

GRR. Same damn thing in everything, even industrial grade tools, not harbor freight stuff.

 

[gogo]

People can be very different. We all tend to hang around with those who are like us, so we can lose sight of this. Marketing to the general public is 'weird' and something I have trouble getting my head around.

Understanding human nature, both that in common and the range of differences, can pay great dividends.

 

[Ohbse]

Companies as an entity are not inherently evil, however they do have 100% selfish motivations, profit and growth. We temper those drives with human judgement and influence, often at the detriment of absolute profit, just like what you're doing by refusing to sell trash. This human influence becomes harder and less effective the larger the entity becomes. The other way business is steered is through regulation, for instance if enough people sell enough junky batteries that catch fire and burn people then the government will introduce mandatory standards for safety.

In the US in particular you can see a huge move towards larger and larger companies, driven by profit. Simultaneously you see public backlash against regulation, instigated at the request of the companies it affects. This trend does not end well for individuals.

Keep selling quality, I will gladly buy it.

 

[zombiess]

Understanding human nature, both that in common and the range of differences, can pay great dividends.

I'm ranting/venting in this a bit, but I get it, well enough to exploit it and make money off of it, I'm just choosing not to do so. As I said, probably not a wise "business" decision. I feel it would violate my ethics.

Another reason I choose not to violate the ethics is I believe if people have nothing but bad experiences with EV related products that it will sour them and the credibility that EVs can be a better way. These are the very early stages of adoption so they are key. I've already spoken with and sold products to several people/companies who have had issues with low quality and failures.

For me the business isn't just about making money, it doesn't have to be all about greed. If I was tossed in with the big boys of business I'd probably get my ass handed to me in a few seconds, so I'm picking my battle carefully. Since this is a new industry and there is growing DIY demand by the mechanically inclined (tinkerers, hot rodders, researchers, people having fun) I'm hoping I can make a difference. It's quite possible my own business could fail with my strategy, but so far it's been working, better than I expected. Now I'm going to try and scale it up this year because the market appears to be more accepting. I'm in contact with more first timers than ever before and I'm trying to provide some guidance vs just selling stuff. I've talked some customers out of what I'm selling because it was the wrong choice for their application.

I feel like I'm running an experiment. I know I'm not alone though, I've dealt with other businesses in a similar market I'm in and we often help each other out by sending customers to each other.

 

[amberwolf]

I'd like to say your observations about business and junk were wrong, but they're not.

Even service businesses are maximizing profit: Denny's, for instance, a restaurant chain, used to have nice comfy booths and chairs, carpeted and rooms designed for keeping echoes and noise down so you could sit there and have a group of people in conversation without it sounding like hundreds of people screaming at each other in a tiled bathroom--which is exactly what it is like now since they've remodelled many (maybe all by now) of the ones around here. (I myself can no longer even go there, because I can't handle the noise--even just the kitchen noise is amplified and reflected around by their new hard-surfaced walls, floor, cieling, and furniture, and their "music" piped thru all the speakers everywhere is loud enough that you have to almost yell to be heard over just that, and by the time you pack in a full customer load it's pure cacophony).

Most of teh fast food places already did this years ago.

What it does is drive people out quickly, so that by teh time their order actually gets prepared and out to them, they just want to gobble it down and get out. That means they have more room for more customers.


But...the catch there is that except for a few places, during lunchtime and *occasionally* during dinnertime, they didn't have enough customers to fill their tables to start with, so there was no need to do this. Now, though, they have even more empty tables even more of the time. And people are less likely to stay to order desserts, etc. Less likely to tip their servers, too, from what I've heard so far from those I know that work at such places.

Oh, and prices at some of these low-medium-end restaurants have gone up by as much as a third on many things in the last couple of years, while portions and quality have decreased by at least that much.



I won't even go into how things are in retail, like where I work, but it's gotten pretty stupidly bad.

 

[The fingers]

Just look at US currency for example. Pennies used to be 100% copper; dimes, quarters, halves, and dollars were silver. Now pennies are made of zinc alloy (pot metal), the other coins are clad copper. Fortunately I don't remember when gold coins were in circulation. Even the paper money in use today looks wierd to me, security features and the loss of the engravers art makes the money look cheap, no wonder it's becoming more and more worthless every day. :x

 

[2old]

Probably not a popular comment, but someone said that we get the government we deserve; similarly, maybe we get the goods we deserve. We can vote with our wallets --- Look at Rivendell for bike related products; almost all are manufactured in the USA, Japan or Europe, similarly Park Tools, American Apparel and etc (I have no affiliation with any of these companies).

 

[MadRhino]

Business is to make money and if you don't, soon you will have to pay your good service with deficit. Those who are selling cheap stuff with pennies for a profit, counting on volume sales to make money, are giving poor service if any.

Business is not only makintg money, but it has to make money to be good, for you and your clients benefit.

 

[Sunder]

Does anyone else wonder what happened to responsible businesses? Why have so many changed? Has the greed gotten that out of control? The need for the latest gadget so intensely strong that the one we purchased 6 months ago is no longer good?

Imagine you're at a football stadium. Some guy at the front wants a better view, so he stands up. Now the guy behind him can't see properly, so he stands up too. This keeps happening until every stands up and nobody is any better off.

Same thing happened with consumerism. We want to keep up with the Jones': John bought a new car, Jane went on holidays, and Jack renovated his house. We envied them all, so we bought a cheap car, went on a budget holidays, and paid the cheapest person with the lowest quality material to freshen up our house.

We got it all - but we got them all badly.

I recall my dad's old Holden Kingswood cost nearly a full year's wages, but aside from a once a year service, ran fine for 25 years. It was still running when he sold it for scrap metal. It was worth more as scrap than as a car due to its very heavy weight (over 2 tonne?) My car is 8 years old, but it's already had several major repairs - but it only cost me 1/4 of a year's wage.

 

[Punx0r]

Grin seem to be a good example of a well-run (dare I say ethical?) business with good support and quality products. The pricing is necessarily strong.

 

[dogman dan]

Grin is the one offering a better level of quality.

What grinds me about the door handle example, is that you can go buy a handle priced 4x the entry level model, and the working parts inside will be identical to the lowest priced model. And they will not work for a decade, lucky if you get 5 years.

So there you are, obscenely rich, and you cannot buy a quality handle that functions for a lifetime for your trophy house. That's very weird. I've installed very pricy handles that broke on the first test use! Even the "commercial grade" stuff is cheap now.

 

[Punx0r]

I'd say that was an example of completed race to the bottom

Cheap Chinese manufacturing means that the phrase "you get what you pay for" has ceased to be true. As you've observed, it's possible to pay very different prices for the same quality of product. IMO this encourages us to buy the cheap-and-nasty option when it comes to product selection, for fear that the "premium" model will only be premium in price and not quality.

 

[e-beach]

So you want to sell a quality product at a reasonable price......More power to you I say! .....But, (yes the devil is in the details) how are you going to get materials of quality at an affordable price? Nobody is giving anything away unless it has little or no value.

On making something that lasts.....how are you going to get repeat sales if your product lasts a long time? So you may not worry about that (the don't get greedy thing) but it is hard to keep a business going on one sale per customer. One answer is to stock more then products for them to buy. I don't know what Grin Tech's books look like, but they stock a lot of stuff, their stuff is considered quality, but they are also very-retail in their pricing.

You will probably have to charge more then you want to for your quality to make up for one time sales.

On inflation, the central banks uses inflation targeting policies. Our fed thinks 1.7-2% annual inflation is ok. They figure that most businesses and people should be able to keep up with that kind of inflation. 2% annual inflation on average would put $1 dollar of goods and services today at $1.50 in 20 years. Of course not every year will be 2% and not every product will always follow that "inflation targeting" curve. Sometimes you may have to pay much more then you want to, for what you need to build what you want to build. Especially if it catches on and others start building similar items and then the demand for raw materials goes up as more people want them. While at the same time the demand for your product goes down as more of them are around.

If you haven't notice the price of oil per barrel has plummeted in the last few months. This will drive a stake through the hearts of most EV makers because of the need to charge money up front. Compared to an ice car their is little need for spare parts....motors last. (reference the movie Robocop "rebullds, spare parts, who cares if it works or not.")
https://www.youtube.com/watch?v=R4zss6s1PMk

With the price of oil dropping the cost of gasoline will drop and people will forget about expensive electric vehicles because it is inexpensive to drive an ice vehicle again. Low oil costs wipe out the expensive competition. The low cost of oil is temporary, but if it lasts long enough it could do a generations worth of damage to the electric vehicle industries.

On the other hand as the demand for lithium batteries decreases they might become temporally cheaper next year and the year after. If they do, consider stocking up.

Good luck with it.

 

[Dougt]

On making something that lasts.....how are you going to get repeat sales if your product lasts a long time? So you may not worry about that (the don't get greedy thing) but it is hard to keep a business going on one sale per customer. One answer is to stock more then products for them to buy. I don't know what Grin Tech's books look like, but they stock a lot of stuff, their stuff is considered quality, but they are also very-retail in their pricing.

There is always a market for quality durable goods. Money can be made in many ways. First of all, custom e-bike market is a fast growing boutique market, so new customers are always coming in. Secondly, with a small business in an unsaturated market, word of mouth and reputation is critical. Third, quality products in this market are safer. Having a home burn down because of a defective battery pack build, bms, or charger is a major liability. Another way to bring in new customers is always to offer improved products...better performance, value, etc. Lighter, stronger, better range, easier operations, safer, etc.

As for oil (although mostly irrelavent to this discussion) the price going down is always temporary, and can be artificially stabilized through many means: political, taxes, subsidies, etc. Regardless, electric cars are cheaper to power even if oil was back to $15 barrel, because oil is always more expensive than the coal that feed the powerplants. It is the battery capacity and cost that limit electric car adoption and battery prices per unit energy and power have been falling rapidly, ccle life increasing, safety increasing, environmental robustness improving, etc, and in less than a decade e-car costs and range will likely be a wash with combustion engines. E-cars will be more reliable, but that doesn't mean companies are going to stop selling them so they can make more money on maintenance and parts, for as long as one company is selling them, the others have to compete.