Funny how people just jump into things they don't understand.  For example, Joe sees his neighbour making a lot of money selling watermelon. So off he goes, looking for watermelon, found a few suppliers, asks for samples, negotiates price and buys a container.

Happily he starts going round to sell his watermelon but not selling too many. He wonders why.

a. The water melon could be the wrong size, ergo he bought them cheap but no takers.

b. Below par quality, ie not sweet. Cheap again and was ripped off.

c. Doesn't understand the industry.  Trying to sell watermelon when everyone is busy buying pumkin for Halloween.

Come on guys, if you want to do business, best way is to start in an industry you are familiar with. If are not currently in that line, then get a job in that industry and you learn very quickly.  Joe could have gotten a job in a fruit stall and learn buying patterns of fruit customers.

In doing that, he will also learn who are the major suppliers, competitors, price fluctuation pattern.  If he is smart, he might even find out where his competitors buy their watermelons from.

Ok going back to the above questions.  If you want to know something, there are two ways. 

a. Go through the rubbish bin.

You find empty cartons and get so much information. You will learn, who the customer buys from and what they are actually buying.

b. You can ask the customers who they are buying from.  if you give them a good enough reason, most customers will freely hand the information over.  Business is about helping each other. So you have to offer them a benefit.

Now, that you have the information, what are you going to do about it? If you are not in the industry, you won't know the current market price and most places won't tell you the price straight up. So you might have to buy some samples off your competitor. 

So you get an idea how much the retail price is, you try to work out the trade price or special price.  If your competitor gives their customers 20% discount for their loyalty, what can you do to break that relationship?

If you give better price that means less profit for you. That means work day and night for nothing.  So what can you do, short of marrying the customers ugly daughter.  Man, you will have to marry a lot of ugly chicks. 

The best way is ask the customers. What can you do to make them happy. Some will discuss with you, so will tell you a straight no. With the later, don't waste too much of your time. 9 out of 10, means they have some special deal going and you just cannot break than bond.

If you offer a lower price, is it worth your while? Sometimes it's better not to do the deal because you are tying up capital that can be deployed in other ways.  So don't be afraid to walk away.

So you are still hard up and want to go ahead but you are not making enough profit. What do you do? Find another supplier, squeeze suppliers in China, cut your cost?  I am a believer of volume.  If you can sell in big-big-big volume, suppliers will come to you with ever better deals.

So what if you don't make money until you hit critical volume.  You sleep in bus stops for a few years, so what.  Your girlfriend dumps you, so what. But once you hit that magical volume, money will start to come pouring in, you will have so much money you don't know what to do with it. 

You look back and have a good laugh. All because you read this post at Alibaba.com