Low Cost Competitors and What It Means for Customers

Why are shower doors so much cheaper at home improvement big box stores? Or why is one small glass company more expensive than another? There are a few factors that can attribute to the differences in price. The following paragraphs describe the major factors that can affect price, namely buying in bulk from China and companies who don’t play by the rules, but there are several others.

Big box stores buy a majority of their products in bulk from China because it is cheaper than buying American made. The debate of buying American vs buying from China can get heated and ugly. The purpose of this post is not to get into this debate, but rather offer some insight about getting the most for your money.

Buying in bulk from China is undeniably cheaper than buying the same amount of bulk from an American company (based in the U.S.) as manufacturing & employee costs are much lower in China than here. According to a Bloomberg News article by “U.S. research on Chinese manufacturing shows hourly wages going from the equivalent of 62 cents an hour in 2003 to $1.36 an hour in 2008. Today’s story cites more recent numbers from a Japanese survey that put the average base monthly wage in Guangzhou at $352 a month and $317 in Shenzen. That Guangzhou wage is the equivalent of $2.20 an hour a 160-hour month (40-hour week)” (Gimein, 2013). It’s no wonder that many big companies buy from China, but at what price?

Standards that all products (food and non-food) should meet are not always adhered to, may be overlooked, or perhaps the regulations for certain types of products are not very strong. Whatever the reason, some of the products coming from China may be of poorer quality. This is not condemning China or big box stores, but rather addressing reasons why products and/or services are cheaper.

There are other reasons that big box stores may be able to offer glass products, including installation of those products, at a cheaper rate such as lower employee wages compared to specialists who are strictly glaziers (glass experts). For example, in the medical field a person will pay more to go to a specialist (i.e. Endocrinologist, Oncologist, Plastic Surgeon, etc.) than they would to see a general practitioner. Would you rather have a General Physician or an Oncologist providing cancer treatment? Although the General Physician has received education and probably had some experience in cancer treatment, the Oncologist does nothing but cancer treatment, is more current with developing trends/studies in that particular field, has many more resources, and much more experience. Similarly, the employees at the big box stores have received education of a particular product and may have some experience with installing a product, such as shower enclosures, but they are not specialists. Glaziers are glass specialists who do nothing but glass fabrication and installation.

What about smaller companies who don’t buy their glass from China? Why is one small company cheaper than the other? Unfortunately, there are a few companies who don’t play by the rules. “In an effort to cut costs, they might install improper product, or underpay their employees. And with so many building owners focused on the bottom line, these companies sometimes win the job over their honest, quality, possibly higher-priced competitors… This is also true in the fabrication side of business” (Chase, 2013). And good luck getting a company like this to come out for a service call or fix a problem that was most likely caused by a bad installation. In the article referenced above, an anonymous glass blog reader states that, “We’ve had many bids this past year where the low bidder was below our hard costs to do the job, not including liability insurance or other overhead costs.” It is true that every business has different overhead costs based on size and location of shop/showroom, rent, cost of utilities, employee size, wages, insurance, fuel costs, the list goes on, BUT most companies should be pretty similar in bidding a particular job unless it’s a company cutting corners where corners should not be cut. “Costs are rising for materials, insurance, fuel, benefits, and high quality employees” (Chase, 2013), which means the final cost to the customer is rising. It is the job of a reputable, quality, & honest company to sell the customer on what else they are getting for the money…quality products and benefits. Willow-Ridge Glass, Inc. is a company that offers “quality-centric” products and sales practices. We stand behind the work that we do and if there is a problem, it will be fixed in a timely manner. There are few businesses out there, like Willow-Ridge Glass, Inc, who continually takes care of and treats their customers, employees, and vendors fairly. Our goal is to provide our customers the highest quality service and products at a reasonable price by working with honest, quality suppliers and employees.

Sometimes the lowest bidder wins, and that’s ok. Without poor quality, it would be hard to recognize good quality.

References:

Chase, J. (2013, March 25). Beating the Low-cost Competitor. Retrieved from: http://glassmagazine.com/article/commercial/beating-low-cost-competitor-1310933

Gimein, M. (2013, March 27). If U.S. Wages Rose as Fast as China’s, Factories Would Now Pay $50 an Hour. Retrieved from http://go.bloomberg.com/market-now/2013/03/27/if-u-s-wages-rose-as-fast-as-chinas-factories-would-pay-50-an-hour/