CA-Cube targets small businesses and enterprises that need to have a retail outlet. These businesses would actually need to have outlets in malls or shopping centers but they cannot afford these venues. They may not even be allowed to have outlets in these places because of their small size. So, they use non-traditional channels like eBay, Kijiji, weekend markets and trade fairs. These channels could be CA-Cube’s main competition. CA-Cube is a unique concept so it would not have that many other competitors.
Costs and value for money would be the vendors’ most important consideration in choosing a retail outlet. Some retail channels cost very low to operate so they are able to offer very low prices or very big discounts to the end customer. However, the benefits and services they provide may at the same time be very limited.
EBay
EBay is a virtual retail store or e-commerce site that allows individuals to sell small units of products through classified. These products are sold either at fixed prices or through an action. The bidding process at the auction is both a promotional tool to engage customers and allow vendors to earn additional profits. Its chief service is for its clients to do transactions and receive payments, and for its end-buyers a guarantee on the sellers though not of the products. (eBay Canada)
Being a virtual organization like amazon.com (Matthews), eBay does not maintain any physical retail outlet and thus enjoy enormous operational cost savings. It is almost entirely a digital operations. Delivery and corresponding costs are carried by the vendors. This is another cost savings for the company. As a result of all these, eBay can offer its services at much lower costs with regard to retail selling and, relative to traditional media, advertising. In turn, this allows vendors to likewise sell their products at much lower prices than they would at regular stores. The company earns income from various fees for advertising insertion, value of sales, subscription, supplementary services, among others. (eBay Inc.)
Kijiji
Kijiji is essentially a classified ads service. It is also owned by eBay but is positioned to attract the lower end of the market. Its cost structure is similar to eBay. It saves costs by not having to have a print a classified ads publication. While it offers free classified ads service to prospective customers, it earns its income from fees charged on certain types of ads and services. The main difference of Kijiji from eBay is that its classified ads postings are distributed in Canada by cities. This allows vendors to sell their products to a very localized audience rather than to entire country at once. (eBay International)
Weekend and flea markets
Weekend and flea markets are other alternative venues for individuals and small vendors to sell their products. Organizers rent a large space, usually a large open and undeveloped area. The space is divided into stall spaces—usually provided only with a tent cover or roof—that the organizers lease out to different vendors. Weekend and flea markets have very low costs for the organizers as they will practically be paying only for the space and other expenses as covered in the Flea markets regulations act. (Canada government)
Because of their low costs, flea markets can lease spaces also at a very low costs to vendors. They also have a very localized audience and market which could either be an advantage or disadvantage depending on the products being sold. Their chief disadvantage could be their low-cost image which could work against a company’s brand building efforts.
Trade fairs
Trade fairs would have similar costs and advantages as weekend and flea markets. However, they are bigger events and are held at big, reputable venues. They are usually hosted by professional or trade organizations assisted by trade events managers or companies. As a result, they would have higher costs. In addition, they would incur advertising and other costs to promote the events. These activities are far less frequent than weekend markets, usually just one-a-year. These events can be good opportunities for small businesses to build awareness and establish contacts in their specific industries. The cost of participation in these events could be very high for a small business though. (EventsEye)
Comparative sources of costs
Weekend and flea markets may seem to have a lower cost to operate, especially in the short term. These markets are usually held relatively undeveloped locations without the amenities of a mall or shopping center. Their chief advantage over CA-Cube’s costing and to vendors is that one need much less cash allocation at a time. However, assuming that these weekend markets operate on a daily basis the way CA-Cube does, they may actually cost about the same if not more than the operational costs of CA-Cube. After all, the market developer or host will have to absorb all other costs like providing certain requirements of their clients. On the part of the end customer or vendor, they will also incur additional costs in providing themselves in setting up their space to make it suitable for selling. For brand positioning and certain types of products, weekend and flea markets may not be an option.
Trade fairs and shows costs may again seem lower than CA-Cube’s. This is mainly on account of their being conducted only on a very limited time. Should these events be held more frequently, they may cost much higher to operate than CA-Cube. On the part of the vendor, trade fairs can be very cost efficient. However, as these are usually annual, one-time events, they may best serve as channels for promotion and wholesale contracting for the vendor. Also, CA-Cube can provide this service to very small vendors that cannot afford to join trade fairs on their own. In a sense, trade fairs can be utilized by CA-Cube as promotional venue rather than consider treat them as competitors.
CA-Cube’s would have higher costs than eBay, Kijiji or weekend markets. This stems mainly from having it having to shoulder the costs of maintaining a physical retail store. It will have to pay lease and corresponding taxes, the more expensive the location, the higher the taxes and all corresponding costs would be. In addition, CA-Cube will have to design, plan, build and maintain its retail stores. It will also have to maintain staff for the store’s operations. It will also have carrying or storage costs for inventory. eBay and Kijiji do not have such expenses.
Conclusion
In the end, the target vendors of CA-Cube may have to use a distribution mix of e-Bay, Kijiji and trade fairs with CA-Cube as the main channel. Weekend and flea markets can be an option depending on the kind of product like those from home and cottage industries. While CA-Cube’s costs may be higher, it could still be a profitable business with the proper pricing strategy. It can offer better value for money than the three options for the vendor.
References
Canada Government. Flea markets regulation act. Retrieved on 31 Jan 2013 from http://nslegislature.ca/legc/statutes/fleamark.htm
eBay Canada (2013). About us. eBay Canada [Facebook page]. Retrieved on 31 Jan 2013 from http://www.facebook.com/eBayCanada/info
eBay Inc. (2013). Seller information centre. eBay [E-commerce website]. Retrieved on 31 Jan 2013 from http://pages.ebay.ca/sellerinformation/index.html
eBay International AG (2012). What is Kijiji? Kijiji [E-commerce website]. Retrieved on 31 Jan 2013 from http://help.kijiji.net/ca/knowledgebase.php?article=78
EventsEye. Trade shows in Canada: 2013 – 2014. Trade shows worldwide. Retrieved on 31 Jan 2013 from http://www.eventseye.com/fairs/c1_trade-shows_canada.html
Kijiji (2013). About us. Kijiji Canada [Facebook page]. Retrieved on 31 Jan 2013 from http://calgary.kijiji.ca/
Matthews, Christopher (16 Jul 2012). Will amazon take over the world? Time. Retrieved on 31 Jan 2013 from http://business.time.com/2012/07/16/will-amazon-take-over-the-world/
