Why The Current Modern Lighting Industry Is Flawed And Why We Do It Differently September 26, 2016 – Posted in: General Info
The current lighting industry is flawed. The pricing is ridiculous, the number of middlemen, customer service, sales people, and a slew of other problems put a lot of consumers at a loss when it comes to purchasing lighting at a fair price. If you have “expensive” tastes for your home, generally you will end up paying quite a bit for it. Take the example below of the Sonneman Stilleto:
That light is priced at $970 with a very similar design to one of our fixtures that is currently $149.99 (ours is different but similar). That is a ridiculous price to pay for something that costs 10% of that to create. Why though?
- Sales Commission – there is literally salesman, like in car dealerships, trying to sell light fixtures to potential customers every day. They earn a pretty hefty commission so they try to focus on luxury brands and push you into buying a fixture that’s more expensive even when better options are available. I’ve had a conversation with a few, and they blatantly told me “there is no chance we would push your products at your prices”.
- Marketing Budgets – lighting is as old as the day it was created, and their business model seems to have stuck with it. Very few lighting companies have taken the modern approach to marketing even today – they still send postage mailers and focus too heavily on their distribution partners to move product.
- Unnecessary Patents – Lets be honest here, most patents aren’t worth it. Basically patents can’t be too broad, otherwise they get denied and if you’re not heavily enforcing them and constantly looking for prey, its just a waste of money. It’s not a magical blanket that will stop products from getting copied – even with patents, China doesn’t care. Rather then spending all that money patenting semi-unique designs, why not just make a better products at a reasonable price?
- Distribution – So talking with a few lighting store owners, I’ve discovered why these prices are so ridiculous. So lets say a manufacturer sells a fixture for $250 to a distributor, well that distributor knows the Minimum Advertised Price on the fixture is $900 so ofcourse they will sell the fixture for atleast $500 to a smaller store and that store has no other choice but to compete at the same price as anybody else (they like that part), and the contractor is marking it up 20% too. If they sell one or two a day they are still making $13,500 in profit a month! But realistically, they aren’t selling many at all. The price is just too high for 90% of the market, which is just false luxury. It’s a rolex without all the insane care and workmanship. The end consumer stores realistically work out of catalogs and carry very little of the luxury products for the customer that might come in to buy. Ofcourse there is exceptions in bigger cities but you get the point.
- Availability – You know how you just paid $1,560 for the fixture? Well it’s not in-stock, because even the bigger sellers such a YLighting (terrible customer support, check their facebook) doesn’t seem to carry many units. Hell, they might just be made to order at that price. They sure offer a ton of options for colors and features, but when it comes down to it the product isn’t in stock most of the time.
So what is our model?
- Direct – we manufacture, quality control, and ship to you. Ofcourse we do have distributors and private label products for those who want to sell at any price they want but that’s their choice. Our pricing is based on manufacturing, shipping, and marketing costs directly, not 10 middlemen.
- Availability – Sure we don’t have 5 finish colors for every model and 10 sizes, but we do our market research and see which colors are popular, whether customers care, and actually have those in stock.
- Custom Designs – It took me all of 30 minutes to get a hand of SketchUp Pro which is enough for our factory to get a sense of size and shape I want the lights to be. And we don’t plan on spending months getting patents and litigating them .
- Marketing – most of our marketing has been SEO (low budget), word of mouth (just be nice to people, its free), and content (free if I write it, relatively cheap if somebody else does).
I mean, there is great examples of the “bad” business model working around the world, and we don’t plan on being some white knight to condemn them all – we just want to do our own thing and let customers decide.