Fast nickle or slow dime?

Water Cooler Investing
#1

I have a side business I’ve been running for the last 9 months. I will not disclose specific details because it can be easily copied by you BSDs. The gist of it is I buy very niche electronic equipments that are surplus by govt agencies from auctions and then resell them through one of big name online retailers. So far, business is booming. So much so that I’m planning on dropping 15k on new inventory next week (If I win auction of course).

This particular equipment is highly regarded by certain professionals and they are willing to pay a premium for it. I also find that due to its durability and ruggedness, people outside of these professions do purchase it at lower price points.

I do have some competition. The once that price their products too low exit the market quickly and tend to carry low inventories. On the other hand, some of my competitors price their products 25 - 50 percent higher than my price point.

What strategy should I take? Fast nickle or slow dime??

#2

Slow dime. Why? Because as an upstart you don’t want to be making too much money, as that attracts competitors to you. You should be undercutting the more profitable operations. Think Amazon.

Good work btw, sounds pretty awesome.

#3

Can’t say I’m not jealous, but I agree with Palantir. Unless you think you can win (sounds like you can’t based on the way you get your equipment), I wouldn’t start a price war.

#4

Can your inventory go obsolete? Do you have a comfortable place to store the inventory while you’re holding it? If you can put a high price tag on it and keep it on the shelf until the right buyer comes along, that sounds like slow dime to me.

Also, going the fast nickel route would presumably require more time commitment.

#5

Thank you guys for taking the time to respond. I’ve decided to use the fast nickel approach for several reasons. My net profit margin is pretty solid (~70%). Past experience suggests that my DSI is about 4 months. 70% return in 4 months isn’t bad. Taking the slow dime approach will result longer DSI.

Above all though, I swear, my d**k grows 3 inches every time I receive, through email, a sale confirmation!

@ Frisian – inventory cannot go absolute.

#6

^Mad hustlin. Have you thought of slangin’ said equipment out of the back of a van in the ghetto? Straight cash homie, stop paying taxes to The Man!

#7

Have you ever thought of contacting your competition and forming a Pricing Cartel?