Monday, 24 October 2011

The Cost of Focusing Only on Cost

Over the past week, I've seen a couple of supposed innovative ideas meant to provide solutions in a downtrodden economy that are likely to cause more harm than good. 

Most of us read about - the world's largest outsourcing marketplace, empowering entrepreneurs & small businesses worldwide - that was featured in the Star and other local publications.  This is a viable business idea that could really improve our economy if it were properly executed.  Entrepreneurs would look on the site for jobs, and companies would look for qualified contingent labour if it were a valid and reputable forum.

Here is the flaw in the business model.  It focuses on cost savings alone.  One person requested to have someone ghostwrite a novel in seven to ten days for something ridiculous like $100-$150.  They were actually allowed to post this on the website! We all know what offering $150 for forty hours of work would get you.  If a qualified freelancer or a reasonable business person seeking qualified labour saw this, they would likely never return to the site.  One posting, one full swoop - all credibility lost.

The second example is the new DVD machines that we're seeing in grocery stores.  With Blockbuster closing and Rogers rumoured to be getting out of the business, grocery and corner stores are putting up DVD rental machines to satisfy market demand.  The only problem is that they're operated by outside people, and when they break down, there is noone to accept DVD movie returns (and you get charged a $30 deposit every time you rent a movie which you don't get back until you return the movie.) 

Once again, a great idea flawed in execution.  Chances are a customer frustrated by not being able to return the movie and get their money back would stop coming back to the store - for their movies AND their groceries.

It's time for all of us to take a step back and refocus on quality of product, rather than cost savings.  Spend time and money doing research and knowing your audience.  Be strategic and do things right the first time.  Because it's so true - you get what you pay for.

Rachel Pardy

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