Yesterday, the Wall Street Journal and other outlets had an interesting article and a lively debate about Target desperately worried about “showrooming” practices with mobile technology. Showrooming is when someone goes into a store and scan an item with their mobile phone, check for a lower price online and order online instead of the store and essentially, the store is just a “showroom” for the products instead of a place to buy.
I discussed using “showrooming” where we create an app similar to the Tesco iPhone application where cats in the hood can scan products from suburban malls and large grocery stores and help the hood business form a product list to sell directly to the hood.
However, this practice is scaring the hell out of stores because the truth is, it was showrooming that killed off the large chain book, camera and recorded media stores. But showrooming is now impacting the sale of low-margin electronics and that is what worrying stores. I remember when Best Buy staff treated me like I’m some worthless customer and from that point on, all I do is go to Best Buy, try out a product, snap a pic of it on my mobile phone camera and then order it online when I get back home.
But here is the problem with showrooming when it comes to African-Americans entrepreneurs and that is the issue the big box are scared of. See, showrooming will devastate the profit margin of your business if you sell stuff that others can get online. That is known as white-label products that anybody can get from Alibaba.com or China or from a manufacturer and that is what 99% of these so-called African-Americans specialize in and that’s a serious problem we have yet to address in our community.
Exactly 100% of all that Multi-Level Marketing program stuff these brothas and sistas peddle are white label stuff that others can get cheaper if they knew the right channels. When you see brothas and sistas selling handbags and stuff like that, all of that is white label stuff you can get from online at a cheaper price, including those ghetto clothes they sell in the hood.
Some of you cats want to tell me that you got this new hustle and trying to tell me you are a travel agency when you are doing nothing but using a white label web site that put your cheesy logo on it. Then some of you cats got the most ignorant nerve to come at us talking about you sell coffee as if your simple Black ass personally flew down to Risaralda, Columbia and inspected the coffee beans yourself..STFU with that! You talking about selling coffee when you selling that cheap crap being traded on the Chicago Mercantile Exchange, get an education before coming at me talking about you sell premium coffee, okay?
If you look at the business models we discovered in the hood, you should notice the only business surviving in the hood are those entrepreneurs made unique. Fried foods like fried catfish, fried chicken and hot roast beef submarine sandwiches, you can’t white label that. Funereal homes cannot be duplicated and state laws prevent liquor stores and tobacco shops from being duplicated easily also. Everything in the hood that is up and running is not white label products and that is what we need to be careful about when talking about revitalizing the hood.
With that said and this is extremely important – this is why I argue that we brothas and sistas need to focus on manufacturing in our hoods and produce original products to sell worldwide. We need to produce stuff that cannot be duplicated easily and push those products worldwide the same way LVMH push their products worldwide and cats buying it up. And those are the type of business we need to create more than white label products and white label services.
I’m saying this because on Facebook, I get solicited by cats always trying to sell me some MLM hustle that is basically something you find on Alibaba.com that you can get started yourself. I see sistas selling the same handbags you find from the same cats up in the Bronx who got it made in China and bought wholesale from Chinatown. Come on, we need to be serious about setting up real business operations in the hood that ain’t some crap that will crumble once the hustle been exposed.
Because as soon as a brotha or sistas open up one of these white label retail stores, the brothas and sistas who are smart phone savvy is going to start “showrooming” themselves and tell others where they can find these products cheaper. That is why a lot of these Korean retail outlets in the hood is failing and shutting down fast because a lot of brothas and sistas are buying those products online or from the dollar store. Me and you should not be repeating their mistakes and allow our business to be nothing more than a place for showrooming.
Think about my Liquiditi beverage kiosk stand I ran in downtown Atlanta last summer – all those drinks I was selling were not exclusive and could have been bought elsewhere, couldn’t they? I seen cats look at my Gatorade and then see they walked to CVS at the Underground Atlanta and they would walk right back past me with the same Gatorade I had for sale. See, I didn’t have anything unique to offer these cats and that is definitely a lesson learned.
That is why we have to realize we cannot launch these white-label business that feature products that cats are conditioned to run to Wal-Mart and get or just browse our store, ask to see our product and then go on Amazon.com and order it. If we do open up those kind of business, then we better be ready to sell at a low margin and hope we can make our money from volume instead.
Showrooming has some advantage in the hood where we can at least have them conduct transactions in our community and the more we have cats conducting transactions, the money stays in our community to recycle among our people. The key is to offer drop shipping so hood retailers don’t get stuck buying low-margin inventory upfront and just make a commission off the sale like a $299 flat panel television set, delivered in five days or less.
So with that said, if you think about launching a business, please don’t fall in the same trap as these other African-American entrepreneurs and hustle some white label crap. Cats will pick up on the fact they can find that white label stuff elsewhere and you cannot price compete as a new business, you will always lose if you try to go that route.
Instead, we brothas and sistas should look into making sure we can customize these white label products to the point they are unique or focus on manufacturing. I’m going to talk about this in another article but you brothas and sistas in America are straight 2012 ignorant and dumb as hell when there is a global population of over 2 billion that love and look up to your Black American ass and will buy from you if you setup your hustle to sell globally. But you sitting up here in America still looking for a “good job” and ish.
We brothas and sistas got to start focusing on manufacturing and other entrepreneurial endeavors that make us unique and not sell this white label stuff any cat can get off Alibaba.com as our hustle. I strongly feel we can sell just as much Black-manufactured handbags in China than Gucci if we are serious and setup our own handbag manufacturing plant in Detroit and have super quality assurance and the finest leather and materials and craftwork, even an ex-con can make this kind of ish happen.
In summary, let’s step out in this world being original and not get caught up in white labels because cats will definitely start “showrooming” and the hustle will not become profitable. Focus on customization, original manufactured products and create real business that can reach a global consumer base where we set up economic viability for generations in our community, our hoods and our family.