A packet of 50 masks sold for about Sh5,000 in February 2020. That was Sh100 per mask. A discount of Sh500 was common. A packet is now about Sh400. Hawkers are now selling at Sh20 per mask, a drastic fall. What has happened? Any lessons for entrepreneurs?
Remember masks were not available in supermarkets when Covid-19 came ashore. A few people had them and you needed to call them to get your packet. Where they got them from is a question for another day.
They made their profit but not indefinitely. Other players wanted some of that money. The supply went up. The biggest blow to profiteers was the ministry of health guidance that allowed masks made from cloth. The tailors went overdrive supplying masks of all shapes and colours. Did masks from Rivatex and Kicotec get to the market?
The law of economics came into play. Higher supply meant lower prices. The demand remained almost the same. The population of Kenya did not increase overnight. To make matters worse, Kenyans wanted any mask that would keep them away from police.
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The fall in mask price was expected. Higher prices attract more players which damps the price. The suppliers tried to keep their prices high by making customer tailored masks with national colours or your company logo.
One hopes no one tried to hoard the masks with the curve flattening or about to. In the same token I am wondering what happened to body bags. Were they bought?
The fall in price of masks shows a simple fact: no business can escape the laws of economics. That is why innovation is so important, you sell your product at a higher price before the market is saturated or imitators come in. I have noted the current masks are not of the same quality as the original ones. Imitators love highly profitable industries.
Other products and services have followed the same pattern. Remember computers? Phones? The secret behind making money in a new market is knowing when to get in and when to get out or innovate.
But take heart. Sometimes you make more money by being a follower. You let others make their mistakes. IBM pioneered lap tops, Dell and HP did better. Netscape pioneered browsers, explorer and google chrome did better. Some pioneering banks in Kenya are running catch up.
It all depends on whether the product or service is long lasting or intermittent. Did you burn your fingers in masks or made money? Share your experience.
