• DocBlaze@lemmy.world
    link
    fedilink
    English
    arrow-up
    4
    arrow-down
    1
    ·
    edit-2
    1 year ago

    it’s a known strategy in tech startups and most non inventory based businesses in general (think moviepass) to undercut your competition to try and get as much market share as possible, even operating at a loss, and then slowly turn up the prices on your users once they are locked into your system and make back the lost revenue over time. I don’t agree with it either, but the y-combinator business tech crowd seem to love this model, so I can’t really say if it’s a bad decision or not.

      • probablyaCat@kbin.social
        link
        fedilink
        arrow-up
        1
        ·
        1 year ago

        I can cite an example of it with an inventory based company. KIA sold their cars at damn near a loss in the US for a long time to get a good foothold. And it worked. Iirc they had a bogo on cars at one point even.

      • CoderKat@lemm.ee
        link
        fedilink
        English
        arrow-up
        2
        arrow-down
        1
        ·
        1 year ago

        Amazon undercut like crazy and is utterly massive today. They’re basically the online shopping company.

      • DocBlaze@lemmy.world
        link
        fedilink
        English
        arrow-up
        1
        arrow-down
        1
        ·
        edit-2
        1 year ago

        No, but once again, I did say that

        I don’t agree with it either

        I can however, point to evidence that it’s a popular business model, if you don’t mind accepting hacker news and y-combinator articles, as well as YouTube media of startup CEOs in earnings calls, but I refuse to defend it otherwise. These are often people with lots of money and advanced stem + business degrees however, so Im not going to sit here and act like I easily know better than them. I can say it did work for Google, but this is after they already were dominating with ad revenue and had the means to slowly introduce ads into every platform they owned ( youtube, maps, android). Popular platforms like DoorDash also have yet to become profitable, despite commanding a 70% market share on food delivery.