Leveraging Capacity Beyond Scale

Back in the third year of our business, we faced competition from small, 1-machine units whose owners were operating their company as a means of self-employment rather than as a business. Ever since we had converted the market into selling by weight instead of selling by unit hoards of hand-made paper bag manufacturers faced extinction since paper sheets were purchased on a per-ream basis (which means per piece basis). So, the opportunity that we opened was too big for us to capture alone. This gap in the market, fed by the plastic bag ban gave many opportunities to new manufacturers to creep up. The problem that these guys made us face was that of pricing, what we were paying two operators was all that they wanted to earn for themselves. Lack of foresight made them reduce the prices of paper lifafas manufactured by them.

Although they were small but ever since we had changed the unit of the sale in the market, paper lifafas became standardized as every new manufacturer was copying the grammage of our paper along with our sizes and some were even copying our name, Urza, Ujala, and Oorja are some of the MeToos. With standardization comes…