Commoditized Business

Commodity businesses are businesses without Competitive Differentiation and tend to have low pricing power, slim margins, and a crowded, competitive field. For example, editorial products.

Why it matters: On the bright side, if you intrinsically understand them, then they can become a solid foundation to earn capital and cashflow because:

• They’ve a low barrier to entry making them easier to start.
• There is already an existing wide customer-base. Hence, it becomes a question of standing out. Such markets tend to support many adequately sized businesses.
• Finally, if there isn’t much of a competitive differentiation, then customers tend to stick to whoever is habit-forming and matches their sensibilities.

Footnotes:

• https://twitter.com/RomeenSheth/status/1664068522421506049