Home' Trinidad and Tobago Guardian : April 21st 2016 Contents BG20 ENTREPRENOMICS
BUSINESS GUARDIAN www.guardian.co.tt APRIL 21 • 2016
The word "recession" is all over
but it should not mean as a
business owner you should be
terrified. There are many ways
to cope with a downturn. You
can call these strategies,
approaches to get you from here (recession) to
there (growth). There are companies that survive
a recession, some do not and others do what
many believe is impossible, they thrive. You
may have heard of guerrilla marketing, turn-
around management, but let me introduce you
to something new---the Bamboo way---and
maybe you can "buss the market.
There are countless cases of small- and
medium-sized enterprises (SME) that do well
in challenging times.
In the 1980s, the automobile market for
parts started to grow as the vehicle population
aged (older cars mean more parts). But many
car owners in the late 1980s found those prices
unaffordable. The auto parts market, at the
time, comprised of two segments: original (the
higher priced ones you buy at the dealer) and
the aftermarket (the less expensive ones you
buy at independent car parts retailers).
In those days, unemployment was close to
20 per cent and the cost of living was high,
life was a struggle. Car owners needed to repair
their vehicles but just could not and, despite
some reduction in car parts prices, many of
the components came from the Far East and
were of poor quality. Some were nicknamed
"weekend parts" as they lasted only the week-
One of the most expensive jobs is rebuilding
an engine or transmission. Apparently, many
drivers didn t change their engine oil on time
(some thought they could save money by post-
poning this) and this led to even more wear
on the engine. NP had an ad, at the time, with
a tag line: change your oil, not your engine.
To make a long story short, many car owners
had oil-burning engines and not enough money
to rebuild it.
In the Bamboo
Some enterprising individuals spotted an
opportunity that few saw.
What about sourcing engines and transmis-
sions that are good quality and sell them at
an affordable price?
Japan had an excess of these relatively good
components (which they considered scrap) that
matched our vehicle population. Why not
import from Japan or other Far East countries?
This was how the famous or infamous junk
yards---depending on which side of the market
you are in---were born in Bamboo Village.
By the 1990s, the market for car parts was
smoking (with a vehicle population of 500,000)
from the fires from The Bamboo. These enter-
prising companies were cornering the market
for engine and collision parts (fenders, bumpers,
In Japan it was trash, but in Trinidad it was
a real treasure. Their business model was,
essentially, one man s trash is another s treasure.
Today, the junk yards have spread throughout
the country, but its capital is still Bamboo Vil-
lage. The Bamboo business model made a large
number of business owners multimillionaires
in a short time. At the same time, some after-
market parts shops had to close.
Lessons from The Bamboo
Despite the scrappy and disorganised image,
junk yards are retailers with a defined target
market. They hold important lessons for coping
with an extreme downturn. If we were to enter
a similar period as the 1980s, maybe we can
learn from how this retail format and business
Here are some strategies they used:
1. Go global: Identify products that are lit-
erally free and buy large container loads. This
reduces the shipping costs when the distance
2. Price attractively: Buy a car for peanuts
and cut it up in pieces. The sum of the parts
is definitely greater than the whole, so your
margin will be very high. Some parts are marked
up 100s of percent. Crazy, but even in a reces-
sion you can get away with this, if you know
how and have a desperate customer with a
3. Minimalism: If you think PriceSmart
has a low cost, low frills shopping environment,
think again. Junk yards have taken everything
out, except the roof and the shelves, just watch
out for the oil spill on the ground. If you want
to sell at a deep discount, remove all costs.
4. Warranty: If your customer is worried
about the quality of your product and you are
not sure yourself, give them some assurance.
Notice when you leave with your part they
put on paint on it (to identify it as theirs) and
let you know the warranty period. The issue
is very simple: if the part is approximately
free then, a warrant is almost cost free.
5. Knowledge management: An auto-
mobile is quite complicated, many have more
than 4,000 parts. When you buy a used part,
the importer has to make sure the part will
fit. A 2005 Nissan Sentra, for example, in
Japan may differ in engine and therefore its
parts. You must get the engine model and year
right (even if looks the same) or else you have
a garbage yard instead of a junk yard.
6. Change the business model: Some
junk yard owners have graduated to global
sourcing and supply parts importers and have
warehouse shells for rent. They have parts
workers (Trinidadians) in several Asian coun-
tries who would source and fill containers.
7. Geographic concentration: I am not
sure, but there must be at least 50 companies
in The Bamboo. You would think that is rather
senseless and destructive. But, given that parts
are hard to find, when you have that concen-
tration level, the parts buyer can leave The
Bamboo with his item and that benefits all.
Of course, this means that price competition
is fierce and, therefore, good for the buyer.
8. Expand the channel: Why stop at the
final customer when you can also sell to the
installers (air condition repairmen and mechan-
ics who replace engines and transmissions).
Some customers do not have the time to spend
a day in the hot sun looking for a car part,
so they rather have their mechanic do that
Selling to an ultra-low price market and
keeping them happy requires some imagina-
tion. You might have to rethink your marketing
and model in this recession. If consumers in
your market are at the bottom of the pyramid,
then can you make money?
CK Prahalad and Stuart Hart s, The Fortune
at the Bottom of the Pyramid, published in
2004, first introduced the concept of selling
to the poor. While owning a car in T&T does
not mean you are poor---but it can make you
poor---there are some pertinent lessons from
Many large companies have avoided the
bottom of the pyramid as their existing business
cannot be extended to capture this market.
Would a conglomerate here enter the junk
yard business? Unlikely, but I am talking more
about companies that would produce US$50
or less tablet or, say, a US$10 cellphone (not
with a data plan).
Large corporations are bureaucratic and are
afraid to try new things.
Prahalad claims that many established firms
may not enter markets with large groups of
poor customers (bottom of the pyramid) but
entrepreneurs---who have more agility---are
more likely and can create products or business
models from the ground up.
It seems again, when it comes to doing the
impossible, entrepreneurs are our saviours by
thinking differently and innovatively.
Sajjad Hamid is an SME consultant.
He can be contacted via:
firstname.lastname@example.org or Web
The Bamboo business model
A recession buster?
with Sajjad Hamid
Links Archive April 20th 2016 April 22nd 2016 Navigation Previous Page Next Page