Strategies against Crazy Buyers

In certain markets, there are occasionally buyers who exhibit aggressive behaviour by purchasing converters above their inherent values. Often, these buyers lack awareness of the actual value of converters, which exacerbates the problem.

Referred to as Crazy Buyers (CBs), they are willing to pay a premium, sometimes significantly more than breakeven prices, especially for common converter models. Their objective is to gain a larger market share and establish dominance. Unfortunately, they tend to offer considerably lower prices for less common models. In a market with rising metal prices, they may still turn a profit despite overpaying, thereby further reinforcing their self-belief.

One of the challenges for sellers is the limited access to accurate converter prices. The actual prices are based on the inherent precious metals content in each converter, factoring in current metal prices and foreign exchange rates, as well as the recoverable metals. The market prices can sometimes be indifferent to the actual prices, resulting in overpricing or severe underpricing.

Consequently, sellers often gauge buyers’ capabilities by inquiring about the prices of common models only. When CBs overprice the common models, unsuspecting sellers end up selling all their converters to them. Sellers assume that if the common models fetch good prices, the same applies to the rest. This misconception leads them to accept prices for less common models without further verification.

To address this issue, we have devised a strategy based on Chaos Theory: A glass on the table has not reached equilibrium until it falls and shatters on the floor. The glass may remain intact for years, but its final state is only realised when it falls and breaks.

Similarly, many sellers are unaware of the realistic prices of catalytic converters until they receive offers. If there is only one buyer, the seller is unlikely to secure a favourable deal. This can persist for years. However, when competition emerges, the profit margins narrow. This is where a mobile application like Catalopedia, offering price discovery, can shatter the proverbial glass.

In the graph above, the red line represents the break-even price, indicating the value of catalytic converters when refined. Normal buyers generate profits within the combined areas of B and C.
On the other hand, Crazy Buyers may experience losses at A for common models but usually earn larger profits on less common models. Profits can be calculated by subtracting A from the sum of D and C.

As depicted, some sellers remain oblivious to price discovery until they utilise an app like Catalopedia. They eventually realise they have been shortchanged, leading to their frustration with vendors who have been underpaying them.

If every seller acts rationally and price information is transparent and readily available, CBs will not have an advantage in this business. While CBs may still choose to price converters higher than their inherent values to entice sellers, Catalopedia empowers sellers by allowing them to verify if CBs are offering correct prices for less common models. Sellers now have the flexibility to sell to whichever parties offer the best possible price, ensuring they maximise their profits and make informed decisions.

Unless metal prices significantly favour CBs, pricing converters above their inherent values will not be sustainable in the long term. However, it is crucial to have accurate and updated price information, which Catalopedia aims to achieve.

If our catalogue does not include your product or cover your country, please reach out to us. We will gladly purchase your samples at market prices and provide full payment. Furthermore, once your samples are included in our mobile application, we will reward you with in-app credits for your contribution.

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