The LED Bubble is Bursting!
As LED prices continue to fall and as more retailers finally catch onto the craze – the future of LED is not bright, at least for the re-sellers! Prices are plummeting faster than expected and I believe many companies will soon go out of business as a result.
On-line prices are good for the market in general but the aim to be the most competitive will soon catch up with the price-match companies as they've now got to sell 1000 LED lamps to make the same profits they used to make from selling 100. Will higher demand prove me wrong?
Price Gap
The gap in price between high quality branded LED lamps and non-branded has reduced by as much as £15.00 in as little as 12 months’ time. Why would a consumer pay £7.00 for an unknown, untested brand when they can get a trusted brand such as Megaman or Philips that have longer guarantees for £10.00 which were once £25.00? They won’t and this will cause unbranded LED prices to drop even further.
LEDs have been the ‘industry standard’ for the majority of lighting distributors since 2010 and have been regarded as too complicated and expensive for the ‘Twin and earth merchants’ of the industry. This led to a boom for on-line retailers but now LEDs are more readily available from local wholesalers at affordable prices the prices will continue to decline.
On-line retailers are destroying their own industry. They have to buy more to get the right price but sell more to make the same amount. Gone are the days of making decent margins and I believe this will get worse.
If a retailer buys a large amount of stock for say £8.00 per lamp and the next month another manufacturer brings out a newer, improved version for half the price, how are they going to sell them? At a loss I believe, and this could spark an economic crash for the lighting industry. A Wall Street style crash is a realistic possibility!
If retailers can’t make a profit they will go out of business, huge amounts of surplus stocks will become available on places like Ebay. Prices not yet dreamed about will become a reality, LEDs will be sold for less than £1 and the whole industry will be plunged into chaos.
Boom and bust…is this the route the ‘price match companies’ really want to take or is it already too late?