Creative Destruction: Wood Pellet burners – the micro view
I like metaphors! Particularly relevant for me is Sun Tzu, The Art of war, which is filled with metaphors for the small business. When studying I came across the idea that a green and verdant valley would be hotly contested. Rocky slopes would not, and local knowledge could be used for survival. If successful you can move down the hill side as you grow in strength. Wonderful!
Last week I was thinking about this, pellet burners, and keeping one eye on the traffic. I was stuck at 6:30 am along with numerous cars, behind a very slow moving vehicle. (Nothing unusual in Wiltshire). Perhaps this in itself is an extension of the above metaphor.
In the last article about wood pellet stoves the complaint was that there was no real impetus in the market. Whilst the conditions could be met for successful market development. There was not an obvious company pursuing a successful route to the consumer. Perhaps they have the wrong vehicle.
In a new market firms choose which path (or road) to follow. As a market maker you make the path. If you are a follower you have to follow – perhaps behind a very slow moving vehicle. Any customer that comes along may see the market maker first. If they do, and they don't like it they will move on. (I am a potential customer)
Any company stuck behind may lack the resources to overtake, or if they do they have to take a risk. I did notice one or two cars put everyone in danger as they tried to overtake when it was not possible. Shortly before Newbury I changed route.
What factors are there about the “vehicles” in the pellet stove or boiler market that means that the market is struggling at the moment?
Factor 1 Price
From a self interested perspective I would like an alternative to oil. This means that the installation and cost of the boiler should be similar to oil. I would like the fuel to be available and at a similar level or cheaper than oil.
Some of the small firms in the market are selling boilers that perhaps start at £5000, but rising to £12,000 once installation has been taken into consideration. This clearly targets a very small niche of wealthy and green consumers. It also seems to look to substitute green fuel units for its prices e.g. Geodesic, solar, wind, and has a long payback for the consumer. The fuel recommended is also expensive, with prices nearer to £300 per tonne than the £150 per tonne needed. Whilst this fuel is top quality it is also very expensive.
If you meet a market maker with the above prices, you may feel that this market is not for you, yet there are cheaper stoves available, and there is cheaper fuel.
Factor 2 Credibility
When you buy a pellet stove you want to feel confident about the company. You are investing a large amount of cash, this is a risk.
On closer inspection of the market, there are companies which when you do a bit of research, you find a dubious history. From legal disputes to financial irregularities.
Whilst not all companies fall into this category, it is very much a “buyer beware”.
Factor 3 Service
How quickly can I get a stove or boiler? Many companies don't hold stock. It therefore will take time to get your stove. Many of the companies represent small boiler producers. The stock may have to be made to order.
In relation to factor 2, who will service the boiler? If it is going to last 10 years or more, I want the stove or boiler supported.
Factor 4 Agents
There is much mystique on being an agent. Is it because it is a protected trade area? You will see the words “exclusive” banded around quite a lot. The inference is that the company has been chosen, or that they have purchased the license, or indeed that they are the best company with the best stove.
If you are researching do tap in the name of the stove you want, and then find out how many companies in the UK have an “exclusive agreement” for the same stove.
Alternatively you can check with the manufacturer to find out if there is an agreement (I have and was offered a direct offer bypassing the “agent”).
I have been “driving” as a consumer in looking for a wood pellet stove. I am yet to find a company driving the right path using the right vehicle. Ie that can offer the right price, is credible, has the right service, and has a proper agreement that is prepared to sell, install, and maintain a boiler in Wiltshire. In addition is the creative destruction bit. Can they get to me (and other consumers)?
Last week I was thinking about this, pellet burners, and keeping one eye on the traffic. I was stuck at 6:30 am along with numerous cars, behind a very slow moving vehicle. (Nothing unusual in Wiltshire). Perhaps this in itself is an extension of the above metaphor.
In the last article about wood pellet stoves the complaint was that there was no real impetus in the market. Whilst the conditions could be met for successful market development. There was not an obvious company pursuing a successful route to the consumer. Perhaps they have the wrong vehicle.
In a new market firms choose which path (or road) to follow. As a market maker you make the path. If you are a follower you have to follow – perhaps behind a very slow moving vehicle. Any customer that comes along may see the market maker first. If they do, and they don't like it they will move on. (I am a potential customer)
Any company stuck behind may lack the resources to overtake, or if they do they have to take a risk. I did notice one or two cars put everyone in danger as they tried to overtake when it was not possible. Shortly before Newbury I changed route.
What factors are there about the “vehicles” in the pellet stove or boiler market that means that the market is struggling at the moment?
Factor 1 Price
From a self interested perspective I would like an alternative to oil. This means that the installation and cost of the boiler should be similar to oil. I would like the fuel to be available and at a similar level or cheaper than oil.
Some of the small firms in the market are selling boilers that perhaps start at £5000, but rising to £12,000 once installation has been taken into consideration. This clearly targets a very small niche of wealthy and green consumers. It also seems to look to substitute green fuel units for its prices e.g. Geodesic, solar, wind, and has a long payback for the consumer. The fuel recommended is also expensive, with prices nearer to £300 per tonne than the £150 per tonne needed. Whilst this fuel is top quality it is also very expensive.
If you meet a market maker with the above prices, you may feel that this market is not for you, yet there are cheaper stoves available, and there is cheaper fuel.
Factor 2 Credibility
When you buy a pellet stove you want to feel confident about the company. You are investing a large amount of cash, this is a risk.
On closer inspection of the market, there are companies which when you do a bit of research, you find a dubious history. From legal disputes to financial irregularities.
Whilst not all companies fall into this category, it is very much a “buyer beware”.
Factor 3 Service
How quickly can I get a stove or boiler? Many companies don't hold stock. It therefore will take time to get your stove. Many of the companies represent small boiler producers. The stock may have to be made to order.
In relation to factor 2, who will service the boiler? If it is going to last 10 years or more, I want the stove or boiler supported.
Factor 4 Agents
There is much mystique on being an agent. Is it because it is a protected trade area? You will see the words “exclusive” banded around quite a lot. The inference is that the company has been chosen, or that they have purchased the license, or indeed that they are the best company with the best stove.
If you are researching do tap in the name of the stove you want, and then find out how many companies in the UK have an “exclusive agreement” for the same stove.
Alternatively you can check with the manufacturer to find out if there is an agreement (I have and was offered a direct offer bypassing the “agent”).
I have been “driving” as a consumer in looking for a wood pellet stove. I am yet to find a company driving the right path using the right vehicle. Ie that can offer the right price, is credible, has the right service, and has a proper agreement that is prepared to sell, install, and maintain a boiler in Wiltshire. In addition is the creative destruction bit. Can they get to me (and other consumers)?
Labels: biomass, caminetti montegrappa, carbon neutral fuel edilkamin, wood pellet
posted by Roger Croft at 6:37 PM
1 Comments:
bloody well written.
Starting up a new company that will sell pellets boilers to a very god price.
It is not on the boilers where I want to make the money but the 5-10
years contract on the pellets
to a very good price round 170-135 ton.
Many companys are just a bunchs of gready ***** that just like to have a price fixing.
www.greenenergy.se
check it out.
jimjim
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