Supply chain disruptions will end up favoring newcomers in markets

Our HVAC guy here in South Florida mentioned that he formerly installed Mitsubishi mini-split (“ductless”) air conditioners. Mitsubishi has long been considered the quality leader in this market, which they pioneered in Japan and then in the U.S. Since coronapanic, however, he’s found that most of the Mitsubishi stuff that he used to install went out of stock. “I began putting in GREE, which has a longer warranty and actually seems to have fewer problems and failures.” GREE, a Chinese company founded in 1991 (Wikipedia), isn’t a supplier he would have considered prior to the interruption of his supply from Mitsubishi that was occasioned by the various lockdowns. Now he will default to GREE even when Mitsubishi is available.

I was going to put a UniFi system into our house. This is the brand that I knew and that a friend has had positive experience with. However, everything was out of stock. So I took a reader’s suggestion and purchased TP-Link’s Omada products, which are half the price of UniFi and, more importantly, in stock for 2-day shipping.

Is it fair to say that the “sorry, it’s out of stock” messages from the traditional market leaders are going to turn out to have been the most lasting market disruption of coronapanic?


  • The pre-coronapanic situation… “Is Lack of Competition Strangling the U.S. Economy?” (Harvard Business Review, 2018): There’s no question that most industries are becoming more concentrated. Big firms account for higher shares of industry revenue and are reaping historically large profits relative to their investment. … incumbent firms in a wide range of industries — airlines, beer, pharmaceuticals, hospitals — are wielding market power in ways that prevent rivals from emerging and thriving. The winners are winning bigger, while the number of new start-ups is falling. With waning competitive pressure, productivity growth slows, wages stagnate, and the gap between winners and losers widens. … Ten years ago, the top four U.S. airlines collected 41% of the industry’s revenue. Today, they collect 65%.

6 thoughts on “Supply chain disruptions will end up favoring newcomers in markets

  1. It’s too bad the DIY/HVAC industry doesn’t have a website like to compare what’s available. I’ll ask a friend who used to do HVAC in Florida (with a supercharged Ford Bronco for leisure pursuits) and now owns a house along the shoreline in another state what he recommends.

  2. As stated above, GREE is anything but a minor player just coming out. They might not have the top of the range products on par with Daikin, Toshiba etc. but they sure have volume.

    Regardless, low tier products from major companies are nearly all identical as their purpose is to compete in the low end market where brand recognition is their only upside.

    Same thing with TP-LINK, they’ve been around “forever”. I’ve got two of their routers since 2008 or so.

  3. It occurred to the lion kingdom 2 years ago that now was a good time to start a semiconductor factory. 2 years later, the old players are all shut down or out of business & there aren’t any new players. Sounds like the capital just isn’t being redistributed to anyone else.

  4. Oct. 2020, I had an AC contractor install a Carrier 2-ton, 3-head split AC system at my FL residence. Price was $7900 including 10-year parts and labor warranty. I went with this well-established contractor largely because he offered $0 down/0% 3-year financing (thru Wells Fargo). I submitted all the paperwork for the financing deal, but got screwed 30-days later when Wells Fargo debited the full $7900 from my checking account on what was supposed to be the first low-dollar monthly payment. I just sucked it up and considered it business as usual for the criminal organization disguised as a bank, and was sort of glad the AC was paid off. The system has worked great.

  5. On the supply chain side I have a backing anecdote. In the early mid 2000’s I interviewed with an American based manufacturer of plastic bags (trash bags, shopping bags, etc). They said the only way to gain market share in that industry was by being able to deliver orders when a competitor has a disruption. No grocery chain is going to switch to your bags because they are a fraction of a cent cheaper, but when Company A can’t make the delivery and Company B steps up the contract is now B’s going forward.

    My take is that it’s not an effect of newcomer/incumbent but in both HVAC and trash bags and likely others the purchaser is more motivated by availability than prices (which they just pass on to their customers).

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