Before I start, I would like to apologize for the long-windedness of my post; it's just my nature. Now to begin...
I am a 24 year old student at a fairly prestigious southern university pursuing my MBA. I will be graduating in May. I have always enjoyed tea, but for the six years that I've been in the South (originally from the NoVA area) I haven't been able to indulge in my passion because there is literally nowhere to get loose-leaf tea (of any quality for that matter) in this city (maybe even the state). I finally buckled down and ordered some online and received it last week. As I was enjoying my tea I had one of the most powerful "Eureka!" moments of my life and decided that I should bring high quality loose-leaf tea to this area. I have many Chinese friends, and spoke to one about my idea. He agreed to go into this venture with me. We imagine a place where we can sell loose-leaf tea as well as an atmosphere for people to sit and enjoy their tea. A very large part of the business model was that we would be the ONLY suppliers for a very large distance. He says that he will be going back to China in December and while he is there, he will locate suppliers from different provinces for different teas. Great. And we already have a supplier in Taiwan. Now just looking for Japanese and Indian suppliers (any ideas anyone?) It seemed like things were going well, and I put an aggressive timeline to open our place in May after we graduate.
Since there is nowhere here to get tea, I figured that I would have an incredible competitive advantage from the product differentiation side. There are a million coffee shops as this is a college town, so I saw this as out biggest obstacle. We thought that we would have to shift the culture of the town from away from a strict coffee diet.
Then I found out today that a certain large tea retailer (whose name starts with a T and ends with eavana) will be moving into the mall here very soon. Seems that they caught on the my idea before I did. Go figure!
My thoughts are that it will be very difficult to compete with this corporation given their size and capital resources, but I do see some positives. If they move in before us, and with their reputation and resources, they can spark the culture change so that by the time our business opens people will be just getting open to the idea of tea but will not be set in their ways enough to become loyal customers.
I also believe that we will now have two competitive advantages. Now that there is a local competitor (and given their prices and what I hope to be a very efficient supply chain) we should be able to offer our product cheaper and with better quality. We also will still have somewhat of an advantage with product differentiation as they do not allow you to sit in their store and order tea but we plan to. Hopefully this will allow us to become the premier tea shop in town.
The questions is this:
Would you be intimidated to go into business with such a large retailer entering the market before you and possibly swallowing a large market share?
Is my analysis of the new entrance correct? Is it a positive thing, or a bad omen for me?
I intend on meeting with a SCORE representative within the next two weeks, but I just wanted some of your esteemed opinions. Thank you for any feedback.