What are the problems and potential threats in the waterproof connector market
What are the problems and potential threats in the waterproof connector market? The following Lilutong waterproof connector manufacturers will explain to you.
What are the problems and potential threats in the waterproof connector market
1. Threat of new entrants
As an indispensable and important accessory in products and equipment, waterproof connectors account for more than 8% of the total purchase cost in many product applications. And compared with other key components, waterproof connector products have a wider range of options, and its local procurement space is larger, so its industry entry barriers are not high. Entry barriers mainly exist in product differentiation advantages and economies of scale, while there are no special requirements in terms of sales channels, capital requirements, switching costs, and cost advantages. However, the vitality of the waterproof connector market and its high growth potential in the railway, energy industry, and machinery industry are attracting more and more new entrants.
2. The threat of substitutes
The main alternative to waterproof connectors is terminal blocks. In the mid-to-high-end market, waterproof connectors are not threatened by alternatives. This is mainly because the waterproof connectors themselves are developed from the terminal blocks for convenient, fast and error-free plugging and unplugging of cables. In the low-end market, waterproof connectors are more threatened by alternatives. When buyers are under cost pressure, they will choose terminals of average quality and cheap.
3. Bargaining power of buyers
Buyers of waterproof connectors are product and equipment manufacturers, and the concentration of buyers is high: the products purchased by buyers from this industry account for about 10% of their total costs; the standardization degree of buyers from this industry is increasing: Buyer’s The profitability has a tendency to decrease; the buyer has the ability to carry out backward integration; the information of both parties is more transparent; so all this makes the buyer's bargaining power higher and higher.
4. The bargaining power of the supplier
The suppliers of waterproof connectors are aluminum, copper, silver, gold and other suppliers; engineering plastics and other raw materials suppliers. The seller’s industry has a high degree of concentration and standardization; the transaction volume of buying a house is very large; the degree of product differentiation is very small; the cost of switching sellers is relatively small; the possibility of forward integration is unlikely; the information of both parties is quite transparent; in general In other words, the bargaining power of the seller is relatively low, and existing companies can still maintain considerable profit margins between the buyer and the seller.
