July 14, 2012
The number of assumptions involved in designing any product is staggeringly large and usually fundamental.
Take bikes. You know they'll probably be made out of some kind of metal, whether aluminum or steel, unless you're talking about the very expensive racing types built from lightweight carbon fibers.
Would you believe cardboard? An Israeli entrepreneur has apparently pulled off a prototype bicycle made of recycled cardboard, according to the Israeli blog Newsgeek (via TheNextWeb).
Yes, that sounds nuts. How could a cardboard bike support an adult rider?
That's what soldier and entrepreneur Izhar Gafni heard from engineers when he asked about using cardboard to make a truly green – or would it technically be brown? – bicycle.
He asked because he heard about a canoe made of cardboard. If that was possible, why not a bike?
So, Gafni didn’t listen to the experts. (Click on the video below for how he made his bicycle, start to finish.)
BUSINESS FIGURES BEHIND THE VENTURE
As impressive as making his idea work was, some of the figures behind the project are as worth noting. Gafni estimates that the cost of the raw materials for a bike would be between $9 and $12, with a likely selling price of between $60 and $90 to the consumer.
Time for a little extrapolation. You could double the high end of materials costs to get $24, which could be a distribution price. Double it again and you've got $48 to a store. If Gafni is right about the retail price range, that's a minimum of a 25 percent mark-up, and as much as an 85.5 percent margin at the top end.
In other words, this could be commercially viable for the existing retail distribution structure, which is an important consideration when bringing a product to market.
Also, the product characteristics and price combination could be very attractive to consumers. If some economies of manufacturing scale could bring the product to the lower price, you could have a cheap bike for adults that could withstand moisture and also be lightweight.
If someone stole the bike (and it's hard to believe that something so cheap would have appeal to thieves), the replacement cost would be negligible. This might be the type of product that would appeal to the hospitality industry – a good choice perhaps for B&Bs, inns, and even resorts.
It's a great reminder that smart, innovative business is often not business as usual.
Read more at Inc.com:
Tech Start-up Steals Killer Retail Strategy
To Design Better Products, Hit the Road