How can witches compete with mega-corporations who benefit from economies of scale?

Question

Mana is the life energy present in all humans. It also gives us the ability to use magical spells and rituals. However, only witches are able to access their Mana in order to use it directly. For centuries, witches have been the dominant force in commerce. They have been the source for magical items and potions, trading their wares to muggles for a handsome profit. As they were the only individuals able to provide these services, witch society was able to corner this valuable niche market. This changed with the inclusion of the wand, which gave regular people access to magical abilities that they wouldn't be able to use otherwise. These wands could produce spells, allowing people to create their own elixirs and magical items. As wands were expensive, it remained out of reach for most citizens, making soliciting witches a more common option. However, the industry was revolutionized by the business known as Muggle-Zon, founded by Jacklyn Marius, who launched the first e-commerce company as a way to cut out the middleman. This business would allow muggles to sell their wares to other potential customers at a discount. Through this business model, they would remain unprofitable for many years. Overtime, they would slowly build their reach, opening warehouses in various bases, eventually becoming the country's largest employer.

Muggle-Zon ultimately operates as a gatekeeper and a platform, connecting sellers with buyers around the country that they would otherwise be unable to reach. In time, it even served to compete with these sellers, studying what products were popular and producing their own. Their own brand item would then be marketed to consumers, allowing them a bigger slice of profits. As it grows, it would be able to produce its items cheaper and quicker, allowing it to sell to a larger consumer base. This has turned the magical world upside down as it puts witch society on the defensive. For hundreds of years, witch society served as gatekeepers, separating the worthy from the poor, unwashed muggles, gifting them with the opportunity of access to make money. Not only do they have to compete with worthless and pathetic muggles who are undeserving of magical power, they also have to compete in this new industry that has unjustly stolen their birthright. This has threatened to put witches out of business entirely, as they are no longer needed. Many have had to lower their prices to simply stay in business. This ultimately hurts their livelihood as they are forced to race to the bottom just to survive. Soon, they would be put out of business altogether.

How can witches manage to stay in business while going up against corporate power?

Answer 1

When I was a university student in the small town next to the campus there was an artisan who still manufactured bicycles: totally hand made and top notch. How could he stay in business when at less than 10 km there was the mall for wannabe sportmen selling "concepts" and the city had at least 4 other bike shops selling mass produced, high level brands?

If you wanted to buy one of his bikes you would have to pull 10k Euros out of your wallet, but it would have been a bike fitting like a glove to you. When I once visited his workshop he was building a bike for a man with a leg shorter than the other.

A similar example applies also for food: why would a single chef stay afloat, when mass produced food is cheaply available everywhere?

The answer is also applicable to your case: small productions can be highly customized and specialized, in a way that meets the demands of the customer, who is more than happy to pay more for that product/service.

Answer 2

Specialization and customization

The same way freelancers do it today, by offering highly customized and tailored products that haven't been mass produced.

Think about modern day website developers, artists, metal-workers, fashion designers, and other freelancers. How can a solo website developer compete with the likes of giant corporations like Square Space which can fabricate generic websites at the click of a button? The answer is "customization". How can a small fashion design boutique compete with Old Navy? By making things that are different.

For websites, a customer might want 80% of things that a generic product offers, but they might want an extra 20% set of features that isn't mass produced and requires customization. This is where a solo software developer can make something super specific and tailored and custom to fit the exact needs of the customer wants.

There's a saying in software development that the more specific and customized product a customer asks for, the more time and resources it costs. The reason for this is because specific things are generally less mass produced.

Applying this to the witches vs corporations example. One could think that the witches who are highly specialized in their field can offer something customized and tailored to the exact needs of the customers.

Suppose Muggle-Zon mass produces all the basic things, they offer wands that grow plants, but do the plants taste good? Perhaps there's a witch that's amazing at growing plants that also taste amazing. That's going to make this culinary witch very in demand, but most muggles cannot afford her, only the top restaurants can afford to pay this witch for her services.

Suppose Muggle-Zon offers a wand that can create the same mass-produced beautiful dress for one night. Teenage girls might buy it for their prom. But it might not be unique. There might be a witch that can create drop-dead-gorgeous outfits who creates one-of-a-kind dresses that can't be found elsewhere and only offers her services to the most high paying clients.

They'll need to become part of the gig economy in the same way freelancers today need to network, advertise. Perhaps they can also post their skills on websites where freelancers advertise their skills.

Answer 3

Many potions require specialist handling

"Potion" really represents a huge category of things, like "chemicals" or "drugs". A number of potions are generally safe to use with minimal warnings and are shelf-stable and these are sold by mega-corporations cheaply and in bulk to the public. However, then there's the rest of them...

• By analogy with certain specialized medicines, some potions have a very short shelf-life or require special storage conditions and so require a trained witch locally to prepare them immediately before use.
• By analogy with pesticides and explosives, some potions require specialist knowledge to use correctly and safely, requiring a trained and licensed witch locally to use.
• By analogy with controlled substances or weapons, some potions have the potential for abuse (e.g. love potions, curses) and so only can be sold in-person from a licensed witch.

Answer 4

Witchcraft does not benefit from economy of scale

In our world, you must choose between what can be made easily, and what can be made with little investment. Let's say you are a craftsman who hand-crafts a certain part. It might cost \$0.10 of material, but take you a whole hour to make; so, if you want a paycheck of \$50/hr then you sell the part \$50.10 each.

The craftsman must compete against industrialization. An industrial production line might be able to make 100 of those parts an hour, but the craftsman can't just have an industrial production line, you have to invest in one. If you want to injection mold that part, you may be looking at a \$30,000 machine. So, the cost of paying someone \$50/hr to run the machine making 1 molded part may be \$30,000.60 but the cost of making a million of those parts is only \$0.63 each. This is fundamentally how economy of scale leads to greater profits.

But a witch does not need \$30,000 of equipment to mass produce magic. All she needs is the materials; so, she could skip the whole upfront cost and go straight into using her magic to make 100 parts an hour at a cost of only \$0.60 each. Because of this, Muggle-Zon can never obtain monopoly power. In our world, Amazon would sell that part at \$0.50 a piece until all the competition goes out of business, then it would turn around and make their money back selling it at \$5.00 a piece. The high upfront cost of getting into the business would prevent others from competing with Amazon after they have gained monopoly power; however, if Muggle-Zon were to try the same tactic, then the second they hike their prices up to \$5.00 a piece, witches would step in and immediately undercut them with cheaper parts because the witches don't need to invest in a factory to operate at the same overhead that Muggle-Zon does.

Why can't corporations be more efficient than witches?

In an industrial setting, machines are the means of production, and people are just the operators, but in a magic industrial setting witches are the actual means of production. If a muggle buys a wand, he may be able to compete with a witch, but he will never be able to use that wand to outproduce the witch. In fact, Muggle-Zon is at a competitive disadvantage against a witch, because muggles DO need to buy the means of production, and witches do not.