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Entrepreneurial spirit shines brightly in pandemic RAT race

Australia’s ongoing rapid antigen test (RAT) shortage has caused mayhem nationwide, but a handful of clever business owners have used the scarcity to create new market opportunities.
Australia’s ongoing rapid antigen test (RAT) shortage has caused mayhem nationwide, but a handful of clever business owners have used the scarcity to create new market opportunities. The DIY testing kits have fallen into short supply over the past two months as surging case numbers and interstate travel requirements put calamitous strain on the traditional PCR testing services. Numerous small businesses have been quick to turn this shortfall into a windfall, however.  The Care Package Co – a Sydney-based small business that sells scented candles and gifts – has offered a pair of RATs as part of a prize pack for the winner of a competition run through its Instagram account. Followers who tag a friend go in the running to win the tests as well as a scented candle and boutique matches. Luckily for the winner, the Omicron variant is less likely to cause a loss of smell than other variants of COVID.  These sorts of competitions are often used to boost engagement on social media channels and attract new clients to a business, with some data showing businesses running competitions grow their social media base 70% faster than those that don’t. Handled poorly, however, these sorts of promotions can be disastrous – as Melbourne-based coffee shop and bean roaster St Ali learned this week. The business initially offered its ‘VIP’ customers free RATs with any purchase over $160, but was quickly forced to apologise after a massive consumer backlash.  They’re not the only business whose efforts to take advantage of the shortage has backfired in recent weeks.  The Big Grill – a burger restaurant in South Australia – faced massive consumer backlash earlier this month for selling the rare but vital tests for $50 each on food delivery app UberEats. The business was forced to defend itself after customers took to social media to complain about the high prices. Several customers were still irate, however, and questioned why a restaurant chain is selling the tests at all. Major retailers like Harvey Norman and Kogan similarly sought to cash in on the tests’ rarity, selling individual tests for as much as $45. Harvey Norman has since removed the controversial items from their online shop, while Kogan appears to be selling them at a reduced price ($58 for a pack of 5).

Here we go again

It’s not the first time that lack of supply created by COVID has prompted unique marketing tactics. In the midst of 2020’s toilet paper turmoil, the infamous NT News newspaper ran a promotion in which it published eight pages designed to be cut up in lieu of loo roll. Interestingly, the toilet paper shortage was not the result of supply chain failure but rather a real-world example of game theory – specifically, a phenomenon known as Nash Equilibrium. Nash Equilibrium refers to a scenario in which it is beneficial to all participants of a ‘game’ to continue along their chosen course of action without deviation – in this case, buying toilet paper normally. When a small group of people (typically motivated by greed) start trying to stockpile toilet paper, other people who wouldn’t normally buy in bulk start to panic, fearing they might be left paperless if they don’t also begin buying en masse. This breakdown of the Nash Equilibrium triggered widespread buying that absorbed the otherwise adequate supply of toilet paper, leaving shop shelves bare. This game theory principle is sometimes used by economists to better understand how business leaders’ decisions are influenced by, and in turn influence, the decisions of other business leaders.
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