There are about 1.4 billion people in China.
Say you make bicycle bells.
If you sell one to every person in China at a buck apiece, you've got a billion-dollar business.
Sell to even 1% of them, you’ve still got $14 million.
It’s easy to get excited.
Because 1% sounds easy. It looks great on a spreadsheet. And surely just 1% can’t be that hard!
But here's what happens when you actually go looking for bell buyers.
Not everyone rides a bike.
Most bikes already come with a bell.
Bells rarely break or need replacing.
The people who do want one look for the cheapest option.
That's the Chinese bicycle bell trap:
The market looks enormous until you count the people who will actually buy.
I've watched smart people fall into it for decades.
And it’s exactly what happened to Blue Apron.
Their pitch was easy to love. After all, everybody eats dinner, but shopping and cooking is a hassle. So deliver pre-portioned ingredients and an easy recipe to people's doors.
The market for that looks like "every household in America."
But let’s count the actual bell buyers.
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A Quality of Earnings report looks at the proof. Who's actually buying: which customers pay, how much, and how long they stay.
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Who’s actually buying Blue Apron?
Budget-minded families are out. More expensive than groceries, barely cheaper than takeout.
Busy people are out. You still have to spend an hour cooking.
People who love to cook are out too. They don’t want a box telling them what to make.
Who's left? Affluent people with free evenings who like cooking but don't like shopping.
That's the real market.
Now, there’s nothing wrong with going niche. There are people all over this country getting rich selling to a very specific kind of customer. They know exactly who buys, what it costs to get them, and how long they stay. They size their spending, their facilities, and their ambitions to match.
Instead, Blue Apron tried to scale for a billion people. Marketing spend went through the roof, even while customers were churning like crazy. Then HelloFresh came in and ate most of their market share.
By 2023, the whole company sold for $103 million — down 95% from their IPO valuation.
The takeaway: Niche is fine. Pretending you're not is fatal.
Hope this was helpful!
Michael
P.S. I’ve got two great lectures coming up! Check out the links below.
FREE EVENTS COMING UP
Thurs Oct 8 • 12 CT / 1 ET
Understanding the new SBA Lending Guidelines
with Heather Endresen, Michael Girdley, Will McCurdy (Bedrock QoE)
Thu Oct 22 • 12 CT / 1 ET
How to pay your operator: a talk for business owners
with Michael Girdley and Tighe Burke
Other ways I can help…
The Low-Risk Business → 30 years of building, turned into one playbook
Hire With Near → Build high-performing remote teams for 70% less
Bedrock → Validate the numbers before you buy a business
Compound Conference → where business owners figure out their next move