Lowlife: Lowsec TraderNiden
If trading in highsec is Wall Street, trading in lowsec is the Wild West. Those with a sense for business and a nose for war can make a good living. Where there is conflict, there is a demand and the good trader will make sure to provide in times of need, at the right price, of course.
“War is never economically beneficial except for those in position to profit from war expenditures.” – Ron Paul
Running a trade business in highsec is a rather stable affair. Tendencies and trends in supply and demand fluctuate rather slowly and investment risk is relatively low as a result. Any notable changes can rather easily be predicted as they are anchored to nullsec military and political developments and patch notes, information available to anyone with a vested interest. With large predictable entities representing both the supply and demand in both high and nullsec it can be argued that it is a rather reliable market out there.
Lowsec markets are something else entirely.
The turbulent and violent nature of lowsec is reflected well in the trading that takes part there. It is the frontier of business where intrepid pioneers ply their precarious trade. Thriving in this environment requires a unique skillset whilst allowing for creative commerce that would not be possible in other areas of New Eden. The risk is high, but so are the rewards, for those with a pair of brass and some ISK to invest.
CCP recently released a graphic representation of creation and destruction in EVE. It is no surprise that lowsec makes up a majority of the destruction portion.
Destruction equals demand. One of the main gripes of lowsec inhabitants is that they must import much of their hardware, but this presents an excellent opportunity for the entrepreneurial trader. Especially since the competition is quite sparse and often not very well organised.
The first step in establishing a lowsec trading business lies in staking out a good system to base out of. Ideally the system should be a home or staging system for militia or pirates, and be close in proximity to areas of space that see a lot of action. The ingame map and Dotlan are great tools for finding such areas.
While a budding lowsec trader can come a long way using these tools, nothing beats being a part of the community that is one’s intended consumer base. This allows for advanced and delicate knowledge the tools might have a hard time showing.
Rubbing shoulders with the prospected clientele allows the trader insight into the ships and fits flown, as well as knowledge of developing campaigns and political and military manoeuvres as well as the related demand. Many entities will have doctrines they often fly and knowing them is a valuable asset when determining what wares to invest in.
A system that is attractive for commerce is likely to have some small scale trade already established. It is however very seldom that a local market in lowsec provides all that is demanded. It is good practise to initially identify areas where it is lacking, allowing good profit margins and return on investment. The ideal system has a very high disparity between supply and demand – but unlike highsec, they are not virtually impossible to find.
Unlike null, lowsec residents seldom buy in bulk. It is wise to offer a wide selection of wares, but keep stock relatively low. Investing heavily in a limited amount of items ties up capital in stock with a slow turnover.
Dominating the market in a system or area means overcoming some competition however. There are two ways to go about it; passive or aggressive.
The passive approach is what is commonly practised in highsec. Simply providing goods at a slightly lower price than the competition – and keeping it that way. This often leads to drawn out trade wars, fought 0.01 ISK at a time. The benefit is that it requires comparatively little investment and is quite suitable for those starting with a limited budget. The drawback is that it is a war of attrition that can crawl along for a very long time. Unlike highsec however the competition are few in number and there’s a very real possibility of winning.
The aggressive strategy involves a lot more risk and a more substantial ISK investment. If done right however it will allow domination of a market. The principle at work in this strategy is a kind of market flooding and price dumping. The idea is to initially provide a large surplus of goods at very low prices, with little or no profit. The intent is to simply suffocate the competition out of business. Once that is accomplished the prices can be raised to provide good profit. The first main drawback of this strategy is that it initially requires a rather large investment that will more or less only break even at first. The second is the risk that once the competition has been dealt with, the demand may have diminished or changed due to political or military developments – turning the investment into a loss.
Once a strategy is decided upon logistics must be solved. The pure trader will want simply want to move goods from highsec markets such as Jita out to the point of sale. With some investigation and good connections a reliable jump freighter service can be contracted to haul the goods at a reasonable price. If all else fails, there is always Black Frog Logistics.
The more ambitious will perhaps want to look into setting up their own jump freighter solution. For more info on this I suggest Forlorn Wongraven’s excellent article on the matter.