Me-too business: The benefits and risks you need to consider

One of the major hindrances to an entrepreneurial spirit in Kenya is the “me-too” businesses that imitate or copy their competitors’ goods and services. The me-too phenomenon is very common in Kenya. 

A me-too entrepreneur is an imitator and a copycat as s/he imitates the goods and services of successful businesses. At times, a me-too business has to copy the business strategy of its competitor.

A me-too entrepreneur lacks innovativeness and waits for other businesses to innovate and then rides on the success of these businesses. Me-too businesses have to contend with a high level of competition. 

Though it is rare, a me-too business can do better than the business they are imitating. There are several advantages of me-too businesses. 

Firstly, a me-too business does not have to invest in research and development, unlike its pioneer counterparts who spend a lot on market research and product development.

Secondly, me-too businesses have a ready market for their goods and services. The market demand is already established and the business does not have to spend so much money on developing a new market.

Thirdly, there is a high level of consumer awareness of the me-too businesses’ goods and services. Not much has to be spent on advertisement and consumer education, as the consumer is already aware of the products and services.

Despite all the advantages above, the me-too business is a very dangerous type to engage in for various reasons. 

First of all, the me-too business may face a bad reputation in the market as an imitator. The brand perception will decrease and the value of the business may be greatly devalued.

The me-too business faces the challenge of flouting the law. It increases the legal risk of counterfeiting. This is especially so if it passes off its rivals’ goods and services as its own yet that is not the case.

Kenya has a very strong anti-counterfeit law and has an agency that tackles counterfeiting. A me-too business can be destroyed if it is found to have flouted the counterfeit laws, which criminalise counterfeiting.

A me-too business can be deemed to be engaging in illicit trade which is not only an offence but also a civil offence where your rival can file a suit for passing off.

A me-too business that provides sub-standard goods and services also breaches the Kenya Bureau Of Standards regulations on standards. It is an offence and can be very dangerous for the business.

Costly and damaging

A me-too business has a risk of breaching the intellectual property rights of its rival including copyrights, trademarks, industrial designs, and patents.

A big business that has invested heavily in research and development may choose to protect its products and services through intellectual property rights to maintain dominion.

A me-too business that rides on this goodwill to copy its rival may find itself flouting intellectual property rights laws. An infringement suit can be very costly and damaging for a me-too business.

I have seen some me-too businesses shut down due to infringement lawsuits. The court may award general damages and also issue delivery orders.

The me-too business risks practising unfair trade practices when it engages in me-too practices. These are legally actionable as the aggrieved business can get court remedies.

Despite the seeming advantages of the me-too business concept the risks far outweigh the benefits. A me-too business can leverage market information by differentiating its products and services and thereby becoming innovative.

Ms Mputhia is the founder of C Mputhia Advocates | [email protected]