Supply and demand: it’s the cornerstone of business. The amount in which a service or product is needed/desired regulates its price and determines the success of a company.
You can look at supply and demand graphs in the classroom for hours on end, but until you learn about real-life examples, it’s difficult to comprehend how this concept plays out in businesses around the world. You need to look at real, historical, and current situations to best understand this essential rule.
Here are some of the most significant, influential instances of supply and demand that we’ve seen in recent years – and today.
1. The iPhone 11
When the iPhone 11 was released in the fall of 2019, there was an enormous demand for the new phone. Surprisingly, Apple wasn’t able to meet this demand with a steady supply – the company hadn’t expected this many consumers to purchase the iPhone 11 over their higher-end models.
Although prices weren’t necessarily affected by this issue – since Apple maintained the same price tag for the iPhone 11 – even when it was in sharp demand, timelines were. It took roughly 21 days during the first two weeks for Apple to get iPhone 11 orders out – and that didn’t look great for the company.
Understanding supply and demand isn’t just about making sure your business turns a profit. It’s also about being able to anticipate the needs and wants of your consumers and ensuring that your production processes can keep up.
2. Kylie Jenner Lip Kits
After the first three shades of Kylie Jenner’s new lip kits were released, they sold out in just a single minute. Now that’s high demand, and since then, the demand has remained steadily impressive. There have been several instances in which Kylie Cosmetics has not been able to meet demand with adequate supplies.
The issue that has arisen after this lack of met demand?
If you watch the docuseries Broken, you can see in full detail how fake cosmetic manufacturers have sold mock Kylie Jenner products to consumers desperate to get their hands on already sold-out packages.
Kylie Jenner has repeatedly called out counterfeit cosmetics under her name and told fans that they can only obtain legitimate lip kits on her website. And yet, the practice of selling fake makeup products continues. Where supply fails to meet demand, chaos can reign.
3. Face Masks in China
Unless you’ve been living under a rock, you know that 2020 has been rocked by the arrival of the coronavirus, starting in Wuhan China. People in China, and in neighboring countries, have become desperate to protect themselves from the transmission of the virus – and that has led to an increased demand for face masks.
Hospitals, private sellers, doctor offices, and even transportation services are working to meet this high demand with a steady supply of face masks, but of course, that hasn’t stopped the prices of face masks from rising in China.
Unfortunately, this is an instance in which some criminals are using a high demand as a chance to make a killer profit. Just recently, China seized more than 31 million fake face masks that were being sold during shortages.
Not only are these face masks inadequate, they’re not even approved by the CDC.
The lesson here is that when demand is high and supply is running out, there’s room for people to make lower-quality products for a higher price – and get away with it.
There will always be a demand for insulin as long as there are people diagnosed with diabetes. Millions of people struggle to produce their own insulin, and as a result, must purchase it from other sources. In fact, it’s estimated that millions more will be diagnosed with the disease in the next few decades.
Unfortunately, there’s a problem with the supply of insulin. Scientists have made the claim that millions of people around the world with diabetes may not be able to access insulin over the next decade or more due to shortages.
We’ve already seen the prices of insulin skyrocket, thanks to private industries and this constant demand. However, we may yet see the prices climb. This is a time when the law of supply and demand could relate to life and death, not just buying and selling.
5. Organic Honey
Did you know that by 2024, it’s estimated that the global consumption of honey will exceed 2.8 million tons?
It’s not something most of us think about on a regular basis, but the public is increasingly interested in turning toward natural sweeteners like honey over cane sugar. Additionally, the health benefits of organic honey have been heralded by scientists and naturalists alike, leading more people to seek out honey that comes from trustworthy, reliable farms.
This is a prime example of a climbing demand – people want more honey and are buying honey products more often. However, there’s also been a worldwide honey shortage in recent years, according to The Honey Association. A combination of poor crop yields in Eastern Europe, Australia, and the US has led to a significant decrease in supply.
Today, the cost of raw honey has risen. It’s not uncommon to pay $10 for one jar of organic honey, if not more – and that’s a direct result of high demand coupled by a weakened supply.
6. The Oil Market
Now, let’s talk about an industry that’s experiencing problems with demand, not supply. The oil industry has wielded immense influence in our world, both politically and economically, for many decades.
However, as 2020 takes flight, we’re realizing that the demand might not be what it once was. The coronavirus in Asia has caused oil prices to drop significantly as restrictions on transportation are enacted.
Additionally, there’s been a huge backlash against fossil fuels in the past few years, forcing international oil companies to face growing pressure from investors and buyers to find ways to fuel the world without damaging it.
Although there’s still a huge demand for oil, supply is finite, and as a result, people are turning to other sources of power. The question is, which will die out first: supply or demand?
7. Vacation Rentals in Hawaii
The islands of Hawaii have always been a paradise, but in recent years, occupancy and tourism have increased, resulting in high demand for homes and vacation rentals.
In wake of this demand and a very limited supply of housing options on small islands like Oahu, legislation has cracked down on illegal vacation rentals. Economists and politicians in the state are working to bring supply and demand to a more balanced state.
If they don’t, prices for homes and vacation rentals in Hawaii will continue to surge, making it difficult for residents to maintain their way of life on the islands. This is a time when a lack of supply might actually end up disrupting the economy rather than making the area more profitable.
Supply and Demand in Real Life
Supply and demand becomes all the more real when you talk about it in current, relevant situations. These instances show just how powerful an overwhelming demand, or a lack of supply, can be to people’s lives and the economy.