Why market cannibalisation matters to a first-time founder
A new offer can look successful while merely moving existing customers from one product to another. If the replacement has a lower margin, the company may grow unit sales but lose cash. Measuring which sales are genuinely additional helps founders price launches, forecast revenue and decide whether replacing an older product is still worthwhile.
Examples of market cannibalisation
A coffee subscription launches a €12 starter box and sells 500 in its first month. Customer data shows 300 buyers previously ordered the €18 standard box. Only 200 sales are new; the other 300 have shifted €1,800 of monthly revenue away from the existing product before costs are considered.
Common misunderstanding
Cannibalisation is not automatically a failed launch. Replacing your own ageing product may be better than letting a competitor do it, and a lower-priced entry offer may lead to later upgrades. The mistake is counting every sale as growth without subtracting the sales displaced from your existing range.
When to use it
Estimate it before launching a closely related product, changing package sizes or adding a cheaper plan. After launch, compare buyer histories, product margins and total category revenue. Ignore it for an offer aimed at a clearly different customer need unless sales data begins showing customers switching between the two.