@sk22 I believe your comparison is misleading. When Aldi entered...

@sk22

I believe your comparison is misleading.

When Aldi entered Australia, it was already a big business in Europe. In fact, it was a big fish already operating in a big pond, which then decided to enter a small pond (Australia).

In the beginning, for fresh produce and other perishables, it's true that Aldi's buying power in Australia was nothing compared to WOW/Coles. However, for some categories such as nappies, its buying power was already bigger than WOW/Coles combined.

On top of that, the parent company was able to afford years of losses in Australia to ensure Aldi gains a firm foothold in the country.

This is clearly not the case for NEA in the US. NEA in Australia is like a fish in a small pond, which then decided to go into the big pool (US) and tries its luck. The resources of NEA's Australian operation is not strong enough to maintain continuous losses in the US. This is why NEA has to raise capital every now and then to top up its cash balances.

Although the image capturing technology is transferable from Australia to the US, the product that NEA can sell in the US has to be manufactured from scratch, i.e. thousands and thousands of images of the American landscape taken (Pictures of Sydney Opera House is useless for a customer in New York). To make things harder for NEA, the same images have to be regularly retaken to ensure that they are up to date and useful for its customers.

Going back to Aldi, this is clearly not the case with the same brand of nappies that Aldi sells worldwide. No matter what the colour of the skin of the babies' bums, the nappies sold in Germany or US or Australia will work equally well to contain these natural byproducts of human.

Until the US operation becomes self-sufficient, I am happy to watch from the sideline and not risk my capital in NEA. The risks of failure are still too high for me.