Thanks for your comment and the link to the Business Insider article, Trang! It was really interesting.
You do bring up an interesting point about the average visit per-user (I am in the opposite of this camp. The one month I had ClassPass, I averaged one class a day haha). I am concerned about ClassPass depending on these low-users for profitability, however. Word-of-mouth advertising is important for creating buzz around partner studios, which is more likely to be generated by those who go to the gym more often.
I definitely agree that the ability to fill classes is a large source of value for studios. As you said, ClassPass should definitely focus on attaining these gyms, and not get lost in the goal of just trying to recruit the most number of gyms. This temptation of recruiting for the volume of studios will be hard for ClassPass to avoid however, especially as they are trying to attract investors. (And yes, we cannot overlook their $400 million valuation.)
Thanks for the comment, Yuvnesh!
Your idea about tiered pricing is interesting–I hadn’t thought about it before. However, I think some of the appeal is the “unlimited” part of the subscription. I think once you start moving into tiered pricing for the subscribers, there will be little price difference between the “pay-as-you-go” model of some of the current studios.
And yes, the utilization of the gym capacity is a huge draw for partner studios. However, you also may upset some current subscribers, who purposely chose classes at odd times because there are fewer people that attend (for example, those who chose class during a weekday at 10:30am.) In addition, studios have power over how their costs are incurred over these low-utilization periods. They can not offer time slots during that time (and therefore would save costs on the instructor wages).
Thanks for your comment, Napat! Something I didn’t mention was the effect of ClassPass on the brand of their partner studios, so thank you for bringing it up. It is in fact a delicate balance.
An example who does this well–Barry’s Bootcamp (provider of the burn of the workout we are all too familiar with) in the New York marketplace. They open a very limited number of slots that fill up within seconds. This has enabled them to preserve their brand (and even create buzz from people not being able to sign up in time and hearing about how Barry’s is the highest-demand class).
But this is hard to balance for studios that are just getting off the ground. In a highly competitive space, ClassPass would be a hard sell for start-ups that are aiming for a higher-end brand.
One of the things that I miss most about Beijing is Xiabu Xiabu. I used to go to the one in Wudaokou at least once every two weeks.
I think XBXB created a great niche for itself, which has allowed it to be successful in a highly competitive market. It’s for people that want deliciously fresh cooked food (that is non-greasy), but don’t have the time to sit down at a traditional restaurant. Preparing the ingredients is very labor and time intensive, so XBXB has been able to add a lot of value on the convenience side.
The bar-layout really helps cycle through customers and really matches with their young and hip image. You can only really sit with two other friends, which reduces conversation and speeds up eating time. Everything is very clean as well, which improves the customer experience.
Also, high food quality is such an important guarantee in China. I’m glad to learn more about their strong relationships with their suppliers. I also had no idea that they made their own sauces. They need to be careful about customers like me though, who request extra dipping sauces to take home. 🙂
Great post! Do you know about their international franchise opportunities? Shall we start our own Xiabu Xiabu in Cambridge? We can charge half as much as Flame with these operational efficiencies.
Awesome post! I am so hungry now. 🙂
Ramen is my favorite food, so I was super excited to read your post. It also made me really hungry, however.
I feel like Santouka in Harvard Square can really learn a thing or two from them, especially on the wait time. I hate how Santouka puts people in a line and doesn’t require people to be there when their table is ready. They use a text-notification system, and so people leave the restaurant and walk around the area. When their table is ready, it takes them an additional 15 minutes to return, which makes the rest of the people in line wait even longer. When I am told that the wait is going to be an hour, but see three empty tables waiting for patrons to return, I get infuriated.
In terms of the meal experience, it is interesting, however, that they have managed to stay successful without the “social” experience of eating out. In the way you have described the customer experience, there is no opportunity for pre-meal chatting, or post-meal lingering. Do you think that this hinders their value to customers?
But it sounds like they only need to concentrate on the quality of their food, and not so much the social experience. As they only offer one type of ramen, they can focus all their efforts on perfecting the umami of the broth, consistency of the ramen, and juiciness of the pork belly. And because their food is so good, they don’t need to specialize on experience or service the way that mediocre restaurants do. There is nothing in their customer promise that guarantees conversation, and customers don’t care for it either. And I guess the announcement of “dreams” may be the social aspect of the meal—in a way, we reveal something our best friends may not know about!
Awesome post–I just checked out the photos on Yelp! Can we go sometime?
I was drawn to your post by the name of the company—I was intrigued by what kinds of products a company called “Lolly Wolly Doodle” makes. 🙂 I may or may not be gifting those “customizable blankets” to everyone in my family this year.
Anyhow, I would not have thought that the operations of a clothing company could be analogous to that of Dell, but the operations of Lolly Wolly Doodle seem pretty seamless.
I’m wondering about what Lolly Wolly Doodle might have to change about their business and operating model as they seek to expand. Currently, it seems like they focus mainly on direct-to-consumer methods (through Facebook or their online store). What do you think about other potential distribution channels? For example, currently, Dell sells computers through retailers like Best Buy or Costco. Do you think LWD’s just-in-time manufacturing would be able to provide products to these channels to expand future sales?
It is interesting that they have managed to keep their advertising spend to only their company page on Facebook, but do you think that they are pursuing other, more mass-advertising methods? I, for one, had never heard of Lolly Wolly, so perhaps they will need to expand from this part of their business model. Their monogrammed items reminded me a lot of the items in L.L. Bean mail catalogs, however, so perhaps those may be another option.
Perhaps LWD is ok with its niche market of customizable clothing, as it is trying to build a smaller yet stronger brand, in which case expansion wouldn’t really be a concern. But it seems like other large clothing manufacturers may be able to take away something from LWD’s operations as well!
Great post! Thanks for the introduction to LWD!