Amy Shi

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On December 13, 2015, Amy Shi commented on Uber: A Winning Strategy :

Thanks for sharing! It’s hard to believe Uber’s only been around for a few years – I feel like I can’t live without it now. From talking with Uber drivers during my rides, I definitely agree with your point of Uber’s dual business model of delivering value for both passengers and drivers. The drivers are all extremely loyal to Uber and speak positively of the value proposition for them.

I have a few concerns regarding the longer-term sustainability of the business model, because as you point out, human capital is such a critical component of its success. The key concern is around legal ambiguities such as whether its drivers are independent contractors or employees. In fact, a few recent rulings have ruled that drivers are employees, and therefore have rights to unemployment benefits, health insurance and other employee benefits. Uber pulled out of Kansas after lawmakers passed legislation that would obligate the company to conduct more stringent background checks on its drivers and provide additional insurance. Uber has encountered similar issues in Nevada, San Franciso, and even more broadly worldwide.

From a consumer standpoint, I hope Uber is able to resolve all these ambiguities and continue to disrupt the market and provide such a great value proposition for passengers and drivers.

On December 13, 2015, Amy Shi commented on Lululemon: From Niche Market Pioneer to Apparel Ubiquity :

Really interesting post! I’ve always wondered how Lululemon is able to charge such a premium for yoga pants and avoid the dangerous discounting downward spiral that so many other retailers are struggling with. It’s incredible Lululemon sells 95% of its units at full price in a context where consumers are looking for value and often trained to not buy until something is on sale.

I have two main concerns with their business model, which you pointed out at the end (and which have impacted their share price). I think it’s risky that some recent incidents have been against the two pillars of their value proposition, and we know tight alignment between core customer values and execution is critical.

Firstly, the promise of high quality technical wear – Lululemon had quality control issues, where they had to recall 17% of its bottoms because they were too sheer. Customers who spend $100 on yoga pants expect quality. I think increased focus on quality, even if it’s at the expense of margins, is critical to sustain its competitive advantage going forward.

Secondly, and perhaps more concerning, are the marketing disasters where Chip Wilson implied that women complaining about sheet pants were too large to be wearing them!! If a core value of the company is to ‘spread positivity among customers, employees and the community’, then such attitudes definitely detract from brand equity. While Wilson was forced to step down, I really do hope that all the elements of Lululemon’s operating model, such as the employee training and customer-orientation are indeed authentic. It’s powerful for a business to achieve financial success, but also create and empower its communities.

On December 13, 2015, Amy Shi commented on Somebody Hates Amazon and Has Something Else to Offer :

Great article – thanks for sharing! From a consumer perspective, it’s definitely very exciting to see a legitimate competitor to Amazon. Having visited their offices recently, it definitely felt like an extremely well-funded startup with a lot of passionate and talented people. I’m very keen to see how the business model works out, as Jet is taking quite a different approach to Amazon in investing less in facilities, and instead optimizing the supply chain and encouraging customers to modify items or purchase size to achieve savings. I see a few risks to the business model.

Firstly, it’ll be hard to win loyal Amazon Prime members, where the shopping experience is convenient and seamless. When I ordered on Jet, there were a lot of SKUs I couldn’t find (they seemed to focus more on consumer basics), or that were out of stock. There was also very limited product information. For example, I really rely on product reviews, product information and pictures to make my decision, especially in categories such as fashion, which you rightly point out could be a real differentiator for Jet. After being used to Amazon 2 day delivery, the slower delivery time, in multiple shipments, was a real inconvenience for me. I was curious to try out the new business and the $10 discount coupon I got, but I’m not sure whether these issues will deter repeat purchases.

Secondly, you mention that Jet buys products from third parties that they do not stock, and this can be considered part of customer acquisition costs. While definitely great from a consumer standpoint, I wonder how the economics here work, and whether it’s a sustainable model going forward. I think Jet is aiming to breakeven by 2020, but I see this as a challenge under the current mode.

Finally, Jet has faced some backlash from retailer under the Jet Anywhere program you mention. See

Big brands including Home Depot and L’Oreal pulled their brands from the site. I imagine other retailers would be very concerned that Jet is selling their products significantly cheaper than they are and using their brand, without having negotiated a deal with Jet.
In sum, it’s going to be really exciting to see where Jet will be in the next few years. E-commerce is an ultra-competitive space, and who the winners will be is far from certain.