Ezra Josephson

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On December 14, 2015, Ezra Josephson commented on Trader Joe’s :

Nice find, Sofia. I did not realize the extent to which they had streamlined their purchasing and distribution in order to keep customer costs down. I think the other key element of their business advantage is their diverse set of ready-made food available (not frozen meals, but pre-packaged fresh meals like sushi, lasagna, etc.). I wonder how they incorporate this into their low cost sourcing approach: do their have the suppliers create these too? Do they use the same suppliers that produce the raw food, or separate suppliers and/or aggregators? Or do they use their own labor to create some of these meals? If they outsource this, I could see that impacting their decision for choosing suppliers, and it may drive up costs as it would be more labor intensive (a slight misalignment with the rest of their operating model). However, these meals are currently available at low costs, so it seems that they have found a way to produce meals in cost-effective ways as well.

On December 14, 2015, Ezra Josephson commented on GNC – Supplementation Gone Wrong :

Interesting post. I agree that in general brink and mortar is losing to e-commerce, and nutritionals/supplements are no exception to this trend. However, I still believe that this situation has potential for a labor heavy operating model. First, health is an area where in-person knowledge is still valued (particularly given the wide variety of vitamins and supplements available). For example, I might read something on WebMD first, but I will still go in to the doctor’s office for a professional opinion. GNC might need to have an actual nutritionist on staff for this level of professional service to be successful (like a pharmacy but for supplements). Their second option would be to leverage more of their in-store food services. Many places like gyms are starting to incorporate smoothie/shake services as part of their offering. I see no reason why GNC could not do the same, particularly with their mall locations. In both cases, they would better justify their cost of labor and rent.

On December 14, 2015, Ezra Josephson commented on Amtrak: Losing Money for the Long Haul :

Nice article, Will. It’s interesting to see the US/EU comparisons that have been drawn out with the public good vs. privatization argument. Another consideration that comes to mind is the extent to which train service currently fills the void in the US between really cheap, low quality bus transport and higher priced, more efficient plane transport. It works for the Northeast Corridor, where this niche is profitable, but the trade-off is only a couple of hours vs. ~$100 and people are willing to accept lower quality wifi and food services. If an upgrade in services and speed occurs, and there is a corresponding increase in price, I don’t see this new train service being differentiated from a plane trip.

To your other point, I see the customer’s acceptable time/money tradeoff as limited to regional routes only. For Chicago to LA, even a bullet train at 200 mph would take 10 hours (vs. 4.5 hours flying) – so even bullet trains likely do not have a place for longer routes. I agree with your assertion that even privatization of these longer haul routes may not make the operating model any more sustainable. A more interesting model would be an integrated model of plane and train travel (where planes handle the longer more profitable routes, and trains handle the shorter regional routes). However, they would face a challenge in facing off against smaller, regional airlines (e.g., Southwest).

On December 14, 2015, Ezra Josephson commented on PillPack: the new kid on the block in the world of pharmacy :

Cool post, PillPack is certainly doing something unique in the industry by making themselves a personalized package mail order service. I think you are spot on in your conclusion that while their operating model helps them keep costs down now, their competitive advantage will not be able to fend off competition in the long term. I could definitely see another larger mail order service (e.g, Express Scripts) pretty easily copying this distribution type. By leveraging their existing PBM business, they would have an existing customer base and be able to subsidize their “personalized” service if necessary during its developmental stages. Another outstanding question is how will PillPack increase its awareness and drive patients to mail order? Without an existing pharmacy and/or PBM business, I see it being a challenge for them to gain patient awareness. One option to drive future growth is partnering with insurance companies (health plans that keep PBM services in-house, but lack their own mail order service). This would allow them to still keep operational costs down, while reaching a larger patient base. Their incentives would be well aligned, particularly if PillPack can show that their service increases medication adherence at statistically significant levels over an extended period of time.