rvernovskaya's Profile

Wow that sounds amazing! Know of any plans for them to expand into the US?

Costco has had a mobile website for a long time now. And if you have a membership, you can order from them for delivery. But that just brings to light how Boxed can serve as a much better alternative for you anyway. Boxed has no membership fees, is able to keep costs low with low overhead, and already delivers in under 2 days to most places. In fact, Boxed may even charge lower prices than Costco for the same products. Check out this Tide detergent, which is sold for $8 less on Boxed:
https://www.boxed.com/product/300/tide-pods-152-pacs-spring-meadow-scent/
http://www.costco.com/Tide-Pods-Spring-Meadow-Scent-152-Count.product.100230702.html
It is clear that although Costco may offer more products, Boxed just has a better operating model, which drives savings for its customers.

I have never tried out this service, but now I am somewhat tempted to- mostly out of curiosity. The main thing I would personally be uncomfortable with is the feeling of getting rushed. Their operating model is almost like a factory approach to blow outs. And when I go to a salon, I would want to feel “pampered” and relaxed. Overall, I think you did a great job outlining the business and operating models and pointing out some of their drawbacks. Awesome read!

I really enjoyed reading this post. My only personal experience with a Krispy Kreme was a store on the upper east side in manhattan, and it closed years ago. After reading about their operating model, I can now understand why that happened. I think Dunkin Donuts is way ahead of the cheap retail game. But I also believe that DD’s quality is slipping–or it can just be that doughnuts don’t taste as good as an adult ;). But if I were KK, I would start focusing on “high end doughnut retail”- there has been a huge resurgence of quirky bakeries producing interesting new flavors of doughnuts. There are even successful doughnut food trucks that sell at a significant mark-up to DD. In other words, doughnuts look like they are making a fancy comeback, so that’s what I would capitalize on.

Just want to say that I loved the effort and enthusiasm you brought to this piece. Great job! I really enjoyed watching the process, and seeing this output 🙂

Such a cool idea- I wonder if this model can be applied to other cuisines, or if the seafood element is important. Maybe people are more picky about receiving chicken vs. steak rather than salmon vs. halibut. But overall this restaurant chain is very interesting to me because it looks like the operating model very much informed the business model.

I want to second Aaron’s point. In the past few years some of the banks have been teaming up to try to build an alternative to Bloomberg Chat. A great deal of traders use the terminal more as a networking tool, than a financial analysis tool. Possible alternatives like Perzo may disrupt this business model for a number of its subscribers. While I would agree with you that Bloomberg terminals have become the biggest and most reliable source of news and data, I wonder if it is not evolving fast enough to continue to appeal to its customer base with such a large price tag.

I really enjoyed reading this article. Businesses have been dealing with FX issues for a very long time but they can often better protect themselves against adverse FX effects by “swapping” currency instead of transferring it. This isn’t exactly accessible or financially feasible for an individual consumer, so it’s interesting to see a company step up and offer a new way to “transfer” money. However, this money is probably not transferred very equally. There may be more dollars coming out, than coming in. How do they balance these risks agains the 0.5% they charge their customers? Could there be a situation where they don’t have enough of a strong customer base in a country to offer this service and still make a profit?

I think that the great business and operating models really come into play for Boxed in making it a strong competitor against these giants. Boxed is a very niche product–offering only bulk items, and utilizing a very lean operating model to both profit and pass savings down to consumers. Boxed isn’t really looking to replace Amazon, but is more likely a threat to Costco and brick and mortar retailers. While I do not know whether or not Amazon would try to price cut such a niche competitor, I think there are some elements in the operating model that make Boxed really strong- not owning delivery trucks, limiting SKUs, providing free 2 day shipping without a membership fee (Amazon also has a membership fee for Prime). I also don’t think that Costco can really compete with Boxed in the long term, because they already offer almost the same prices, and Costco has all of the overhead and inventory management to deal with that it can’t enter into a price war. Boxed doesn’t just choose its product mix randomly. It picks the top selling 800+ SKUs that can be delivered quickly and cheaply. So if Costco were to cut prices on these SKUs, it would have to take a very big hit in its margins. In addition, the size of this market is so huge, that Boxed may not be currently hurting Costco that much anyway. The Costco customer tends to be older, in the 40+ age range, and live somewhat close to a Costco. Boxed attracts millenials and young Gen Xers, as well as older folks who simply do not have access to a big box retailer because they live in remote areas. I will be interested to see how these companies respond to Boxed in the future, but I do stand by the company model and would expect Boxed to, at the minimum, give these guys a really good fight.

I think you make a fair point. There is a very important balance for this company in offering the right product mix so that they can make money vs. making sure their customers are satisfied. I think the company started out with ~500 SKUs and this number has grown significantly. The company is using information from their customer base- demographics, location etc. and have responded to this data by expanding their mix to include things like diapers, which were originally excluded as too cheap/bulky but would appeal to young parents. They also encourage users to give feedback about their products and to request products on their contact us page. I do not think, at least at the level they are currently, that they can reasonably stock the same 2000-5000 SKUs that Costco does, but I would agree that they still have room to expand their product offering.

Overall very interesting business model. I think their return policy really takes it home. While it can get expensive for the company if the model doesn’t work, the policy helps address the inherent risk of ordering custom clothing online. To be successful, Indochino really needed to figure out how to educate their consumer. Providing tailoring or remakes is a very good way to convince people to at least try the service out almost “risk free.” But as I was reading, I couldn’t help but think of one major risk that isn’t addressed by offering additional tailoring. I think that fabric quality is really important in a custom made suit. It is unclear to me whether or not Indochino can really convince new customers of the quality of their fabric through images alone. How important do you think this is to consumers and does Indochino address it at all- for example, have some kind of catalog of fabric swatches that they can cheaply provide to interested but skeptical consumers?