Tariq Musa's Profile

Hey Oba – what do you think would happen to market share if the government removed the ban on cement imports? Seems like the local price is significantly higher than it should be. Do you think the government will move away from protectionism any time soon?

Tariq

Hilary, thank you for bringing much needed attention to this broken business model. It is absurd that this organization continues to exist in its current form. The typical constitutional argument made in its defense rests on the government’s “fundamental obligation,” as a democracy, to provide a neutral, open network of communication between all citizens across the country (as well as to collect taxes and distribute military orders). Today the internet has made this all irrelevant, particularly with the proliferation of connectivity in rural areas. A privatized post office would be run more efficiently and eliminate the majority of corporate bloat (particularly in the form of over a half million overpaid employees). As a natural monopoly it could still be required to maintain offices in rural areas to avoid potential issues of inequity. Unfortunately it doesn’t seem like this will ever happen given the perceived “noble” nature of the profession and the strongly unionized work force.

Sorry, please disregard the last line of text, which I included by mistake 🙂

Hi Kohei, thanks for writing this great post.

I was interested in digging a bit deeper into the Nitori-Ikea comparison. Ikea is significantly larger in scale: 2014 sales were around $35b, making it the largest furniture manufacturer and retailer in the world. This is around 10x the size of Nitori. In furniture manufacturing, wood accounts for a bulk of your raw materials, and superior sourcing is paramount. Ikea is said to account for 1% of the world’s wood each year and is therefore able to exact the best prices possible. How is Nitori, then, able to charge significantly lower prices (30%) for its products while still maintaining an incredibly consistent (and impressive) 10% bottom line margin (and 50%+ gross margin) according to bloomberg? Ikea’s net margin is around 11% and I would imagine they have significantly stronger pricing power given the higher end nature of their goods and the brand equity they have developed, while Nitori remains a lower-end player. Any thoughts? Thanks.

Or is it pricing power? Ikea mid. Nitori is lower so perhaps more price contious.

Who knew Turkish adverts could be so spunky?

Thanks for sharing – it’s a well-written post and an interesting company. You’ve done a great job explaining their success. I think a large part of this success also has to do with the following points:
– Increased internet penetration in Turkey in the last decade; between 2005 and 2010 alone, penetration grew almost 3x from 15% to 40%. It’s probably over 60% today.
– This business model is well suited for densely populated cities like Istanbul, where horrible traffic is rampant, and delivery drivers using motor bikes are able to navigate in small amounts of time.

The website is attractive to customers as long as it provides enough options from which to choose, and it is attractive to restaurant owners as long as the orders are being placed by new users and therefore increasing their overall business. There is therefore a clear case for its monetization; however, I wonder if the model will migrate towards that used in mature economies like the US. American food delivery services Seamless Web and Grub Hub, for instance, charge restaurants around 13.5% commissions on the food, 0% for customers, and do not charge any membership/subscription fee.