I am actually in my first month of my Le Tote subscription after 2-3 months of toying with the idea of subscribing to one of these clothing rental businesses. I think they have a number of operational challenges. First of all, the product (rentable closet) is only as good as its size and variety. Therefore they require a massive base of customers in order to support the inventory they must hold. However, they are also dependent on customers referring their friends to grow. Yet I’m not sure how many women want to be seen worn the same thing their friend just wore a couple of weeks ago. Secondly, the quality of the experience is also dependent on the speed of their service. Currently, it takes at least 2 days to return a tote and another day for them to “style” and then 2-3 more days for the new tote to be sent out. In essence, while they promise unlimited totes, a customer can realistically maybe get 2 totes per month. While this might help reduce their costs and meet demand, it may cause dissatisfaction from customers. I would suggest they offer different tiers of service and speed in order to capture the full value of their service. Overall, while it is an interesting concept, I think there are still operational kinks and customer messaging they need to work out.
This sounds super interesting, I am surprised that it is organized around only Halloween. I would imagine they need to be able to move a significant amount of volume at larger than average margins to support this business model in order to compete with the cost advantages of regular stores that would only need to changeover their seasonal merchandise. I am surprised at how they are able to sustain this success. I wonder how disruptive this is to the year-round party stores and why they do not expand scope to include the other holidays around the year.
This seems like a great business model. It truly captures value to the consumer. To Steph’s point above, I don’t think the retailers actually sign on to the platform, Paribus is the one negotiating and managing the rebate process with each retailer on behalf of the customer. As Paribus grows, I worry that the retailers will change their policy to exclude rebates requested by a third party. One way Paribus could may be prevent this is by proactively reaching out to the retailers and share some of the benefit back to the retailer by issuing the rebates in store gift cards rather than cash deposits. Additionally, I think this would have been a wonderful idea for a charitable organization, with both the retailer and customer receiving a donation receipt (and therefore tax benefits) for the rebate.
I totally agree with Pluto! Reading this reminded me of Ryanair in Europe. Taking it to the extreme, I believe Ryanair even charges for the use of bathrooms. I think this business model is great in giving consumers choice and truly capturing a different segment in the willingness to pay curve. I wonder if there are any operational things other than essentially decomposing all the fees and services Sprit Airlines have done, perhaps in terms of its fleets. One example might be, assuming the consumers choosing to fly Sprit Airlines all want to minimize their expenses, they should have less luggage in their cargo. I wonder if Spirit have found ways to either reduce the cargo space or monetize the extra space they have. Would be interesting to see what other operational or design changes they have made to make their business model sustainable. Additionally, what prevents another carrier from copying this strategy?
As I read this post I had similar thoughts to Shultzy above. As you mentioned, customers for Doorman are effectively paying twice for their delivery. I wonder if there is an opportunity for Doorman to try to capture some of the value it provides to the delivery services as a way to improve profitability. Additionally, in the case of lost or stolen packages, I wonder if the issue is large enough for Doorman to partner with some of the retailers such as Amazon who is on the hook for replacing the lost/stolen packages to capture some value there by reducing the retailer liability for losses. Finally, a major point of concern for me is the subscription service. As someone who shops almost exclusively online, this subscription model would attract expensive customers like myself who may have the highest willingness to pay but end up reaping the most benefit from the business model. As a result, I think this model may make sense most for Amazon Prime in which the customer pays a premium for additional levels of service, but each delivery brings additional revenues for the company as well to help with profitability. Maybe they should consider selling?