I agree that they have done a good job with the technology to make sure they have solid luggage but I do not think they differentiate themselves this way from competitors. You mention vertical integration and how they are using this to branch into other markets however it seems to me that their luggage is still pretty consistently geared toward the business traveler. When they bought for example, High Sierra, did they continue the relationship with the pre-existing manufacturers and distributors? Did they leverage the existing pieces that made those companies efficient? It’s unclear to me what part of their operating model really adds value to the customer. the several acquisitions they have I believe could be very useful for their business but am not sure at this present moment how those companies create something for the customer as opposed to just more options for the business.
Michelle, I have heard about Harry’s but did not know this much so thank you for the education. It’s an interesting fact that Harry’s sells the blades for 50% of the competitors. I would be curious to see the margins for each company and how these price point differences feed into the bottom line. Furthermore, I agree that the vertical integration in this case seems to be working for them but as they grow and hopefully take a larger piece of the market share, how will they sustain the low prices? Do they have the money or resources to buy other manufactures? I am curious to see when they grow if they can scale their business in a logical way.
Akeel, I think you do an awesome job hitting on the key aspects of what makes them valuable to male millennials. I think Bonobos has found a way to penetrate the male shopping market and we will see in a few years that this model works. I wonder in the future when this model does work if they will try to branch into a higher income market. Since the customer needs to just got to a Guideshop to find the right fit, is there a way for Bonobos to expand their business model to custom create clothes? Can they provide swatches of fabric to the clients who then pick what they want and Bonobos can custom make it and send it to them? Again, this allows them to keep a low inventory yet charge a premium for the product made. This would be a way for them to attract a more sophisticated clientele who would spend more money yet still retain their current operating model. Based on what happens with the relationships with the bigger retail stores, this could be a way to supplement their current revenue streams and help them turn a profit.