Thanks Sarah – some great issues you raised. To address a few of your concerns:
– While I am sure Dirt Cheap does incur some additional costs from having to sort through the items, my understanding is that the goods can be purchased for such a steep discount that there is still plenty of room to pass on margin to customers.
– On the fixing unusable items front, they do not guarantee that their products (particularly electronics) will work. The way they deal with this is by having “plug stations” in their stores where customers can plug in products to make sure they work before they buy.
– Finally, in terms of Walmart and Target, I think many retailers just aren’t set up to spend a lot of attention on reverse logistics and Dirt Cheap has been able to create a business out of this inefficiency. I’m not sure focusing a ton of attention on this area, however, would deliver a lot of value for Walmart or Target as customer returns are a very small percentage of their total volume.
And thanks for the link to Trader Joe’s! Very interesting comp.
I find Warby Parker to be a fascinating case study and I was particularly struck by the price differential between its glasses and those of other high-end brands. Is there more to the “secret sauce” that drives this price differential? Or are other brands simply capturing egregious margins? The first seems more sustainable to me whereas the second would be concerning as Warby Parker continues to grab a larger share of the market. If other brands see it as a significant threat and begin to lose market share, they may drop their price significantly, eroding a lot of the Warby Parker value proposition.
Fascinating case study here. I find it interesting how Harry Winston has backwardly integrated in to the diamond mines themselves to ensure access to supply. This move raised two questions for me: (1) is access to a few mines enough to ensure sustainability given the percent of the total global supply controlled by De Beers? and (2) is the business model and core competencies that come with running a high end jewelry and watch brand truly compatible with diamond mining?
Sorry, the last line should read:
Has SolarCity done anything in its operating model to address this key weakness in its business model?
Very interesting company and I find it fascinating how they have found an innovative way to remove the single largest obstacle for the customer – the upfront cost of installation – from the equation. My question is as follows – my understanding is that these businesses would find it difficult to exist without the significant government subsidies and/or credits that exist to support solar energy. Has SolarCity done anything in its operating model to address this key weakness in its operating model?