Great post! A few questions:
1. Innovation is key for beauty companies, but I was wondering what is the rationale behind such a frequent portfolio update? Do competitors do the same thing, i.e. is this really expected in the local market? How does such product breadth impact their supply chain/operations?
2. I’m not clear on how the consultoras promote/encourage sustainable consumption? You mentioned this as part of the evaluation/incentive structure.
3. How big is the average territory of the consultoras? I’m sure it depends on whether they serve a rural or urban base, but I wonder if any of them could be stretched thin. Is there a risk of them being poached by companies like Avon, or does Natura do the poaching?
Great writeup – they have definitely managed to stay ahead of the pack as so many subscription models have petered out. Do you know if the retail store expansion has hurt Birchbox’s profitability? I know they were actually throwing off cash for a while – impressive for a startup – but I wonder what the retail footprint has done. Secondly, do you see any potential blowback from privacy concerns given all the data that they amass? I assume it’s wiped of any personal identifiers?
Great write up Elliott! Very interesting analysis on their competitive advantage. Question for you – now that many brands are producing less inventory to better align with demand and tightening up their quality standards (which should lead to fewer “mistake” pieces like those that can be found at TJX), how will this affect TJX going forward? This has been a perpetual thorn for companies like Gilt and Fab, which you mention. For instance, Gilt has answered by producing private label goods and going down market to less exclusive brands. What is TJX’s response?
Not that I know of, but that’s a good point. They could try to incentivize people to take better care of the garment, like giving them points toward a future discount on a rental. I struggled a bit with whether to call them a winner or loser, but I ultimately came down on the winner side by looking at it from a pure operational perspective, i.e. what we study in TOM. Their operations/logistics platform is quite incredible when you look at it – it does allow them to get those dresses out very efficiently to millions of women. But I think their business model is challenged in the long term because it’s expensive to gain new customers and most women only have so many formal events to attend. They clearly see this too, and that’s why they launched their new Unlimited program which focuses on everyday clothing. It has a long waiting list but a very high price – $139 per month for a Netflix like clothing subscription.