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I think Manjoo's a bit off the mark here. We're not "witnessing the death of the on-demand dream". The dream was never alive in the first place. It was a zombie

I think Manjoo's a bit off the mark here. We're not "witnessing the death of the on-demand dream". The dream was never alive in the first place. It was a zombie that was animated by cheap VC dollars. Is the fact that most of these services are more expensive and less performant than they were two years ago a function of the challenges of maintaining quality while rapidly scaling (Luxe's excuse in the article)? Is it because the cost of expanding into new market segments has exceeded corresponding revenues in the short-term (Instacart's excuse)? Or is it because there are fewer venture capital dollars with which one can buy users? When I hear the paper of record name "not losing money on the bulk of its orders" as an attribute of a startup that is doing well, I start wondering when the music is going to stop.

Retric 11y ago
Loss leaders are a very common strategy for successful business. https://en.wikipedia.org/wiki/Loss_leader https://en.wikipedia.org/wiki/Loss_leader IMO, the problem is the web makes customers far less sticky and people still have not caught on.
- leroy_masochist 11y ago
  Most successful businesses that use loss leaders to gain revenue / market share do so for several specific products among a much larger offering. For example, the supermarket's 50% off charcoal sale ahead of the 4th of July that gets you into the store where you'll buy hot dogs and beer. It's not a loss leader when your entire company is losing money. It's just a loss.
  - sharkweek 11y ago
    I was a buyer for a major grocery chain for a while - If you ever feel like really sticking it to the man, the biggest losses I used to stare at were always the rotisserie chickens, the expectation being customers buy other sides that had insane margins. So buy those without anything else in the cart and slowly run your local grocery store out of business!
  - Retric 11y ago
    My assumption for "not losing money on the bulk of its orders" meant that most transactions where not loss leaders. Zappos is a good example where uniform business models may include unprofitable transactions. Having a liberal return policy is fine as long as only a small percentage of orders are a small net loss. AKA, if 0 or 1 return is profitable, they break even on 2 returns, and most orders never hit 3 returns it's a very good sign. But, if even 2 returns is unprofitable and people regularly go past that then the business model may be at issue.
mafuyu 11y ago
I think the model itself is valid, it just doesn't work for certain markets right now. Companies like Amazon and Uber expand their market through convenience and ease-of-use. I make more impulse buys on Amazon with Prime 2-day shipping and take more taxi rides with the convenience of the Uber app. The problem is it's hard to extract a lot of value without volume and efficiency/integration. Amazon ekes out as much efficiency as possible, being a large online retailer, and Uber was able to 'disrupt' the taxi industry. It turns out delivery is expensive and even with good process, you can only get so far with a luxury service. I suspect the on-demand service will slowly die out until it's revived by more efficient transportation (autonomous cars, drone last mile delivery).
rconti 11y ago
If Luxe was cheaper than parking close to work because they were enabling users to have their cars parked at far-flung, cheaper lots, they drove up the value of those far-flung lots as demand increased. Sometimes these kinds of hacks just don't scale.

Retric 11y ago

Loss leaders are a very common strategy for successful business. https://en.wikipedia.org/wiki/Loss_leader https://en.wikipedia.org/wiki/Loss_leader IMO, the problem is the web makes customers far less sticky and people still have not caught on.

leroy_masochist 11y ago
Most successful businesses that use loss leaders to gain revenue / market share do so for several specific products among a much larger offering. For example, the supermarket's 50% off charcoal sale ahead of the 4th of July that gets you into the store where you'll buy hot dogs and beer. It's not a loss leader when your entire company is losing money. It's just a loss.
- sharkweek 11y ago
  I was a buyer for a major grocery chain for a while - If you ever feel like really sticking it to the man, the biggest losses I used to stare at were always the rotisserie chickens, the expectation being customers buy other sides that had insane margins. So buy those without anything else in the cart and slowly run your local grocery store out of business!
- Retric 11y ago
  My assumption for "not losing money on the bulk of its orders" meant that most transactions where not loss leaders. Zappos is a good example where uniform business models may include unprofitable transactions. Having a liberal return policy is fine as long as only a small percentage of orders are a small net loss. AKA, if 0 or 1 return is profitable, they break even on 2 returns, and most orders never hit 3 returns it's a very good sign. But, if even 2 returns is unprofitable and people regularly go past that then the business model may be at issue.

mafuyu 11y ago

I think the model itself is valid, it just doesn't work for certain markets right now. Companies like Amazon and Uber expand their market through convenience and ease-of-use. I make more impulse buys on Amazon with Prime 2-day shipping and take more taxi rides with the convenience of the Uber app. The problem is it's hard to extract a lot of value without volume and efficiency/integration. Amazon ekes out as much efficiency as possible, being a large online retailer, and Uber was able to 'disrupt' the taxi industry. It turns out delivery is expensive and even with good process, you can only get so far with a luxury service. I suspect the on-demand service will slowly die out until it's revived by more efficient transportation (autonomous cars, drone last mile delivery).

rconti 11y ago

If Luxe was cheaper than parking close to work because they were enabling users to have their cars parked at far-flung, cheaper lots, they drove up the value of those far-flung lots as demand increased. Sometimes these kinds of hacks just don't scale.