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Let’s go with your argument. What economies of scale and purchasing power would make for a differentiable competitive difference vs Local Coffee Co? Are those e

Let’s go with your argument. What economies of scale and purchasing power would make for a differentiable competitive difference vs Local Coffee Co? Are those economies the driving force for Starbucks success? For their competitive advantage in the eyes of a consumer? WeWork is an international brand. Can you name another coworking space in nearby [state/country]? On the other hand there’s prob a WeWork there with a certain consistency wrt quality that you’d expect.

CPLX 7y ago
I can, Regus. They’ve been around forever, this business model is not novel. But the lack of examples doesn’t support the argument the way you think it does. That means it’s very much an open question if this model could ever be successful. Unlike chain food/beverage which is a highly proven business model.
- dyarosla 7y ago
  But you still haven’t given me an example. Thusly any competitor to come into this space would have to spend as much as WeWork at least to unseat them or to make a competitive brand for themselves. Sure the market’s not new, but the solidified brand in this market is. That counts for a lot.
  - CPLX 7y ago
    I have indeed given you an example, it’s called Regus. Google it, they have an international brand too. Wework now has a higher profile. Good for them, but what’s that worth exactly? Having brand recognition is not at all the same thing as a barrier to entry of a market, or a network effect. The market for shared or managed office has very low barriers to entry and modest network effects. Thus making the concept of a monopoly in this market more than implausible.
csande17 7y ago
> What economies of scale and purchasing power would make for a differentiable competitive difference vs Local Coffee Co? If Starbucks spends less money buying coffee, that means they can afford to spend more money on nice decorations (and better real estate, more ads/PR to increase brand presence, etc.) than Local Coffee Co. The real estate/furniture is presumably a relatively small portion of the operating costs of a coffee shop, so e.g. buying 10% cheaper coffee beans could mean getting a location that's two times as attractive to customers. WeWork might not be able to do that as easily because for them, the real estate and furniture is their only product.
- dyarosla 7y ago
  So a competitor to WeWork would have to spend even more than WeWork to compete vs the brand. They’d be even more strapped for cash for PR/ads than the main player. They have the first mover advantage.
  - csande17 7y ago
    > So a competitor to WeWork would have to spend even more than WeWork to compete vs the brand. They’d be even more strapped for cash for PR/ads than the main player. WeWork won't be able to maintain their venture-capital-fueled level of spending forever. Starbucks' economies of scale aren't a one-time "build the brand" thing, they're a constant source of capital that allows them to continually build and maintain storefronts better than Local Coffee Co can. I can totally see a world where WeWork, forced by the public markets to attempt to reach profitability, stops putting as much money into their buildings and furniture as they currently are. Then, the next real estate firm disguised as a tech startup can raise private money at a forty-eight million dollar valuation, build even nicer offices, and eat their lunch. > They have the first mover advantage. I am not convinced the first-mover advantage is very significant in the short-term office rental industry! WeWork got a lot of customers by selling nice offices at below cost, even though other players in the space had been around longer. Who's to say another company couldn't do the same thing?
- smm2000 7y ago
  Cost of coffee in cup of latte is less than 25cents and Starbucks sells latte for $4.5. I am sure Starbucks has small price advantage compared to local coffee shop but this advantage is minuscule for widely traded commodities like coffee, milk and paper cups. I doubt that's their main competitor advantage. Personally for me ability to order Starbucks coffee online and have it ready when I get to the store is a game changer + consistent user experience. Local coffee shops are always hit/miss.

CPLX 7y ago

I can, Regus. They’ve been around forever, this business model is not novel. But the lack of examples doesn’t support the argument the way you think it does. That means it’s very much an open question if this model could ever be successful. Unlike chain food/beverage which is a highly proven business model.

dyarosla 7y ago
But you still haven’t given me an example. Thusly any competitor to come into this space would have to spend as much as WeWork at least to unseat them or to make a competitive brand for themselves. Sure the market’s not new, but the solidified brand in this market is. That counts for a lot.
- CPLX 7y ago
  I have indeed given you an example, it’s called Regus. Google it, they have an international brand too. Wework now has a higher profile. Good for them, but what’s that worth exactly? Having brand recognition is not at all the same thing as a barrier to entry of a market, or a network effect. The market for shared or managed office has very low barriers to entry and modest network effects. Thus making the concept of a monopoly in this market more than implausible.

csande17 7y ago

> What economies of scale and purchasing power would make for a differentiable competitive difference vs Local Coffee Co? If Starbucks spends less money buying coffee, that means they can afford to spend more money on nice decorations (and better real estate, more ads/PR to increase brand presence, etc.) than Local Coffee Co. The real estate/furniture is presumably a relatively small portion of the operating costs of a coffee shop, so e.g. buying 10% cheaper coffee beans could mean getting a location that's two times as attractive to customers. WeWork might not be able to do that as easily because for them, the real estate and furniture is their only product.

dyarosla 7y ago
So a competitor to WeWork would have to spend even more than WeWork to compete vs the brand. They’d be even more strapped for cash for PR/ads than the main player. They have the first mover advantage.
- csande17 7y ago
  > So a competitor to WeWork would have to spend even more than WeWork to compete vs the brand. They’d be even more strapped for cash for PR/ads than the main player. WeWork won't be able to maintain their venture-capital-fueled level of spending forever. Starbucks' economies of scale aren't a one-time "build the brand" thing, they're a constant source of capital that allows them to continually build and maintain storefronts better than Local Coffee Co can. I can totally see a world where WeWork, forced by the public markets to attempt to reach profitability, stops putting as much money into their buildings and furniture as they currently are. Then, the next real estate firm disguised as a tech startup can raise private money at a forty-eight million dollar valuation, build even nicer offices, and eat their lunch. > They have the first mover advantage. I am not convinced the first-mover advantage is very significant in the short-term office rental industry! WeWork got a lot of customers by selling nice offices at below cost, even though other players in the space had been around longer. Who's to say another company couldn't do the same thing?
smm2000 7y ago
Cost of coffee in cup of latte is less than 25cents and Starbucks sells latte for $4.5. I am sure Starbucks has small price advantage compared to local coffee shop but this advantage is minuscule for widely traded commodities like coffee, milk and paper cups. I doubt that's their main competitor advantage. Personally for me ability to order Starbucks coffee online and have it ready when I get to the store is a game changer + consistent user experience. Local coffee shops are always hit/miss.