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The whole subscription box industry consists of undifferentiated companies with zero moat. Look at any category: beauty products, men's grooming products, wine,
by _skel 4y ago
The whole subscription box industry consists of undifferentiated companies with zero moat. Look at any category: beauty products, men's grooming products, wine, watches, etc. and you'll see a bunch of companies that all look the same selling the same stuff.
On top of that, the first thing people cut when they have money problems are luxury subscriptions they don't really need.
I don't know why anyone would invest in any of these companies.
- amelius 4y ago> On top of that, the first thing people cut when they have money problems are luxury subscriptions they don't really need. Except their subscription to the gym.
- have_faith 4y agoThat’s not really a luxury subscription, and is often signed up for in 12 month contracts because it works out cheaper. I know many people who’s mental health would substantially decline if they couldn’t go to the gym.
- sokoloff 4y agoDon’t most luxury things serve a mental health function? I know people whose mental health would suffer if you took away their beach house or private jet. That doesn’t make those things not luxury items.
- klodolph 4y agoI think early subscription boxes also sent out the surplus merchandise that was good, but not successful in the market for whatever reason. That era is gone.
- dehrmann 4y agoPicking on the razor companies, you can get similar, name-brand blades with Amazon Subscribe and Save at a similar price. There's no business there. I'm using a coffee subscription right now, but it's specifically for small quantities of a variety of beans. There's a bit more of a curation element to it, and they do repackage the beans. It's not something Amazon would do, but it's low volume, and a competitive space.
- Simon_O_Rourke 4y agoI never got that razor subscription service. I'm happy enough taking the hit of a couple of bucks and buying only when I need razors.
- twblalock 4y agoI think the point was to undercut Gillette's cartridge prices, but since more than one company can do that, they have to compete with each other too.
- dehrmann 4y agoAnd Gillette can lower its prices if the subscription services ever become a real threat. Unlike taxis, there isn't a blitzscaling story here, either.
- eadmund 4y agoDouble-edge safety razor blades undercut all of the fancy razor blades: 2¢ apiece or less!
- adhesive_wombat 4y agoIndeed. Even a Rolls-Royce of a DE blade, like a Feather, is well under 50 cents.
- Veen 4y agoDollar Shave Club goes to show what you can do with a trivial idea and some very clever marketing.
- malborodog 4y agoExactly. Or think Lululemon— “wow, clothing, no moat”. And look at them. 20bn company or something.
- diceduckmonk 4y ago> I don't know why anyone would invest in any of these companies. A belief that they would form lifestyle habits. I was able to cut rideshare pretty quick when they stopped subsidizing rides.
- lazyasciiart 4y agoA moat is overrated. What kind of moat did SVB have that got it into the S&P500? How many of the companies in that really have a moat?
- lambic2 4y agoThe fact that SVB just went under disproved your point. Without a moat a company is relegated to ways of making money that at some point in time become unsustainable (i.e. when interest rates change) and then go under. As opposed to companies with strong moats that defend their free cash flow (i.e. Apple).
- lazyasciiart 4y agoIt doesn't disprove it at all, because I'm certainly not arguing that not having a moat is a strength. It almost sounds like you are arguing that having a moat makes a company indestructible.
- aarreedd 4y agoIt is a lot easier to start a subscription box company than a bank. That's a moat.