Idea: Subscription based online store with no markups (everything at cost), revenue from subscription. Also no warranty

ModernPowerSolutions on 04/03/2019 - 11:30

Hi guys,

I want to get your feedback on a topic,

The subscription-based revenue business model has disrupted industries. For example from iTunes paid per song, to now unlimited songs for a monthly subscription. (Mostly digitla/service-based industries)

Could this work in retail? Imagine a large online store, only making money from revenue on a subscription? Everything at cost?

While maybe also providing no warranty and limited customer service. (I know this is against consumer laws). But will allow for cost pricing.

For example, I saw this post a while back which came to mind:
https://www.ozbargain.com.au/node/431768
The Xiaomi scooter cost price is ~$400. To consumers, it costs ~$550. Would people prefer to save about $100 without warranty, customer service etc…?
This could then apply to many other products/industries.

Or do you guys think that many stores have the approach where they sell some products below cost to entice consumers into purchasing from the store, then make money on other higher markup items when they rebuy? In this case, a cost-price online store would not be cheapest all the time.

What are your thoughts?

TLDR: A large online store whereby everything is sold at cost price, charging customers a subscription, offering no warranty - with the expectation all prices will be cheapest on the market. Would this work?

Poll Options

  • 306
    Would not work
  • 25
    Could work
  • 7
    Would work
General Discussion

Comments

  • Presence on 04/03/2019 - 11:34
    +28

    The subscription cost would have to be absurdly high, effectively making goods no cheaper than normal stores.

    • ModernPowerSolutions on 04/03/2019 - 11:43

      Obviously, this would have to be calculated.

      But I would say not necessarily because the store would need to be efficient (large and EOS). If this was the case, I would say $10-$15 per month on 1-year minimum.

      • Kangal on 04/03/2019 - 16:29
        +1

        And there's no accounting for different people's tastes, wants, and needs.
        So it will virtually be impossible to make this efficient, at least, to an individual level. Imagine doing this to a good that all people require (to make it more viable), such as food, then congratulations you just invented communism.

        Communism doesn't work. Capitalism doesn't work. A good system will choose the best features from both systems, and create a hybrid based on the geographical, economical, ideological, and populatory requirements
        (ie Chad is different to Egypt, India is different to Nepal, China is different to Japan, Canada is different to Mexico, Uruguay is different to Paraguay, Portugal is different to Germany, and Australia is different to New Zealand).

      • Antikythera on 05/03/2019 - 01:34

        I think there is a possibility for a group negotiated deal site.

        Lets take the scooter as an example you ask your (say 100,000) members how many would buy at each price point.

        $300 - 1000
        $350 - 400
        $400 - 200
        $450 - 100

        then you approach the company and say if you sell to our members at $400 we can guarantee 200 sales, but if you agree to a $350 price we can double the sales.

        Similar group negotiating power to unions. Approach companies for all sorts of products and services. Especially things consumers have been getting shafted on for years because of a lack of understanding of the product and lack of time to do proper research like insurance, mechanical repairs, utility and phone contracts.

        Your customers may not find a deal for everything they need, because your negotiators havent found a deal good enough to lock in yet, but everything you can negotiate will save the consumer and still benefit the seller because of bulk sales.

      • MrMoo on 05/03/2019 - 11:00
        +2

        No $10-15 per month will not be sufficient. It will need to be closer to $100 a month.

        Returns alone would kill you. All you need is for your customers to return 1 item a month for it to cancel out their subscription profit.

        This isn't even factoring in your fixed costs like warehouse rental and labour costs.

  • pantsparty on 04/03/2019 - 11:38

    What are the items? How much cheaper will it be than other stores?

    If for example you were selling iPhones, I would want a warranty - even at market lowest price they are still a very expensive item which I would not gamble on buying without a warranty.

    If you are selling items which are already cheap but at an even cheaper price than I would be open to the idea of having no warranty.

    It also depends on what the subscription price is. I am unlikely to sign up for an ongoing subscription unless I thought I would use your service ongoing - most people do not buy appliances every month.

    • ModernPowerSolutions on 04/03/2019 - 11:44

      Yeah this is a tradeoff with some items. You want to pay more for warranty. But how much more?

      If you were saving 20% on an iPhone, then probably worth taking the risk.

      • [Deactivated] on 04/03/2019 - 12:41
        +5

        Say an iPhone was $1000 with warranty (I know there are very few devices as cheap as that, but as an example).

        Less 20% would be $800.

        For an $800 device I'd definitely want full warranty/ACL rights.

        Each to their own but after-sales service is a big selling point in this day and age.
        To cut this out altogether would put you in a very negative light with consumers constantly asking "what if…" before clicking the big check out button.

        • ModernPowerSolutions on 04/03/2019 - 15:03

          Ok fair comment

          • BillyG687 on 04/03/2019 - 23:24
            +1

            @ModernPowerSolutions: Plus don’t forget as a retailer you can’t not give a warranty. You can’t even say to a customer to go straight to the manufacturer, if they bring the item back to you, your store has to handle the warranty process. It’s a total pain in the but, trust me I know, and means your “not offer warranty” part would work.

        • Melong on 06/03/2019 - 14:40

          Also you cannot avoid ACL under any circumstances.

  • HighAndDry on 04/03/2019 - 11:39
    +14

    For example from iTunes paid per song, to now unlimited songs for a monthly subscription. (Mostly digitla/service-based industries)

    Comparing digital goods with zero marginal cost, zero stock-keeping costs, etc, with a physical business is not ideal.

    Could this work in retail? Imagine a large online store, only making money from revenue on a subscription? Everything at cost?

    Costco charges a subscription fee and even they can't do this at cost. The fact that your model is online only won't matter unless everything is drop-shipped, in which case your "cost-price" is just other online retailer's price, and not wholesale (which defeats the entire purpose).

    (I know this is against consumer laws)

    This isn't something you can hand-wave away.

      • HighAndDry on 04/03/2019 - 11:50
        +16

        Clear advertising on the website terms and conditions "no warranty".

        Lol nope. That will just get you dinged for misleading consumers as to their ACL rights (read up on MSY, etc). Other than the kinds of efficiencies being practically impossible (again, if Costco and Amazon can't achieve it even with their economies of scale and buying power, you certainly can't) - this blatant breach of the ACL is an instant showstopper.

        • ModernPowerSolutions on 04/03/2019 - 11:57
          -3

          Costco and Aldi do not need to achieve it, they will make more money charging markups obviously.
          And I think they make a lot of money.

          But in a much more competitive world, an ultra-efficient business might come in and dominate with no markups. Similar to Netflix etc… (I understand they are non-physical goods, but still - at the end of the day this business would just be providing the service of supplying something to an end consumer)

          There may be a way to get permission from the ACCC to offer no warranty, given that it is made incredibly clear on the website, and checkout. What are your thoughts? This would be fair right?

          • HighAndDry on 04/03/2019 - 12:02
            +2

            @ModernPowerSolutions:

            But in a much more competitive world, an ultra-efficient business might come in and dominate with no markups.

            It is already a much more competitive world. Costco and ALDI and Amazon already cut margins razor thin which is how they've been able to come in despite established players like Coles and Woolies. I'll note Amazon is famous for basically making very little net profit, and having arguably the best supply chain management systems in place in the world. The kinds of efficiencies you need for this idea are practically unattainable. It's a nice business hypothetical but that's it.

            There may be a way to get permission from the ACCC to offer no warranty, given that it is made incredibly clear on the website, and checkout. What are your thoughts? This would be fair right?

            Nope. The ACL is a piece of legislation. The ACCC administers it, they can't hand out waivers or exemptions to it.

            • ModernPowerSolutions on 04/03/2019 - 12:08
              -2

              @HighAndDry: It is never an "already a much more competitive world"

              Costco and Aldi may have cut product margins thin, but I am sure they can still go thinner?

              I think It is very likely that there will be new players come into the market, doing things differently and maybe better to support the needs of the market at that time. I think this could be one of them.

              ACCC, in that case, would need to find another loophole/method.

              • Seraphin7 on 04/03/2019 - 12:44
                +10

                @ModernPowerSolutions: You can argue this up and down, left and right … there is NO WAY the ACCC are going to grant an exemption, find a loophole or any other term you might like to use to allow for "no warranty" sales to take place.

                There has been literally years of effort that has gone into creating ACL which is not going to be brushed aside to allow for some new "innovative" business model to be launched that has the undermining of the ACL at its core.

                • hikaru78 on 04/03/2019 - 13:49
                  +7

                  @Seraphin7: what i really love is the people who hold onto their ideas no matter what. Even when they get told no way in hell is it legal….

                  • fantombloo on 04/03/2019 - 20:01

                    @hikaru78:

                    what i really love is the people who hold onto their ideas no matter what. Even when they get told no way in hell is it legal….

                    Like the Underground Railroaders in 1800s USA? Or those that harboured Jews in Nazi occupied Europe? Or those that argued against the White Australia Policy in the 1960s? Or those that had homosexual sex before 1994 in Australia?

                    Legality is nothing about right and wrong, it's just the mob's rule. Those rules can change if they're challenged enough.

                    • SlickMick on 05/03/2019 - 12:34
                      +1

                      @fantombloo: Yep, a lot of work went into fighting for minimum wages, penalty rates etc. Look at them getting thrown out the window with the weak governments we have now.

                      But we should be fighting to improve what is lacking and hold onto what's been achieved, not tear it down for profit.

                      • fantombloo on 05/03/2019 - 15:21
                        +1

                        @SlickMick:

                        But we should be fighting to improve what is lacking and hold onto what's been achieved, not tear it down for profit.

                        Sure! Just want to challenge this "authority of law" that so many people here seem to love.

                • ModernPowerSolutions on 04/03/2019 - 15:09
                  -4

                  @Seraphin7: Breaching ACL should not be the focus of this discussion. It was just a comment/side note.

              • ThithLord on 04/03/2019 - 14:29
                +2

                @ModernPowerSolutions: lmao, you really think your buying power is going to outstrip what Aldi/CostCo etc can afford?

                This is a ridiculous thread.

                • ModernPowerSolutions on 04/03/2019 - 15:06

                  @ThithLord: Please note, I do not think (nor have I mentioned) that I have any intention of doing this myself.

                  I also thought it would make for a good discussion- because I genuinely believe this is where we are heading.

                  • cheng2008 on 05/03/2019 - 04:07
                    +1

                    @ModernPowerSolutions:

                    because I genuinely believe this is where we are heading.

                    I honestly can't see things heading this way any time soon, people have never been as worried about the price as they have with warranty and service.

              • Parentheses on 06/03/2019 - 13:53

                @ModernPowerSolutions:

                ACCC, in that case, would need to find another loophole/method.

                What motivation do they have to do anything other than say no?

      • Presence on 04/03/2019 - 11:51
        +1

        Manufacturers would still provide warranty so I can't see them wanting to sell you anything.

        No way in hell Apple would deal with you.

        • ModernPowerSolutions on 04/03/2019 - 12:00
          -1

          Yeah Apple would not, and I agree that a lot of manufacturers would still provide warranty.

          But again, a lot of manufacturers do not.

          • Danstar on 06/03/2019 - 07:01
            +1

            @ModernPowerSolutions: Name one manufacturer of a brand that doesn't provide some sort of warranty ?

            • Ti-au on 06/03/2019 - 11:11

              @Danstar: if its a brand they tend to stand behind their product…. thermomix being the obvious exception.

              Non brand stuff -> every factory in China?
              Bow down to your communist overlords you capitalistic dogs - No Warranty for u!

              • Danstar on 06/03/2019 - 11:25

                @Ti-au: They probably have the best warranty.

                Refund and send you another one free olol

  • Helmuth on 04/03/2019 - 11:40
    +19

    If you're based in Australia, you have to obey Australian Consumer laws. This includes having a warranty for merchantable quality.

    You can't just say "it's cheap so whatevers" - the fines will put you out of business very very quickly.

    If you're not in Australia, why are you better than Kogan, Aliexpress (or Alibaba, for that matter)?

    Edit: beaten, above. All true.

    • ModernPowerSolutions on 04/03/2019 - 11:50
      -6

      As mentioned above, there may be ways around consumer law (not sure though).

      My thoughts are:
      - auctioned items (no warranty),
      - used items etc… Clear advertising on the website terms and conditions "no warranty".
      - Getting approval from ACCC
      - Or even international.

      But Kogan, Aliexpress etc… still take margins. Small value item margins may be insignificant, but larger products have higher margins that are worth the savings sometimes.

      • Chandler on 05/03/2019 - 10:52
        +3

        If the ACL was that easy to "get around", why aren't majority of retailers and manufacturer's doing that already?

        It was written for a purpose, and set up in such a way that it couldn't just be dodged.

      • [Deactivated] on 05/03/2019 - 18:49
        +1

        Approval from ACCC to have items with no warranty? hahahahahahaha you have to be having a laugh.

    • 0FoxGiven on 04/03/2019 - 14:08
      +1

      Kogan prices are crap IMHO (except for some instances like the Mobile SIM deals). even for grey import, the prices are the same if not worse than some Australian retailers.

      The only kinda cheap prices are on their own brand of stuff or exclusive partner brands. But then, those are both cheap and bad quality.

      • Helmuth on 04/03/2019 - 15:00

        There's a fair bit of truth in what your saying - lots of complaints about Kogan. I was using them as an example of an "Overseas" vendor selling into Australia.

        OK, then what about aliexpress? Based outside AU, not an Australian legal entity, lots of competition. Will likely outcompete anybody else on the cheap goods/crap service/no warranty category. This store has to go up against them, and if it's AU based, will have to pay AU shipping costs.

        • 0FoxGiven on 04/03/2019 - 16:41

          I wasn’t disagreeing with you. I just wanted give my opinion on Kogan and their almost ridiculous margins on grey imports.

  • Krankite on 04/03/2019 - 11:45
    +2

    CostCo is the closest thing to what you have described and has been successful in the retail space, and Amazon Prime and Ebay Plus are the closest online but none of them are close to offering cost price.

    There are two problems you have to overcome;

    1. Scale - it is quite possible that larger companies will be able to offer products at cheaper prices than your cost, I know this often happens with Bunnings or First Choice and I'm sure others as well.

    2. Fair Use - Pricing your subscription is going to be very difficult because some users will buy a lot and some might only buy a few things so how to price it will be very difficult. Add in people sharing accounts and you are right out of luck.

    • ModernPowerSolutions on 04/03/2019 - 11:52

      Yeah sharing accounts would be important to note. But there are methods to minimise this,

      Scale is a big thing that would need to be achieved over a long time.

      But imagine if a big retailed decided to reduce all margins to zero in favour of a subscription? They could do it, might not pay off in the short run. But maybe in the long term?

      • [Deactivated] on 04/03/2019 - 12:44
        +3

        reduce all margins to zero

        You'd be a perfect employee. Don't go into business.

        • pais on 04/03/2019 - 20:57
          +2

          Can you imagine even trying to work everything out based on a net margin of zero?

          Fuel levy for your domestic freight, a demurrage charge for a container decanned half an hour late, a change to the award, a tribunal finding against you, an insurance claim, a stiff breeze… There are so many inputs into a GL that you'd be (profanity) the moment literally anything, anywhere changes. Your subscription model would have to be down to the millisecond based on immediate feedback and you have no ability to scale the business.

  • [Deactivated] on 04/03/2019 - 11:57

    If you look at the retail video game sector, the went the opposite way. It's all about returns. Fanboys who want sealed mint in box games don't count. It's all about easy returns and change of mind for soccer moms.

    • ModernPowerSolutions on 04/03/2019 - 11:58

      Yeah I agree that for a lot of items this is the case.

      But for Bargainers, is the cheaper cost worth the risks?

      • [Deactivated] on 04/03/2019 - 15:48
        +1

        Nope. Would still perfer have option to refund /replacement.

  • Third_Gear on 04/03/2019 - 12:01
    +10

    Obviously you have no idea what the real cost on many products is. The amount of stuff amazon already sells at cost is crazy. Sorry but this is an absurd idea.

    / end thread

    • ModernPowerSolutions on 04/03/2019 - 12:03

      Please explain a bit more…

      I would agree that Amazon sells a lot of products near cost (small margins), but I would disagree that they sell many items at cost?

      Are they trying to entice customers into the platform and earn profit elsewhere?

      • OG Puppy Banana on 05/03/2019 - 07:27

        Yes. Amazon enjoys near pure profit on other goods and services like ebooks, music and cloud storage solutions.

        A lot of what they sell is sold by 3rd parties, meaning that they get 2-3% for not doing very much! But when that scales to 100s of millions of daily transactions, it's pure profit money in the bank.

  • bongom on 04/03/2019 - 12:20

    Who pays for shipping? The markup on clothing is huge.

    • ModernPowerSolutions on 04/03/2019 - 12:24

      Shipping would be the buyer, or pickup.

      • raptormesh on 04/03/2019 - 15:55
        +1

        So how are you going to offset the warehousing costs and customer service footprint? If you rent a large place in a very rural area nobody will pick up. Are you planning to just dropship everything?

  • altomic on 04/03/2019 - 12:29
    +15

    Any one want to split a subscription 100 ways?

  • [Deactivated] on 04/03/2019 - 12:36
    +4

    No warranty returns would make it illegal under Australian consumer law so it's kind of a no starter.

    • ModernPowerSolutions on 04/03/2019 - 13:25
      -1

      As mentioned above, there would need to be a legal way around this for it to work. Which I think would be possible

      • [Deactivated] on 04/03/2019 - 15:26
        +1

        I don't think there is, even when shops like masters close down they have signs up saying something like no refunds except ACL. So even when buying from a shop that is closing down you are still legally covered (although claiming it would be quite difficult after they have closed - you would lodge a claim with the creditors and take your place along with all the unsecured creditors)

        • Ti-au on 06/03/2019 - 11:16

          If you were overseas. Otherwise you are correct.

      • gromit on 06/03/2019 - 15:11

        The laws were designed to ensure manufacturers and retailers DID NOT have a legal way to avoid their obligations. Any statement of "No Warranty" is actually a breach in itself as you cannot make terms and conditions that remove a consumers rights under the laws. If you could a heap of the less dubious sellers would already be doing it.

  • hikaru78 on 04/03/2019 - 12:43
    +11

    no warranty…. can we just end the thread here before you get a whopping big fine for misleading and decepetive conduct

    • [Deactivated] on 04/03/2019 - 12:45
      +2

      I'm happy for the OP to get a nice large fine with a few trailing 0s.

      The more the OP gets fined the less I'll be taxed.

  • ModernPowerSolutions on 04/03/2019 - 13:41
    -8

    Why is everyone in this community so negative about this idea? I am yet to read a supportive comment!

    I was expecting you guys to like this idea given this is a bargaining community…

    Is it the warranty that is an important part of the sale?

    What are you honest thoughts?

    • Baysew on 04/03/2019 - 13:48
      +36

      Why is everyone in this community so negative about this idea?

      Maybe because it is not really a good idea?

      • ModernPowerSolutions on 04/03/2019 - 14:24
        -2

        I agree that it would probably be a very difficult idea to execute, (and legally - due to the warranty concerns). And because of this, it could be considered a bad idea.

        It would also have negative effects on many businesses in the industry.

        But what I am asking is that from the consumer end, is it a bad idea because of the unethical "no warranty"? Or another reason?

        • ThithLord on 04/03/2019 - 14:31
          +6

          Regardless of the warranty status - you just cannot amass enough buying power to sell your entire inventory at cost price. It just ain't happening, kiddo

          • ModernPowerSolutions on 04/03/2019 - 14:37

            @ThithLord: I appreciate your comment, but I disagree

            • OG Puppy Banana on 05/03/2019 - 07:41

              @ModernPowerSolutions: May I put up a new angle for your consideration.

              To get it your scale, you'll need to take in millions in private equity to fund the costs you desire up until the point where you'll have enough market power to pressure their suppliers (i.e uber).

              The problem with your model is you don't really seem to want to give a return to your shareholders. Instead, everything goes back to your customer.

              So I put it to you. How do you intend to scale (e-commerce, marketing, warehousing, insurance, legal, supply chain and of course stock) without a lick of funds.

              Also, how will you get suppliers to give you goods the second time after you've just undercut their other buyer's? There's a good reason for a RRP.

            • Ghost47 on 06/03/2019 - 14:46

              @ModernPowerSolutions: Don't listen to everyone OP. Maybe people are envious they didn't come up with this idea before you. Go and invest your hard earned money and your family's hard earned money on this project.

          • Bargain80 on 04/03/2019 - 14:51
            +1

            @ThithLord: if OP can get enough subscription (probably as many as Amazon Prime customers), it's doable.
            But to get there, OP will have to burn a lot of money.

        • HighAndDry on 04/03/2019 - 15:00

          But what I am asking is that from the consumer end

          You're asking about a business idea. If it was purely from the consumer's end, I'd tell you to go buy all the products I want, and then give them away for free.

        • visionistnz on 04/03/2019 - 15:54

          May be subscription based joint purchase would be another way??

    • Kenb0 on 04/03/2019 - 13:52
      +11

      people have given you their honest thoughts. Just because its not what you want to hear doesn't mean they're wrong.

      And yes, the warranty is an important part of the sale, especially when its actually written into legislation to protect consumers. You can't just say, I'll offer the consumer the choice of no warranty for cheaper prices and be done with it, you're still going to be caught under Australian Consumer Law. Just the same way that there are rights that you can't sign away, even if you sign a contract saying you do eg. restrictive employee contracts, etc..

    • HighAndDry on 04/03/2019 - 14:02
      +9

      Is it the warranty that is an important part of the sale?

      Yes, it's a legally required part of all sales in Australia.

      What are you honest thoughts?

      Believe me, you probably don't want to know.

      • ModernPowerSolutions on 04/03/2019 - 14:59
        -1

        Yes, but what if you changed the nature of the "sale"?

        To a sale where the warranty is not required? Is this unethical in your view if it is clearly displayed, and legal?

        For example, all items are used condition. Or it is an "auction site".

        (This information is going off my knowledge, I may be incorrect)

        • HighAndDry on 04/03/2019 - 15:01
          +3

          To a sale where the warranty is not required?

          This doesn't exist. If it's a sale by a business, it's covered by the ACL. People smarter than you came up with the ACL, it's not that easy to get around.

          You might as well be asking: How can I start a business selling unicorns?

          Case in point:

          For example, all items are used condition.

          Even if you only sell used items - but do so as a business, you're still covered by the ACL.

          • ModernPowerSolutions on 04/03/2019 - 15:18

            @HighAndDry: Please keep this a friendly discussion.

            You may be right, but the reason for my thoughts on my comment was:
            - Setting up an international entity. Shipping from overseas. (I understand unethical, but legal right?)
            - Selling used items - ACL, warranty significantly less? Maybe 30 days if at all? (please help me clarify)

            • HighAndDry on 04/03/2019 - 15:19
              +1

              @ModernPowerSolutions: As long as you're selling to Australians, you're covered by Australian law. See recent GST changes.

              No - do your own research.

              • ModernPowerSolutions on 04/03/2019 - 15:22

                @HighAndDry: Ok, interesting point.

                Do you have any comments other than ACL obligations? Assuming that standard ACL is followed in this business model?

                • HighAndDry on 04/03/2019 - 15:29
                  +3

                  @ModernPowerSolutions: Yes - you're trivialising just how difficult it will be to achieve the kinds of efficiencies you'd need for the model to work while charging any kind of palatable subscription fee.

                  There is an entire multi-billion dollar industry revolving around optimising supply chain management. So let's take it as a given that you can't get any more efficient than the likes of Coles or Woolworths, much less world-leaders like Amazon or Costco.

                  You would also have to take into account the fact that a subscription fee does not scale with number of purchases by customers, whereas your costs will. It will take you more manpower at a minimum, to process more orders from one customer, whereas your subscription revenue from one person will stay the same. To account for this, you'd need to model the expected number of orders from each customer taking into account the incentive effect of it being a subscription model. This would then mean you would have to price the subscription at around the cost for processing the average number of orders - but this would in turn drive away those people who would make less than this average number of purchases, pushing up your average order figure and therefore cost (because people who bargain hunt are good are figuring out their individual break-even).

                  • ModernPowerSolutions on 04/03/2019 - 15:38

                    @HighAndDry: Yes, would be hard, but I believe that is where the world is heading - as everything gets more efficient right?

                    Subscription fee and volume - that was brought up in a comment before.

                    Note that, at the same time, the business would become more valuable to consumers if this was the case? This is a benefit.

                    Similar to Uber losing millions of dollars, yet as the revenue is there, investors are opening their wallets.

                    Also, I believe the logistic costs are low. When I initially thought about this business model, I was expecting the cost price to equal the price of the product landed in Aus. The only logistic costs are warehouse and processing in Aus. Obviously, there are many ways of determining the "cost price" at which point of the supply chain.

                    Ultimately, I do not think this is as significant as an issue as you make it seem,

                    • HighAndDry on 04/03/2019 - 15:40
                      +2

                      @ModernPowerSolutions: Uber is an entirely new business model. Your proposed business plan is basically retail.

                      • ModernPowerSolutions on 04/03/2019 - 15:41

                        @HighAndDry: Not necessarily, Taxi management services were around for a while?

                        • HighAndDry on 04/03/2019 - 15:49
                          +6

                          @ModernPowerSolutions: Uber's innovation wasn't in their front-end user-facing platform. That was window-dressing. Uber's innovation was effectively lowering the barrier to entry of the "taxi" industry to zero.

                          I'm going to be blunt - if you didn't have enough business sense to understand the above, don't go into business.

                    • HighAndDry on 04/03/2019 - 15:42
                      +4

                      @ModernPowerSolutions:

                      The only logistic costs are warehouse and processing in Aus.

                      These are not insignificant costs.

                      Ultimately, I do not think this is as significant as an issue as you make it seem

                      Ultimately what you and I think don't really matter. Your business model has issues which aren't new to the retail industry - warehouse overheads, import costs, warranty contingency amounts - all of these are known issues for any retailer. And, in case I haven't made it clear, repeating:

                      However, costs would have to be minimised via an efficient supply chain.

                      Doesn't solve the problem in a way that existing retailers haven't already thought of. Retailers haven't somehow left potential efficiency gains on the table because they don't like money. You can bet your bottom dollar that existing players like Amazon and Costco are already operating as efficient as it is possible.

                      • jace88 on 04/03/2019 - 22:16
                        +1

                        @HighAndDry: Can't tell if Op will hold inventory and risk it.. or if it'll be held by overseas distributors and hence take a long time to arrive.

              • witsa on 06/03/2019 - 11:24

                @HighAndDry: Is that strictly true though? What about those gray import online stores based on HK or whatever. They don't need to oblige by ACL even though they sell to Australians

                • HighAndDry on 06/03/2019 - 11:39

                  @witsa: It's technically true. Basically all business which market to and sell to Australians (not one-off incidental sales) are subject to Australian laws. Of course, if it's a one man outfit operating out of HK, enforceability is another matter entirely.

                  OP is in Australia though, so that's not a relevant consideration. They'll be subject to Australian laws, and those laws can and will be enforced against them.

                  • witsa on 06/03/2019 - 13:47

                    @HighAndDry: I got the impression OP wasn't talking about just himself setting up a subscription service to compete against retailers etc. He was interested about whether this business model could work presumably with an existing player.

                    Everyone is saying there is no way around not giving warranty etc. Sounds like there is - don't operate in Australia - a strategy a lot of online stores seen to be operating in.

                    To be truthful, I don't think it would work as OP has specified, however it's not that outrageous an idea. There are similar variations like Costco so it could be a pivot or two from a workable idea.

                    It's easy to say an idea doesn't work. It's also not helpful cause an idea is just a starting point. Ideas can evolve, fleshed out and adapt into a more refined solution. It's much more constructive to talk about how an idea could work then why it just wouldn't.

                    • HighAndDry on 06/03/2019 - 13:50

                      @witsa:

                      It's easy to say an idea doesn't work. It's also not helpful cause an idea is just a starting point. Ideas can evolve, fleshed out and adapt into a more refined solution.

                      That "evolved, fleshed out, and more refined" solution is called Costco. OP's idea as some kind of new and novel business model is DOA. OP's idea in workable form already exists.

          • ModernPowerSolutions on 04/03/2019 - 15:19
            +2

            @HighAndDry: Also, for the sake of humour, here is a business selling unicorns:
            https://www.theunicornstore.com/

            • There is always a way
    • bongom on 04/03/2019 - 14:50
      +4

      Not financially viable. Your revenue is fixed per user but the costs per user are variable depending on how many items are purchased?

      • ModernPowerSolutions on 04/03/2019 - 14:54

        Good point,

        Difficult, yes. However, costs would have to be minimised via an efficient supply chain.

        • Name on 04/03/2019 - 20:34
          +3

          Until Harvey normal realise they can buy from you at cost for $15 per month….

    • Ughhh on 04/03/2019 - 17:22
      +5

      Why is everyone in this community so negative about this idea? I am yet to read a supportive comment!

      Bad people will support you or agree with whatever you say, telling you what you want to hear, even if knowing it will hurt you now or in the future.
      Decent people will tell you the truth, even knowing it may hurt your feelings.

      Being "supportive" isnt always the best or nicest thing to do.

  • chumlee on 04/03/2019 - 13:53

    You reckon Apple will supply you if you don't adhere to their pricing model??

    How many people will pay a monthly subscription if they are not heavy users?

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