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

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  twocsies on 06/03/2019 - 11:28

  +1

  MassDrop has a competing approach. MassDrop is a community-driven commerce platform. When enough members have prepaid for a product, those consumers can enjoy volume discounts. The more people who prepay, the bigger the discount. Members can also participate in the product selection process.

  Loot boxes and HelloFresh take the model the other direction. Customers pay a subscription fee and then don't pay anything for the products they receive. However, to lower costs, customers seldom participate in the product selection process, meaning that customers are paying the subscription fee for curation of the products. The drawback is that they may receive things that they don't want, so a large part of the budget needs to go to marketing (e.g. HelloFresh pays people to sell their food subscriptions at shopping malls).

  If you are charging a subscription fee and the only benefit is lower prices, this doesn't seem to be a suitable business model. People might be more willing to pay for things like more convenience, better products, being part of a community, enabling bulk purchases (e.g Costco), etc. It isn't easy to convince people to pay money just so they can (potentially) save money; furthermore, if you ever get have a loyal subscriber base, you want to upsell them: you should try to get more money from them. More, not less.

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  Real Bill Pullman on 06/03/2019 - 12:32

  +1

  A lot of warranty discussion when, warranty or not, the basic premise doesn't work. Netflix can charge a flat subscription because if I watch Narcos 500 times, their costs barely change. If I order 500 toothbrushes at cost, to make it worthwhile you either have to charge me a big subscription fee, plan on a LOT of people ordering nothing, or be an incredible altruist.

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  od810 on 06/03/2019 - 13:36

  My question is at what cost? Have you included any Human resources/Logistics/Inventories etc? You know that the margin say from Coles is paper thin.

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  macrocephalic on 06/03/2019 - 14:01

  The cost will have to be very high to make it work. This will discourage small consumers, so the only people who will use your store are the ones who buy in very large volumes. Basically, you'll just become a wholesaler for other local businesses to buy from.

  Apple/Spotify/netflix can make this work because there's no resale of the digital media - and there's a realistic limit to how much media one user can consume. This isn't the same for physical goods; they will get resold.

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  Ghost47 on 06/03/2019 - 14:39

  I wouldn't pay an ongoing subscription cost to a store that I may not purchase goods from often. I'm not the type of person to spend money on material goods often enough to warrant this sort of business model.

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  Aceboy884 on 06/03/2019 - 17:41

  You will go bankrupt from the cost of stock alone

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  netjock on 06/03/2019 - 19:50

  Sounds like Airbnb / Uber. Take all the profits and no responsibility.

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  nimnomnimy on 07/03/2019 - 01:22

  what you are describing is called amazon. it pretty much doesn’t work with physical goods unless you dropship or scale to reduce your costs to a portion of your membership.

  you need to have massive scale and even then you will be competing with amazon

  i thought about this about 10 years ago, i tried the dropship model but couldn’t get the user base to a level that would sustain costs, especially when costs go up, you have to deal with warranty, refunds, returns etc..

  then i tried doing it with physical stock, even being first to market but then as soon as you have a gap, 10 competitors shipping direct from china for less than you pay for postage locally pop up and kill the market.

  if you are looking for a business idea, focus on software and services. that’s the only place with margin where you can differentiate unless you are making bespoke goods

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  curtturtle on 07/03/2019 - 11:00

  +1

  One of the biggest hurdles would be finding suppliers willing to kill their own business. I work for a manufacturer that sells to all the big hardware store chains. Now we have a good relationship with everyone and sell to everyone for roughly the same amount. If let's say Mitre 10 started selling all our products at cost. Bunnings would be on the phone telling us they are no longer selling our items, as no one will buy them with markup, or even worse we now have to pay the 10% price match difference. In no time, no one would want our items. And we'd be dead.

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