The @Opendoor SPAC has me thinking about real estate as an ecommerce category and why its worse than other online verticals like fashion, electronics, and auto.
Nationally centralized ecommerce companies like @Carvana, @Wayfair, & @amazon move supplier inventory to the middle of the US population.
They take the 200+ local brick and mortar markets, and create one consolidated US ecommerce market.
The problem for real estate is that it can’t be moved. Therefore, iBuyers like Opendoor, Zillow, Redfin, & Offerpad can't achieve the benefits of centralization.
What are the centralization benefits exactly?
The main benefit is maximizing eyeballs per SKU, and SKUs per customer.
For example, every car purchased by CVNA has 665 potential buyers. A KMX car just 285.
A Carvana shopper sees 18k vehicles, a KMX store shopper just 245.
This means higher conversion & inv turnover.
Centralized inventory also minimizes the aggregate network distance between suppliers, inventory, and consumers.
This enables quicker & cheaper logistics.
From a CVNA IRC in TN to top MSAs is 1,150mi. The distance for KMX stores in SF/BOS/MIA to the same MSAs is 1,600mi.
When pooling inventory, you're also pooling risk.
Since local markets are smaller & subject to demand fluctuations, storefronts hold significant safety stock. with a centralized portfolio, demand fluctuations are counterbalanced.
This is exhibited by the square root law.
Smaller in-market presence provides scalability and cost savings on real estate and personnel.
Some businesses can also arbitrage pricing across markets. For example, trucks are cheaper in TX and convertibles in FL because of oversupply.
So, while @opendoor brings the cx online/transactional, they dont present incumbents with a massive innovator’s dilemma. Thus, we’ll likely see a @shopify / @instacart / @CoxAutomotive solution for real estate brokers to create a D2C experience
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Setup: Americans are looking for flavored, low-cal, gluten free, convenient alcoholic drinks. Just like they are in regular drinks.
The spiked seltzer phenomenon is simply an extension of the Millennial obsession with soda water (cc: @lacroixwater)
While it feels like there are a million brands, the US spiked seltzer market is essentially a duopoly between @WhiteClaw (Mark Anthony Brands "MAB") and @trulyseltzer (Boston Beer / $SAM) & they're growing gangbusters.
“The 911 is a concept of the car that is prepared for the combustion engine. It’s not useful to combine it with pure electric mobility. We believe in purpose-designed cars for electric mobility.”
In ecommerce, you need to continuously improve the breadth/depth of your product offering to attract new customers and maintain a product lead. This is the antithesis of D2C, generally only offering a few products.
For example, Casper has a grand total of...3 mattresses!
Also, D2C companies are typically not vertically integrated into production, payments, logistics, etc. And even @smiledirectclub which is, still attracts a significant amount of competition from copycats.