Why is every consumer startup selling me what I already own for 10x the price?

He complains about a direct-to-consumer underwear brand costing 10x as much as fruit of the loom. This isn't any different from Ralph Lauren, or Calvin Klein, or any of the legacy players in the segment.

Lifestyle brands have large creative and marketing teams, with production secondary and technical production largely outsourced, sometimes to the manufacturing partners.

This is a well worn business model for product categories in which all the margins have been competed away. Pricing power comes from the emotion of brand alignment.

As they say, "nobody ever went broke underestimating the intelligence of the American people"...

The first reason is retail margin. If you can manufacture something for $X, it will probably retail for $2.5-3X. When it's really cheap to make, that might be a reasonable price, but when you are making something that has 3-5x the BOM of the cheaper versions, that high of a markup can make the product inviable. When you start to look at the absolute dollar values, you realize you might be able to do your own marketing and sell direct at a lower price.

Second, with such a price premium, retail isn't as appealing because your buyers are going to be high intent. If your underwear is 5x the cost of everything around it, you're not going to sell the average Walmart shopper just because they're already there. So the other value prop of retail, exposing your product to their captive audience, isn't going to be very valuable either.

So we're left with a lot of DTC business, generally selling quite premium products at high prices, but what are often very reasonable margins. The economics can be shaky because of the high cost of user acquisition, but unfortunately there aren't really any better alternatives at present. Some people do take advantage of this general ecosystem to try to sell cheap stuff in the same manner. I think long term this is hard to due because so much of the business relies on word of mouth, but these sorts of entities definitely do come and go.

This falls apart quickly. On mattresses, for example, it's uncommon for queen-size mattresses with higher-end features (pocket springs, etc.) and quality to be in the price range he suggests. He makes no effort to find actual comparable products.

The post might as well say "Why do iPhones exist? I can buy a Boost Mobile Android phone for $116 from Walmart! Apple wants 5-10x as much!! This product will never succeed..."

If there's a non-branded bombas equivalent, I'd buy it, but comparing walmart fruit of the loom and bombas isn't apples to apples.

The first thought the headline provoked in my mind is the strange proliferation of "services" that are really just monthly payments for thing I used to be able to buy (and usually still can). It started with software, where at least some argument can be made around ongoing support. But now it's just everything. I don't understand how these companies make money. Are there people out there with dozens of subscriptions for various things, adding up to many hundreds of dollars every month? Do they even know what they are spending? Perhaps that is the business model... get people to forget they are paying you.

He’s stating that everything is a fungible commodity in his view and then gripes about the costs being different. Everything is not an interchangeable commodity and to view it that way creates a toxic race to the bottom.

The part that kills me is this is posted on a site called “machine learning everything” and yet the post shows a lack of basic understanding of basic data stuff, and zero desire or motivation to look into the actual data. Vastly different things are grouped and it goes well beyond just ignoring signs that they are actually different. In fact, in the face of such indicators he decides the best course is to actively refute them without looking into it to understand what’s going on.

And being a longtime producer of something absolutely does not have bearing on quality. There is a common brand arc where in the latter stages they cut costs and quality to capitalize on built up reputation.

Anyway I’d be curious on his opinion of cheap 40oz bottles of malt liquor vs normal beer.

Of course you can find cheap mattresses elsewhere. And if they’re comfortable enough for you then that’s fantastic. But Avocado isn’t a big outlier (in price) in the mattress industry.

I'm actually not sure whether some of the mentioned price tags aren't actually justified given the overhead of the x-washing (e.g. supplying homeless shelters with variable amounts of socks rather than simply setting up a recurring donation). The real grift are white label electronics bulk purchases from Alibaba and sold at a 10x to 100x price tag. There is an entire industry in creating brands out of whole cloth to do just that.

There are so many things wrong with this post, not the least of which is that Walmart exerts perhaps the most downward price pressure of any retailer in the history of retail. If you want to sell your product in a Walmart store, chances are you will make a deal where you are left with the tiniest sliver of profit for yourself. You might even adjust your manufacturing ethics to meet the price demand from Walmart...

And with other items, such as an eco mattress... perhaps it is greenwashing, or maybe it really does take into consideration offgassing and other factors which are (or should be) important to humans who will spend 25% of their lives in close proximity to the product.

This feels like a hit piece paid for by some PAC.

It's easy to see how a $50000 car has enough margin in the price to sustain the advertisement spend. I don't understand how a pair of underwear manages to do the same - even if it's a $35 pair.

Maybe the advertising money comes from VC pockets? Selling the same made-in-farawaystan underwear for $35 instead of $3.50 is a great business opportunity, assuming you have repeat customers.

These companies always annoy me, even though I'm presumably their "target demographic" because I happily pay more for quality. The thing is, I actually buy one, test it for quality, and if it's not there I move on.

Except maybe the chocolate. I don't believe the popular brand that he mentioned has actual chocolate in it.

Sometimes I buy cheap things, sometimes I spend far more. Maybe no one ever sees my $50 underwear and maybe the quality isn't 10x my cheaper ones. But also maybe I have just a little more confidence on the days when I put them on in the morning.

Life doesn't always have to be so rational.

I bought a pair of lululemon pants for $140 and they are incomparable to any other article of clothing I’ve ever owned. They cost 5-7x the price of my usual h&m/Nordstrom rack/etc pair of pants, but are way more than 10x better in terms of fit, comfort, and not fading/lose strings/etc.

Is there some other brand or big brand variant out there of similar quality that's like 2x or 5x the price instead? Not sure, I haven't been able to find any. I could research harder to try and find such a thing, but is that work on my part worth the potential price differential? I highly doubt it.

And why do we need this cheapest price obsession anyways? We're wearing this stuff on our most sensitive bits for most of our waking life, why is it necessary to get the cheapest thing we can possibly find? This 10x price is still a meaninglessly small fraction of total income, at least for me. I bet it's more in line with the historical price for what ordinary people wore than the cheapo stuff.

Maybe this alternate mode of product distribution feels weird. But I think the question we ought to be asking instead is why has there been such a race to the bottom in mainstream goods obtained via mainstream distribution routes? Your mainstream producers and store shelves mostly only have the lowest quality stuff that won't fall apart immediately. If we want something a little better, we need to invent a whole new mode of distribution. Maybe we should ask ourselves what's wrong with our current mainstream where you have to go outside them to get something that isn't junk.

I mean. Yeah? If I found out my mattress was toxic and had been slowly poisoning me by releasing VOCs every night for 8 hours, I'd probably want one that wasn't. I don't know anything about that particular brand, but if you're going to bring it up in a blog post, it seems like a good place to actually investigate whether there's any merit to the claim instead of just assuming there isn't.

This article is not worth your time to read and neither is this comment. ;)

Some people with limited means do not even look at prices. The ready availability of consumer debt allows them to buy whatever they wish without considering price as a factor. They simply do not consider any form of budgeting or interest rates on debt when they spend.

Most startups won’t, of course, but the market opportunity is so obvious that everyone goes after it.

Based on my experience with looking for shoes (communications with the companies, etc), and trying one of the startup brands (the only one I could find with wide sizes), I've sworn off these startups. These days I just look at their products to see how absurd the price is. $100+ hoodies? Come on.

  Sell 1x $1,000,000
  Sell 10x $100,000
  Sell 100x $10,000
  And so on

[1] https://en.wikipedia.org/wiki/Veblen_good

Also don't you dare compare Hershey to an actual Truffle and say "But they use practically the same ingredients". NO THEY DON'T. You're comparing an edible chocolate flavored preserved emulsification to actual chocolate. Imagine the process that food item went through to get to your mouth. What you should be concerned about is wtf is in Hershey's and how it's so cheap.

If you don't like it, don't buy it... and if other people agree with you, the company will fade away.

What's the alternative?

It's wild to me that an blog pointing out that some brands cost more than others is upvoted highly.

I like seeing ads and spending money on things that might be nicer than the things I have now. I can't imagine I'm the only person like this.

> Over-accumulation and crisis

> The Marxist analysis of capital accumulation and the development of capitalism identifies systemic issues with the process that arise with expansion of the productive forces. A crisis of overaccumulation of capital occurs when the rate of profit is greater than the rate of new profitable investment outlets in the economy, arising from increasing productivity from a rising organic composition of capital (higher capital input to labor input ratio). This depresses the wage bill, leading to stagnant wages and high rates of unemployment for the working class while excess profits search for new profitable investment opportunities. Marx believed that this cyclical process would be the fundamental cause for the dissolution of capitalism and its replacement by socialism, which would operate according to a different economic dynamic.[9]

> In Marxist thought, socialism would succeed capitalism as the dominant mode of production when the accumulation of capital can no longer sustain itself due to falling rates of profit in real production relative to increasing productivity. A socialist economy would not base production on the accumulation of capital, instead basing production on the criteria of satisfying human needs and directly producing use-values. This concept is encapsulated in the principle of production for use.

Sure, you can cheap out on ___, but you'll replace it soon enough. If you need it once, this might not be a bad idea. But if you use it regularly, this is just a terrible way to burn money up.

But then we have https://www.getrichslowly.org/boots-theory-of-socioeconomic-...