Ask HN: Review my business idea/model | Hacker News Reader

Ask HN: Review my business idea/model

6 pointsdjsamson6 comments

I got rejected by my college’s summer incubator program and I have a chip on my shoulder to succeed this summer. If I can prove a viable minimum product by mid-summer I’ll be allowed to join and I was hoping the intelligent people on HN could throw me their two cents.

I was playing around with the idea of creating a “Netflix for purses” startup. Basically buying mass quantities of designer bags and having a subscription service for women who couldn’t originally afford these bags. It turns out this idea has already been implemented, which isn’t a huge issue but I couldn’t determine how to differentiate myself from the competition (thus me not being accepted into the program).

Then last week I was in NYC in the East Village and I went into a store called Buffalo Exchange. It’s a consignment shop with “mildly used” designer clothing brands for extremely cheap prices. Basically people sell clothing to Buffalo Exchange they bought from retail stores and never really wore. The company filters what they buy on what they believe are fashionable and reputable brands (you won’t find vintage clothing like in a typical consignment shop). Then Buffalo Exchange marks it up and puts it on the rack. The store was absolutely packed and I went home and found that they had zero online presence. I found that at one point they had an ebay account that’s no longer active.

I feel like taking a similar business model and putting it online would be a successful startup. The majority of online consignment shops are vintage which is the opposite of direction I would be going in. My largest setback is automation. I would have to handle all of the buying/packaging/selling in the beginning. And if this were to scale it would rely heavily on human resources which is sometimes risky for a startup. Furthermore, I’m not trying to create an ebay store selling used clothing which I really hope this doesn’t become. I’m trying to build a brand as the online Buffalo Exchange.

I realize this idea has little to do with programming other than setting up an online store presence. But I find the people at HN to be some of the most intelligent entrepreneurs I’ve conversed with online and this is the place I’d like to get some advice from. What do you think?

Basically you want to take an established business model and put it online. My first thoughts would be that possibly Buffalo Exchange has a very strong cultural presence which on which its Value Proposition lies, but I am going to try going through your model step by step. My second thought that this business model already exists for women in the form of 99dresses - so maybe have a look at what they do for some more ideas.

I'll go quickly through each blocks of the business model (businessmodelgeneration.com) and try and see whether your business is able to pass each value test. Sorry if it is not thorough, but try using this framework to evaluate businesses. These ideas are from my draft book Theoretical Entrepreneurship (madintelligence.com).

Business Model;

Partner Network: You are going to need partners in the form of consignment (purchase) and fulfilment.

Key Activities: Marketing, Keeping abrest of key trends, fulfilment and storage, relationships with consumers, value setting (how much they buy goods for)

Key Resources: Online presence, storage space, relationships.

Costs: Storage (fixed), Fulfilment (variable), Customer Acquisition (variable), marketing (fixed/variable), product acquisition (fixed/variable).

Revenue: Either subsription based, for per unit based.

Customer Relationships: Online. Little to no contact

Customer Segments: Mass Market "majority...are vintage which is the opposite of direction I would be going in"

Distribution Channels: Online

Value proposition: Online, easy to access designer brands for use in the future (due to delivery).

TESTS.

Value Tests: 1. How do you know the customer has those needs? We can see by competitors and hopefully some statistics that X amount of sales are done, but this is in a local area. If somebody was able to universally control a network of consigment stores and have an online presence we can make profit through economies of scale.

2. Why do you think it is valuable to the customers to solve these needs? Because of need for value, but also a conflicting need to have the best/be the best

3. How might you quantify this value? Through price, through increasing affluence, decreasing willingness to spend.

4. What is the urgency of the need? Very low. Local stores exist in most places that cover this need.

The Execution Test 1. Why do you beleive that your firm is uniquely capable of producing this new offering? Its not. I dont believe there is any special skill you need to run this. Based on the introduction - none.

2. What current capabilities are leveraged by the new offering? None known about.

3. What capabilities are missing? Past experience in fulfilment. Partnerships with fulfilment or with other consignment stores.

4. WHere will these new capabilities come from? Through relationships

5. Which value chain partners do you need to cooperate? Consumers who you buy off. Fulfilment who stocks and issues your goods.

6. Will they be interested? Consumers - possibly an easier way to sell clothes guaranteed (lowering of risk vs. ebay). Fulfilment business - more customers (higher growth).

The Scale Tests 1. Is this need specific to the particular customer, or does it exist across a customer segment? Across a customer segment, all over the world. Its is a large niche market.

2. Specific customer need recurring or is it onetime? It is recurring.

did that help?

This is a pretty sweet idea. Have you heard of 99 Dresses? http://www.99dresses.com/

Crossroads, Buffalo Exchange, and a bunch of other thrift stores are popular here in SF. People love selling their old clothes there to either get some cash or so they can get some new threads there at the store. There are always lines of people waiting to sell.

There are a lot of operational issues like you mentioned that will be hard to address. Can you hire stay-at-home moms who want to make some extra cash to help with your inventory? People ship you the clothes they want to sell, you redirect it to someone in your workforce, and they'll send it out as needed.

How do you know people need this product? Can you go to Buffalo Exchange and talk to customers to see if they would use it?

I believe services like this have been around for a while so be sure to check those out.

I do like the idea though.

I think I want to help you market it. Send members an email. Look for it in my profile.

There's existing models out there: check out renttherunway and bagborroworsteal

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