Consumer Electronics · Consumer Marketing

Can I get some feedback on how profitable this idea is?

Anonymous

May 7th, 2020

A service that lets you try high end items before you buy. So example speakers or TV or drones, you get to try them for a week and then decide if you want to keep it. If you do you're charged the price of the item, if not you can return it for free but you have to give feedback why you didn't like the item and what can be improved.


My idea was to charge brands for the service to handle fulfillment and we keep a % of sales made.


What are other potential sources of revenue? Is this a sustainable business in the long term?

David M

May 9th, 2020

Personally, I think everyone is missing the point and approach of your idea. What you are pitching is not the same thing as a return and everyone in this post is missing that. You are pitching buying to try out. That is different that buying with the option to return. Many businesses often do not differ in product but how they market that product. Your model does exist in various forms but you could differentiate in various ways depending on how your business plan plays out. Without doing any of the research...there would be serious challenges in the take back and re-shelving costs or refurbish costs...used mark down..etc. Try to target an industry where the product would most lend itself to this and start there and build your idea around that with a target market and small focus initially in your research so you don't get overwhelmed. Evaluate the idea further.

Jamie Martin Senior UX Designer at Marketo

May 7th, 2020

Most retailers already offer a return window, why would somebody buy from you?

Ronnie Spang Problem solver; inventor, AV designer, audio-visual programmer, team leader

Last updated on May 10th, 2020

This trial period alone seems unlikely to be sufficient value proposition but as a part of your strategy may demonstrate sufficient customer/client focus to grab some market share.

Here are other additional factors that are needed to complete a functional business plan and industry specific situations that you will need to figure out.


Market focus? (each of these has different product mixes and distribution strategies)

Note that these are really 2 categories with many niches:

We can do both consumer and pro however the sales and marketing are what changes along with product types. Retail mass consumer products are not able to compete with professional specialty equipment in a pro-market and that is why even high end residential uses pro-grade equipment for optimal results. Pro grade does not always cost more than low grade consumer. In fact in some categories: it can even cost less due to greater durability/reliability combined with low cost due to mass appeal in the commercial market!


Conversely some higher end residential products can find use in the professional markets as well. Frequent crossover products include displays and studio, booth, cubicle, office, or huddle room sized loudspeakers as the space that they are used in is very similar.


Retail (Online, box or both)

Residential install

Commercial

Enterprise

Military

Government

Pro

Studio

Touring

Conference

Entertainment

Themed Entertainment

Sports Arenas

Houses of Worship

Post Production

Live performance theater

Cinema

Museum/exhibit

Trade Show

Broadcast

Signage

Surveillance/Security

Networking

Data or Media Storage/Streaming/Hosting

Casinos

Gaming

Sports


For now: we will delineate ALL of these into: consumer and commercial/pro gear. These each share MANY common products and distribution channels, there are unique differences, but more is the same than different.


Consumer gear is low cost mass distribution while pro gear can be low cost mass distribution also supports many custom and high end niches, brands and products.


Retail level: Best Buy (for example) already offers 14 day trial for any purchase.

Buy it and if you are displeased for ANY reason: you can return.


Commercial/Pro gear: many commercial systems (outside of IT desktop solutions) are not plug and play, but require professional integration and configuration to get on the corporate network if not custom UI and settings.

During large enterprise roll outs: they will order a proof of concept demo system and play with it while they determine if that means their needs before an enterprise level rollout.

Tech changes rapidly and before most rollouts are complete: some adjustments and improvements will be made, so in larger enterprises: there is an ongoing and constant rollout process going on with a constant percentage of outdated systems, current systems and upgrades in process.

Enterprises can access demo stock and free loaner systems as manufacturers, distributors and dealers bend over backwards for large clients.

Plus many large corporations have engineering departments that want to own common new cutting edge products for specifications, network, security, hackability, performance, adoption rates, evaluation, interoperability testing & validation.


Smaller companies may complete rollout/refresh without adaptation, however those systems if well designed will be scalable, modular, expandable which again goes back to the adage of not being plug and play.


So I dont see the business model as fitting corporate/enterprise as the enterprise distribution and integration channels already offer demo/loaner stock and enterprise IT/IS is already geared for product evaluation.


Retail/residential this is already a best practice.

With the new WFH (Work From Home) focus: residential is about to undertake a massive upswing IMHO.


Technology is a massive opportunity in general. Have 3 decades in tech and it just keeps getting better and cheaper. This strategy should be part of any retail or distribution strategy. But that is not a complete plan, only a footnote in the plan. To complete your plan: you need a catalog, product line card. Which manufacturers and products? What plans and demo stock are available from that brand? Logistics will be based on suppliers.

Distributors are easier than manufacturer direct for all but core brands. Distributors (B&H, NewEgg, Almo AV, ScanSource, Stampede, Anixter, Graybar, etc) provide access to MANY products with one-stop shopping.

Then once you have the products: then how to find customers and get them to buy?

Do you call them or advertise and wait for them to call you?

What is your sales and marketing strategy?

Rental vs trial vs purchase is one tiny piece of this puzzle, but whatever you do not define is what will hurt you, so you need to consider each and every situation in the fine print in all of the processes and procedures from sales order to shipping to delivery to payment to RMA to return to complaint to collections to litigation plus everything else. Operations supports it all. The more that you can automate your processes: the fewer human interactions with your data: the more efficient and effective. Choose your management and database platforms carefully and attempt to integrate an automate everything in your business to those platforms. Visibility is essential to success, you must master every aspect of your business and the more unified your data: the easier that becomes.


pat riemitis Senior product and market strategist, marketer and entrepreneur in Business, consumer and education.

May 7th, 2020

Second Jamie's remarks. The majority of the big retailers already do this, and would have no need to outsource. What value does this give to the retailers if they are able to do this themselves?

Dimitry Rotstein Founder at Miranor

May 7th, 2020

As others mentioned, in US, and probably some other countries, this is already an established practice. But not everywhere. In Israel, for example, there is actually a law, which requires all retailers to take back items within 14 days... as long as they are in the original packaging. Most, if not all retailers, however, have interpreted the last part as meaning "package has never been opened", which makes this a sad joke instead of a trial period. So, I suppose in such countries this could be an interesting business idea, but you'd have to convince retailers that this is a good idea, which apparently won't be easy. But if you do manage to convince them, then there is no reason why they wouldn't do it themselves, especially if they're required to do so by law anyway.

So, in this case, your best strategy may be to become a retailer yourself and make this model work. How profitable is this? Well, retail seems to be a well-established way to make money, so I guess it's profitable enough. Assuming such a return policy is a good idea to begin with, you may become pretty successful and popular even if you offer the items at a higher price to offset you increased risk. By the time other retailers realize their mistake and rush to offer the same policy, you may be already rich. On the other hand, retailers aren't stupid, and there might well be a good reason why in some countries such a policy isn't used - because for some local reason it's not a good idea.

Greyson Cole Founder

May 8th, 2020

Hi anonymous,


It sounds like we have looked at this through the lens of the consumer: that there are already existing return protocols. But, how does this protocol effect a business?


maybe the business model is more insurance based?


I'd like to hear more about you're idea.

Andy Freeman Product Management and ... - Looking for new opportunities

May 10th, 2020

The vast majority of the feedback will be useless, so you won't make much money from it.


Are your target customers people who will keep but want a return option? If so, you're trying a retail tweak. You can't charge much of a premium because if you do, you'll have a lot of "I'll try it and return it, and then buy elsewhere if I like it" customers. I suspect that the value of an easy return option is very specific and would be surprised if other vendors in the market where it worked didn't offer it. They'll definitely copy if you're successful.


However, there is another kind of market, where folks are willing to buy used and like to replace every so often. Women's clothing (threadup) and purses are two examples. So are guitars to some extent. In that case, it's really more like renting, but that's not how the cash flows. Their alternative is buy and throw away.

Sem Brandenburg CEO

May 13th, 2020

You should not ask this question. You should run some scenarios to better understand the economics of your business model. Reshape it and when satisfied, simply talk to brands with your propisition.


At least this is what we do with entrepreneurs. In minutes we run several scenarios through our platform and the result is that they know exactly what to do and what not.

Don Clark UX/UI Designer and Consultant

May 13th, 2020

I want to say that I have heard of something similar. I dont remember the name of the service or business. And doing a quick search, I cant find anything that matches your service.

I do think its also similar to the "influencer" model. But with actual customers providing direct feedback... could be the new solution that brands are looking for.

Not sure of the numbers you've run on charging brands, fulfillment, sales, and if that ends up looking appealing for the customer and the brand.

Not sure of other sources without putting a lot more thought into this.

Unsure of the sustainability without an example of product, all numbers, etc.

I like the idea and look forward to hearing more as you move forward.

Will Graham Looking to validate a new Donation platform concept / engage with future Co-Founder & CTO

Last updated on May 14th, 2020

I agree with David M, people are missing the point here. Warby Parker has been very successful sending free product and only charging customers if they keep them longer than the pre-determined return date. The benefit of this business model is that would-be customers are more likely to trial something if it's free so you can get a lot of people to sign up for a trial (giving you a mailing list, voluntary data on their product interests, and future customers)

You will also get a certain amount of sales out of people not returning the product (through apathy or laziness), for which they can either be charged the full amount or a late fee until it's returned. It's the same concept as most free / reduced rate trial businesses.

My main concern would be about shipping; sending watches and sunglasses is relatively inexpensive, sending a Sound Bar would be trickier. Also, Warby Parker sunglasses are pretty cheap to make, so potential lost / damaged goods in transit are more acceptable than with consumer electronics.