

Ask HN: Review my business idea/model - djsamson

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.<p>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).<p>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  I found that at one point they had an ebay account that’s no longer active.<p>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.<p>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?
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Madintelligence
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.

~~~
Madintelligence
did that help?

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sherm8n
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?

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

I do like the idea though.

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

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

