As I was cleaning up my “Bebarang folder” on my hardrive, I
found this document I wrote this past summer and wanted to share it with
everyone. Before going into NYC Seedstart, one of Guy Kawasaki’s videos inspired
me to conduct a pre-mortem analysis on my startup: if my startup were to fail,
why it would fail. For each potential failure points, I annotated how we were
going to approach the problem and try to avoid it from happening. It’s funny how I
never put “passion” in one of the categories… I didn’t know back then that
would matter so much.
For the entrepreneurs, I thought it would be a good exercise
to go through this process to understand what your “deep dark scary stuffs” are
and how you could embrace it.
Sun Tzu has a famous saying in the book “The Art of War”:
“It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.”
“It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.”
Bebarang Pre-Mortem Analysis (May 2011)
Lack of Customer Traction (why?)
· The price
point is too expensive
o
For avg. 2-3 months of item rental, the value of
renting vs. purchasing it is not high enough. (For a $10 item, pay $6 to rent
out 2 months?)
§
Price Plan page comment
box
§
Email survey
§
Phone survey
§
Account cancellation
survey
§
Olark – instant chat
service
· We don’t
have the right selection
o
There’s extreme demand to rent out popular –
everyday wear items and less demand for premium designer items
§
Product Browse page
“Tell us what you want”
§
Account cancellation
survey
§
Olark
o
We don’t have the right brands customers want
o
There’s too much brands and products to
customers (paradox of choices + intimidation factor)
§
Not a concern at this
point
· Not
Convenient
o
Takes too long to ship the product
- Bebarang is
inefficient
- Focus on regional customers (NY only) to reduce shipping
time & shipping cost
- Drop-shippers
are inefficient and Bebarang has no control (think Zappos' issue)
- 3 strike policy à lower discount for
products
o
Poor service calls
§
Follow up phone call
satisfaction email
o
Poor email replies
§
Follow up email
satisfaction email
o
Confusing returning process (printing labels,
etc)
§
Follow up returning
process satisfaction email
o
Poor web user interface, complex navigation
§
Olark
o
No free trial?
§
14 day free trial – Risk
Free
· Not Clean
o
There are stains in the item
o
There are wrinkles in the item
o
There are bad odor/smell from the item
o
Regardless of the actual cleanliness,
I think a big barrier is convincing moms that the clothes are clean enough. I would
add in something along the lines of "Customers not confident in
cleanliness"
§
Cleanliness
page on the website – detailed process info, products used for cleaning
· Mothers don't like to shop online
o
Have you looked at
trends/sales figures for online shopping of baby clothes? Not sure if moms like
to see/feel/touch clothes before buying
§
Update
Mintel baby apparel industry market analysis report
§
Analyze
online consumer behavior
· Lack of
service
o
There’s no buy-in option
§
Product browse page –
“Tell us what we are missing!” comment box
§
Olark
o
There’s no package deals
§
Same as above
o
We don’t have any accessories/additional
products available other than clothing rental
§
Same as above
· Too confusing
- Moms don't 'get
it' or understand how to order.
- “how
it works” web page
- FAQ
page – if we don’t have questions listed, ask us the question
- Stumped by the
large number of choices
- Not
a concern yet
- Uncomfortable
committing to a package
- 14
day free trial
· Doesn't align with
mom's shopping habits/behaviors well
- Baby clothes
shopping dominated by impulse buying (Bebarang requires a certain amount
of 'pre-planning')
- 14
day free trial
- Special event
clothes buying usually done last minute
- Don’t
have a solution for this yet…
- Hassle to sign
up and have to wait for first item
- 1-2
business day shipping guarantee – Operate the business with local region
only
Not a Profitable Business (why?)
· Cost to
acquire customers is too high
o
Identify revenue per channel (i.e. tot. rev
30%/mommy blogs)
o
Identify unique visitor lead per channel (i.e.
tot. visit 25%/facebook)
· Inventory
costs too much
o
Poor liquidation vs. drop-ship partnership (# of
product) ratio
o
Poor # customers vs. brands/product ratio (cannot identify metric to measure when to
order, how much to order)
o
Poor partnership cost structure (50% discount,
45 day term)
· Logistics/operation
costs too much
o
Cost of cleaning per item
§
Worker’s wage per item
§
Utility cost per item
§
Equipment lifetime value per item
o
Cost of shipping per item
§
Worker’s wage per item (pick & pack)
§
Shipping box cost per item
§
USPS shipping cost per item
· Customer
lifetime value is too small
o
Unable to retain repeating customers
o
The average revenue per customer is too low to
sustain ourselves
o
The question is if you can get that
customer value to increase by considering not only the individual but their
friends and friends of friend. "Unable to generate/encourage
word-of-mouth"
