Butternut Box & The Myth of Profitable Dog Food Delivery
This video is about dog food delivery services and argues that these services are not likely to be profitable. The video argues that fresh dog food delivery services are not a sustainable business model.
The high cost of customer acquisition, churn, and perishable food all contribute to this. The video uses HelloFresh as an example, noting that they have a churn rate of 90% and it takes them 6 months to recoup $1 spent on acquiring a customer.
The video also says that dog food delivery services are capital intensive. They need to cook the food, box it up, label it, store it, refrigerate it, and then send it away. This is a lot more expensive than a traditional business model where a company can sell a product and not have to worry about storing or shipping it. In addition, the video argues that these businesses are not unique.
They all offer similar products and services, and they all rely on aggressive discounts to acquire customers. This commoditizes the product and destroys the margins of these businesses.
Finally, the video argues that the investors in these businesses are likely to lose money. The video compares this to the investment in Blue Apron, another meal delivery service that went private after it almost got delisted from the stock exchange.