> if they cut their sales & marketing budget 21% without doing anything else they'd be breaking even
Not at all. If they cut this budget by 21% they would likely lose even more money. Business isn't a game where your competitors are like posts buried into the ground that can't move. All of these companies are battling for the same slices of pizza. If one backs off the others take more slices.
As a related thought: This is one of the things that lots of people don't understand about outsourcing and the migration of manufacturing to China.
One of the narratives is that companies are greedy and they went to China to lower their costs and take advantage of consumers. That couldn't be farther from the truth, which, in reality, tragic.
In any given industry there as a first mover who thought they could grab greater market share if they could lower their COGS by manufacturing in China and beat their competitors in pricing. What they did not foresee is that they triggered a chain reaction: After their move every single competitor was forced to move manufacturing to China because it was impossible to compete given the regulatory and labor constraints in places like the US and Europe.
And so, one after the other, they all followed each other off the cliff. Very soon they all found themselves manufacturing in China. They also woke up to having to sell their products at about the same prices, which means their margins were now really slim.
Years later, the factories where they all made their products decided they would now sell direct in the US and Europe and eliminate the foreign middle-men from the equation. And that's what you call being in a pickle.
Food delivery is an arms race. They are burning cash like it's free. I have no clue how it will all shake out. I don't think the math supports a business that isn't subsidized by money that is willing to burn in huge piles quarter after quarter.
Much like the migration of manufacturing to China, if one competitor turns-up marketing campaigns the others are forced to burn even more cash for even more negative returns.
Somehow we live in a world where this is called "investing". What do I know?
Not at all. If they cut this budget by 21% they would likely lose even more money. Business isn't a game where your competitors are like posts buried into the ground that can't move. All of these companies are battling for the same slices of pizza. If one backs off the others take more slices.
As a related thought: This is one of the things that lots of people don't understand about outsourcing and the migration of manufacturing to China.
One of the narratives is that companies are greedy and they went to China to lower their costs and take advantage of consumers. That couldn't be farther from the truth, which, in reality, tragic.
In any given industry there as a first mover who thought they could grab greater market share if they could lower their COGS by manufacturing in China and beat their competitors in pricing. What they did not foresee is that they triggered a chain reaction: After their move every single competitor was forced to move manufacturing to China because it was impossible to compete given the regulatory and labor constraints in places like the US and Europe.
And so, one after the other, they all followed each other off the cliff. Very soon they all found themselves manufacturing in China. They also woke up to having to sell their products at about the same prices, which means their margins were now really slim.
Years later, the factories where they all made their products decided they would now sell direct in the US and Europe and eliminate the foreign middle-men from the equation. And that's what you call being in a pickle.
Food delivery is an arms race. They are burning cash like it's free. I have no clue how it will all shake out. I don't think the math supports a business that isn't subsidized by money that is willing to burn in huge piles quarter after quarter.
Much like the migration of manufacturing to China, if one competitor turns-up marketing campaigns the others are forced to burn even more cash for even more negative returns.
Somehow we live in a world where this is called "investing". What do I know?