Lasula learned the hard way what it costs to win in the B2C market

September 27, 2019

Lasula has gone into liquidation and the assets may be sold by the administrator soon so that suppliers and the staff may be ok — time will tell. Shareholders like us have lost 100% of the money invested.

 

Lasula is a cautionary tale of how difficult it is to succeed in a ruthlessly competitive B2C market, even when making what appear to be all the right moves.

It wasn’t lack of a good product that caused lasula to fold. Nor was huge strategic or management mistakes (mistakes have been made but not fatal). And it certainly it wasn’t the lack of a market. 

So, if it wasn’t any of those things, what did go wrong?

 

Scale

 

The company was not able to achieve the £10m Annual revenues that allows a B2C player to be close to profitability. The company had the team structure and put in place marketing campaigns that could not afford, being a £5m player and not a £10m player.

 

Timing

 

The fast fashion market is still growing but at a lower rate than the past 5 years. Particularly Generation Z is much more focus on sustainability and start to see with suspicious fast fashion players while it is embracing with love second hand marketplaces as Depop or Spock.

 

 

Cash reserve

 

Where lasula came unstuck was not having the huge amount of money for the level of marketing demanded from competing in a pure B2C fashion player. It’s like getting an airliner off the ground. You have to build up a lot of speed up on the runway to get airborne.

 

That’s hard if you are consistently outgunned by competitors with more cash at their disposal, particularly when there is such a dominant main player like Asos and Boohoo. That tends to create a flywheel effect in this situation where the best at fundraising will have more money for marketing, making them the biggest and fastest growing so best able to raise yet more money, allowing them to pull further away from their competition. The money flows up to them, making it harder for the rest of the field to get investment.

 

we’ve been moving away from straight b2c plays for a while now. 

 

It makes much more sense for us to focus on capital efficient business models where more can be achieved with comparatively smaller amounts of investment. 

 

We now prefer sales driven businesses including marketplaces rather than purely marketing driven businesses, so we don’t look at lasula as a failure but as a healthy learning experience.

 

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