Business Pivot Examples for 2023
How to pivot your business and marketing in tough times (like 2023)…
This year may emerge as one for the books.
Marketplace changes continue to accelerate faster than businesses can react.
Let’s look at some business failures currently in the media. Now on the verge of bankruptcy, these were all Wall Street darlings at some point.
But instead of critizing leadership mistakes, we can reimagine business pivot examples for those companies.
WeWork office lobby.
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WeWork (NASDAQ: WE)
A vulnerable business model…
Four years ago, when WeWork’s troubles began surfacing in the media, I reviewed their business model.
I saw trouble ahead, because their model was highly sensitive to economy fluctuations. I wrote an article titled “When Hip Doesn’t Drop to the Bottom Line”.
WeWork’s model is to lease prime office space, create lots of smallish individual workspaces, and lease these out to budding entrpreneurs and work-from-home people seeking an alternative.
Possibly one of the worst office rental markets in the history of the world is budding entrepreneurs. Cash-strapped, often naive, high risk.
These would be the first people to bail out of small rented office spaces in a downturn. And there’s always a downturn!
Today, WeWork’s market strategy is still 100% focused on leased commercial office space. They keep doubling down by offering new variations on pricing, services, office layouts and more.
However, what could WeWork do with its existing assets including:
- brand recognition
- market reach
- deep knowledge of what people want in their work environment
- existing customer base and their connections
A great business pivot example would be offering solutions to the WFH (work-from-home) market.
What could WeWork offer to WFH?
- concierge services
- virtual assistants
- subscriptions to resources that offer how-to’s, encouragement, and more
- community, including market space colleagues and mentors
- consulting services for employers
That would be a great business pivot example.
Carvana car silo.
Carvana (NYSE: CVNA)
When my daughter started college a few years ago, I needed to buy a car for her. Typically I buy cars that are two years old with no more than 25,000 miles.
At that time Carvana was advertising heavily. In my city I often drove by the tall used car ‘vending machine’, so I was naturally curious.
I jumped on their website and quickly found that virtually all of their inventory was priced around $2,000 higher than the competition.
Turns out Carvana was charging a hefty premium for a “different” buying experience.
Carvana’s marketing focused on buying a used car from one’s sofa, as opposed to actually going to a car lot and dealing with the traditional used car buying experience (ugh).
So, yes, Carvana was addressing a scorching consumer desire, but at a $2,000 premium many buyers decided it wasn’t a must.
Today, Carvana seems to have pivoted to a model like Edmunds. However, there is zero differentiation and Edmunds was the first significant mover in online used car sales.
As a matter of fact, Carvana’s website looks exactly like Edmunds.
How could Carvana do a business pivot?
There doesn’t seem to be a viable business pivot example available.
What could Carvana offer used car customers?
The used car market is saturated at every turn and driven by price first. Buying experience is a distant second.
There might be some brand recognition value, but it’s nothing like those of CarMax, AutoTrader, or Edmunds.
The only hope for Carvana is cost cutting. If the company could somehow create a big advantage in costs of acquisition and distribution, it might survive as a big volume, low margin business.
Otherwise, it seems as if Carvana may have dug itself too deep of a hole.
Beyond Burger from Beyond Meat
BeyondMeat (NYSE: BYND)
Few repeat customers…
If Beyond Meat fails in the not too distant future, analysts will attribute it to an over-spec’d product priced too high for an inflation riddled economy.
Beyond Meat’s products are beautifully spec’d for strict vegetarians. But this is a sub-segment of vegetarians that may not be large enough to be profitable in a competitive environment.
Their products contain no egg binders (hold ingredients together) or cheaper sources of protein like soy and and wheat gluten.
So their product is highly commendable, but Beyond Meat’s customers are not coming back for seconds. In our worrisome economy, perhaps many of them are OK with egg, soy, and wheat gluten.
And there are lots of lower cost alternatives and substitutes. Meatless food alternatives have been around since ancient times, and there are plenty of choices.
Beyond Meat’s stock price jumped signifcantly in Q1 of 2023. But that appears to be more related to fluctuations in short selling, not the company’s forecasted profitability.
How could Beyond Meat do a business pivot?
Viable business pivot examples are available.
- the overall market is quite large
- the vegan fast-food market is growing well
- the vegan food industry is in major transformation – disruptions in supply chains, distribution channels, and consumer preferences
An obvious choice is to cut production costs by downscaling ingredients and lowering the product price. Yet, that would have implications for the existing strictly vegan customer base.
The more obvious choice is to offer brand extensions with the different ingredients and lower prices.
Other business pivots to consider:
- attract investment to do a roll-up of attractive mom-and-pop manufacturers
- re-focus advertising and merchandising spend to non-domestic markets – the United States ranks a distant 35th in percentage of population that identifies as vegetarian
- strongly encourage repeat purchases with promotions
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