Wednesday, September 30, 2009

Entrepreneurship At Its Finest: Why We Need Them

The reason that entrepreneurs are so important to the economy is because their very existence and success depends on one key factor: Effectively solving other people's problems. Need some new product to make your life better off, or something that already exists but you want it cheaper, better, faster, or more conveniently to make you better off? The entrepreneurs are at your service.

Here's a great example of entrepreneurship at its finest, featured recently on Club for Growth and Marginal Revolution- the Big Box Deliveries service in NYC. From its homepage:

On average, New York City stores and delivery services are 147% more expensive for Non-Perishable items and 107% more expensive for Perishable items than for similar items at Costco. Big Box Deliveries will "split the savings" with you. Each Non-Perishable item for sale has a “Costco” price and the “Average New York City” price for the exact same item but with Costco-sized bulk packing (see samples above).

For instance, Charmin costs $20.19 at Costco for 30 rolls. If a customer were to purchase 30 rolls in New York City, on average, the price would be $42.18. We split the savings. The customer pays $31.19 and saves $11. The Average New York City price is derived from real prices at Fresh Direct, Fairway, Gristedes, D’Agostino’s, Food Emporium, Whole Foods, Duane Reade™, CVS, Staples, Petco, and Where there is no direct comparison for items, we use the overall average difference of 147.42% to calculate your final price.

They deliver 7 days a week to the Upper East and West sides of Manhattan, only to apartment buildings that have a doorman (doorperson?).


At 9/30/2009 4:38 PM, Anonymous Anonymous said...

I wouldn't call this entrepreneurship at its finest unless you want to say that the finest entrepreneurs breach their contracts.

The entrepreneur is picking up his products under his Costco card, which I am sure is non-assignable and does not permit sales to resellers.

Market arbitrage often works, but sellers have contracts with their customers prohibiting them from arbitrage.


At 9/30/2009 7:58 PM, Anonymous Anonymous said...

I'm not sure about Costco but at Sam's Club only certain items are resellable and the prices for resellable items are higher than for those meant for personal use (gum ,candy, and tobacco comes to mind). Most of the items aren't for resale, though.

The entrepreneur might have a deal with Costco. It's not really clear from the story.

At 9/30/2009 9:21 PM, Blogger bobble said...

"The entrepreneur is picking up his products under his Costco card, which I am sure is non-assignable and does not permit sales to resellers."

according to the costco website:

"Business Membership at Costco Wholesale allows you to purchase products for business, personal and resale* use. "


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