COTW: THE MOST BORING OPPORTUNITY
It's Friday, so it is time for the Avory Chart of the Week!
The debate is typically about what furniture to buy not how to buy it. We think this could change and anyone figuring out the solution has a long runway. Enjoy!
Online distribution is disrupting every industry. Some industries have moved faster than others with clothing and electronics surpassing 50% of their total sales made online. Most of these categories were the low hanging fruit for offline to online, but now comes the hard part. The next wave will be the categories with complex logistics, high capital intensity, poor starting unit economics, and less purchase frequency. But with such complexity comes massive opportunity and sustainable moats. Furniture is a $300B market in the US, the average person spends $908 a year, and there has been little innovation. The category is just starting to see traction with online making up nearly 16% of sales in 2017 (see chart). If the market hits 30% at any point, this means $90B is going towards a group of companies. Lastly, the industry is fragmented and extremely local, therefore an aggregator with high capacity logistics is likely to be rewarded. We have a couple names on the radar... .
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Sean D. Emory
Avory & Co. Founder & Chief Investment Officer
Disclaimer: This is not a recommendation for purchase or sale of any securities.
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