The case is set in 2014, from the perspective of Pyra, a Singaporean subscription box company for beauty products. Subscription-box services are a fairly new business model that involves the delivery of product(s) to the consumer on a periodic basis. A more recent variant of subscription-box services personalises the selection of products delivered, by closely matching products with customers’ preferences. The company, in essence, becomes a personal shopping assistant for the customer. Pyra falls squarely in this last category.
Pyra relies on data analytics and proprietary algorithms to personalise its selection of products. Given that customer data is central to the operation of the business, a platform that provides ease and convenience to customers in the provision of their feedback and preferences is paramount. Pyra developed a mobile app for this very purpose. The fact that its target segments are millennials and centennials, consumers who are tech savvy and always connected, makes this a sensible move. The app also makes it easy for customers to share the curated boxes they received on social media.
Pyra was launched in early 2013 and has had reasonable success in its first year of operations, with double-digit month-on-month growth in customer base. There are nagging doubts, however, about whether the business will continue to be viable in the longer term. For one thing, retention of customers might prove to be a challenge, as customers’ interest in accessing novel products could wane with time. In addition, with the entry of direct competition becoming an imminent event, there are looming questions about the sustainability of Pyra’s competitive advantage.
The case thus provides students an opportunity to analyse the long-term viability of the business model in its current form and recommend what Pyra should do to develop a sustainable competitive advantage.
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