The Benefits of Your Competitors Going Public
Recently, Vitacost, the biggest online player in my company’s industry, announced their decision to go public. We have been watching Vitacost for years. The problem is that information about them was hard to obtain—private companies tend to be secretive. So, it is actually kind of liberating to watch them start to go public because all of a sudden, we are swimming in great information.
For example, we now know that Vitacost operates on about a 33% gross margin and is now profitable with a 5% net margin. They spend 11% of revenue on administrative expenses, 11% on marketing, and 5% on fulfillment. They grew 55% in the last quarter over the same quarter last year to $22.8 million. We also found it interesting that 35% of their revenue comes from sales of their own brand while the rest came from selling other brands and their own brand sales are growing faster than other brand sales.
Comparing this information to our company’s is very useful. While we beat Vitacost in several areas (I will not say which), we really have some challenges in other areas. Without going into too much detail, we can see how success breeds more success. The most significant way this happens is in the lower cost of goods. The buying advantages of a company like Vitacost are enough to keep them on top of their industry almost without trying.