Is Juicero a Floppy Story or a Solid Investment?
With its current business model, Juicero's failure is inevitable. It's no longer a question of 'if', but 'when' this juice machine will go bankrupt.
The Cost: Overpriced and Unnecessary
The initial price of the Juicero machine was exorbitant, at $700, but it's now slashed to $399. However, this is just the tip of the iceberg. To use the machine, customers need to subscribe to weekly shipments of juice packs. These packs cost between $5 to $8, yet they yield only 8 ounces of juice.
Compare this with a typical 16-ounce bottle of premium juice, which may cost around $8. Even if you’re willing to pay that, it’s still more expensive than the alternatives. Stores like Whole Foods and trendy juice shops offer better value for money.
Terrible Timing and Market Viability
The juice industry is fiercely competitive, with countless rivals sprouting up. The trend of cold-pressed juice boomed in 2010 but subsided by 2014. Now, thousands of companies, including high-end supermarkets and local coffee shops, offer fresh and affordable premium juices. For less than half the cost per ounce, you can get quality juice from these sources.
The demand for juicer machines has also plummeted, with many sitting unused in kitchen drawers. Juicero’s timing couldn’t be worse in today’s highly saturated market.
The Trivial Problem It Solves
The primary issue Juicero claims to solve is the hassle of cleaning after juicing. However, this isn’t a significant problem. The machine’s ability to perform the task can be easily bypassed. Moreover, the process of using Juicero involves commitment to a limited and inflexible offering. Customization is non-existent, with the QR code on each pack needing approval before squeezing. Even attempting to do it manually is faster.
Scalability Challenges
The business model of Juicero is unrealistic. The company aims to control the entire supply chain, selling both the machine and juice. This results in high costs and limited scalability. The juice bags have a shelf life of only 5-7 days, meaning frequent overnight shipping across the country, increasing expenses.
To expand, Juicero needs to invest in multiple strategically located facilities, which are expensive to operate. Wholesale opportunities would be scarce, adding to the difficulty of growth.
Founder’s Departure and Investor Concerns
The founder of Juicero, Doug Evans, stepped down after only 6 months of raising capital. His departure raises red flags, suggesting that despite managing to secure $120M in funding, the business lacks a clear roadmap. The most significant achievement was securing this massive investment, which is more impressive than the business’s actual impact.
The company’s numerous obstacles, coupled with stiff competition, make it almost certain that millions have been spent without substantial returns. At best, they’ve attracted a small number of wealthy or lazy customers who bought the machine purely as a novelty. It’s time to consider returning the invested capital.
Based on the current state, Juicero may not be a wise investment. The business lacks a sustainable revenue model and faces significant challenges in scaling. It’s time to think about other options or invest in more promising ventures.