Bodega is a startup tech company based in the U.S. founded by former Google employees, Paul McDonald and Ashwath Rajan. The business provides smartphone-activated vending machines across the country unique to specific locations. Recently, they launched their first 50 machines and received huge backlash from customers and convenience store owners. I have created a brief business model that will further explain the reasons for this negative feedback.

Bodega founders, Paul McDonald and Ashwath Rajan

Value Propositions

Bodega values convenience and instant gratification. These are driving forces behind their company. However, they also have a main goal of completely replacing convenience stores.

• Many convenience stores in New York are family-run and started years ago by immigrants; they are an important part of the community

Customer Segments

The company targets a wide variety of people who are busy and need fast and easy access to food, hygiene products, etc.

• The majority of people are satisfied their local convenience shops and enjoy the community aspect

Channels

Their vision is “100,000 Bodegas spread out, with one always 100 feet away from you.”

• This will disrupt business for many local convenience stores

Customer Relationships

Bodega kiosks are to be designed specific to their location, with the “promise that the products will not just be tailored to their general environments — protein bars in the gym, tampons in a sorority house — but to their specific users”.

Revenue Streams

The company earns revenue with their machines which charge customers on credit through their mobile device.

Key Partners

The company has paired up with three main investors: “First Round”, “Forerunner” and “Homebrew”.

Key Activities

The company’s success will come from supplying the public with products they need through their machines and mobile service.

Key Resources

The several thousand machines Bodega intends to build will call for a large amount of employees in charge of packaging products for each location, transporting them, restocking machines as well as fixing any mechanical issues.

Cost Structures

If the company were to build 100,000 machines, that would be “ten million items that are active at a time, plus reserve products for restocking, plus new products to introduce as the “machine learning”…cycles out low performers”. Purchasing these items, bundling them and delivering them to each location will be very costly.

Financial cost is not the only cost associated with this company. Many family-run stores are being and will continue to be put in jeopardy at the cost of these machines. The company’s overall concept has potential. However, before the company can grow, it needs to change its values and direct its main goal away from reshaping the convenience store industry and taking away from community, to something that will add to the communities.

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We see it on a regular basis. Cosmetic companies promoting their new “clinically” proven age-altering formulas, health corporations promoting new miracle diets, food brands introducing new products with outrageous health benefits. False advertising is a hazard in the world of consumerism. Many companies turn to the use of false claims and promises in order to generate higher profit, deliberately betraying the trust of consumers.

A current example of this is Gwyneth Paltrow’s online company “Goop”, dedicated to creating women’s health and wellness products. Products range from “crystal therapy”, claimed to transform one’s energy “in a manner essential for good health”, to energy stickers, suggested to be worn to “rebalance the energy frequency in our bodies”. The goal is to empower women and enhance women’s autonomy, in encouraging the improvement of their overall health and self-esteem. The problem is, the claims these products make have no medical backing. They will not live up to consumers expectations; it is scientifically impossible. Timothy Caulfield of The Globe and Mail challenges the company’s ethics in stating “This choice-enhancement shtick is a common tactic for those pushing unproven therapies and health products. But how does providing inaccurate and potentially harmful health advice enhance autonomy? On the contrary, misleading people about the facts reduces autonomy and erodes informed choice.”

The 8  Essential Goop Crystals

Agencies such as the FDA and the FTC in the U.S. monitor ad campaigns and help correct misleading information projected by companies. Still, companies continue to misinform their consumers. This is because “the FDA lacks the resources and regulatory authority to effectively monitor false and misleading labeling practices.” Under the circumstances that a company advertises false information, they will receive a Warning Letter. More severe penalties are reserved for other violations.

The power advertisement holds over consumers is very strong and companies such as Goop abuse this power to further their success as a business. Paltrow’s case in particular is especially distasteful. Not only does her company target insecurities of women and self-image, but she is a popular celebrity whose influence is far-reaching. Lying to consumers for one’s own benefit is intolerable and eliminating such issues should be taken more seriously.

Goop encourages both physical and emotional wellbeing

Goop, among other companies that mislead consumers, masks its goal to maximize profit with the idea that it is helping society. Milton Friedman’s article regarding business ethics touches on this tactic, stating that “In the present climate of opinion, with its widespread aversion to “capitalism”, “profits”, the “soulless corporation” and so on, this is one way for a corporation to generate goodwill as a by-product of expenditures that are entirely justified in its own self-interest.” While it may appear that the health of its customers is its number one priority, Goop’s sole aim is profit. Goop shows no morals or ethics in lying to customers and companies such as itself should not be able to thrive at the expense of the public.

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