P
ProHub
English 简体中文 繁體中文
Medium Profitability

CraftCo

#Consumer Goods #Retail #Subscription Services
ProHub Comment

This profitability case tests the candidate's ability to build financial models from limited data, analyze market dynamics, and develop multi-faceted strategies. The case emphasizes the importance of understanding both revenue and cost drivers in subscription models, while Exhibits B and C highlight the critical need to diagnose root causes of business decline before recommending solutions.

Estimated Time 15 minutes
Difficulty Medium
Source Wharton
50 / 100
Our client, Craft Co., is a subscription service that will send customers kits for adult crafting and DIY projects (e.g., watercolor painting, woodworking). Customers pay a monthly fee based on the number of kits they would like, Craft Co. sends them a box with craft supplies. Craft Co. had grown its customer base rapidly during the COVID-19 pandemic, but has seen a dip in recent quarters as new competitors have entered the field. Our client would like our help in answering two questions (i) how has Craft Co. performed recently? and (ii) what strategies can it implement to grow profitability and increase share?

Clarifying Information

  1. Craft Co’s products are typically marketed towards young adults ages 18-35
  2. It was seen as the first major player in this market, but new competitors began to enter by the end of 2020
  3. There is no specific ROI or objective that our client is aiming to achieve related to this analysis, but they are most interested in short-term strategies in the next 1-3 years as opposed to longer-term opportunities
  4. Craft Co. is currently focused solely on the U.S. market