Customer-funded retail model – Lebogang spoke about his customer-funded retail model, meaning that his business is funded through the customers as and when they pay. Lebogang implied that his model means that Cava Sneakers cannot hold sufficient stock to fulfil orders immediately. His pitch implied that he would use the R650 000 prize money to purchase stock in order to increase the speed to supply (see below).
What Lebogang perhaps may not have considered is that more stock will result in the need for additional space to stock these intended purchases. This comes with additional costs which he may or may not have considered, for example, rent, labour, insurance and pilferage. In addition, has Lebogang thought about what would happen with potentially many lines of sneakers that become outdated and outmoded, all landing up stuck in his stockroom?
Speed to supply – Lebogang intimates that speed to supply is very important and that he loses clients as a result of a perceived waiting time to receive stock. This suggests that customers have many alternatives to choose from which may offer quicker fulfilment or instant fulfilment (retail store). This highlights the fact that he is in a highly competitive environment and that perhaps Cava Sneakers does not have the differentiator that the judges are looking for. If Cava Sneakers actually does have the desired level of differentiation, his customers would prefer to wait as they would see the value in this differentiation.