On Tuna Fish and Advertising

I was struck by an epiphany looking at the canned meat section of the supermarket this weekend.

There are 2-3 brands that are all pretty indistinguishable. The cans that you easily reach for are down by your knees. The specialty fish and tuna in a vacuum bag are at eye level.

I’ve known for a long time about supermarket shelf real estate a la the cereal aisle, but it was interesting to see this play out in such a small specialty. The brands essentially compete with themselves between cans and higher margin packages.

It also made me think about the Walmart and Amazon models. They built major brands on the strength of their margin strategy. At scale, Amazon Prime generates tremendous revenue, but they lose money on each new customer.

That said, the lifetime value of a Prime membership is worth much more than that short term loss. They pull you in and build loyalty with prepaid shipping and upsell services, like video and music.

I’ve been thinking a lot about how to play the margin game in real estate syndication. This way I can spend more than my competitors at the top and middle of the funnel.