Nick Kozak for the Toronto Star
Case Studies

Plastic moving bin delivery business, CityBoxes.ca, fights to offer value; differentiate its service from the competition

Vital Stats
Name:
Cityboxes.ca
Website:
http://www.cityboxes.ca
Field:
Moving supplies and services
Staff:
2
Offering:
Plastic moving bins, free delivery and pickup
Core customers:
Young professional condo dwellers, 20-40 years old, small businesses, small offices.

The way Andrew Applebaum sees it, there are three certainties in life: death, taxes and moving.


He can’t help you with the first two, but says the plastic moving bin business he launched in May, CityBoxes.ca, can make moving a hassle-free, low-cost and eco-friendly undertaking.

Unlike cardboard boxes, plastic bins don’t require assembly and won’t fall apart. They’re cheaper than cardboard  — $3 each as opposed to $4-$5 for boxes, plus the hassle of assembly, taping and disposal — and the company offers free delivery and pickup, meaning there’s nothing to lug to the curb of after a move.


Applebaum figures his business has a vast potential market, but plastic moving bins are a foreign concept to many consumers at the moment.


“The challenge we face is getting the word out,” says Applebaum, who launched CityBoxes with his wife, the company’s only other employee, and financed it through a home-equity line of credit. “Most people don’t know there’s an alternative to cardboard boxes.”


And, despite this issue, plenty of other businesses have noticed the same untapped market.


There are dozens of “mom and pop” plastic-moving-bin companies throughout the GTA, plus one dominant player — Frogbox, a franchise system with 17 locations across Canada and three in the U.S.


Applebaum calls Frogbox the “500-pound gorilla” of the moving bin world, but he has one competitive advantage over all the other companies — he’s the only one he knows of that doesn’t charge for bin delivery or pickup.


This means that when Applebaum isn’t taking orders or pursuing new business, he’s in the company’s sole delivery van shuttling between customers across the GTA.

But this doesn’t hurt his company’s bottom line, and Applebaum has managed to keep his prices in line with the larger competition because of CityBoxes’ lower overhead — using a single van means avoiding the costs of Frogbox’s large diesel trucks and specialized drivers, and keeping the company small ensures it’s agile and low risk while the market germinates. Applebaum also carefully plans his routes, only travelling about 70km per day while making an average of 5 drop-offs and pick-ups across the GTA.

Of course, there are drawbacks to this model, and being the only delivery man means Applebaum loses a lot of time that could be spent developing the business.


“Every day we’re taking in new orders,” he says. The average delivery consists of 30 bins, rented for two weeks, at a cost of $120.


Still, Applebaum acknowledges change will be necessary for growth to continue.


“Is this a sustainable ongoing business? No, this isn’t something we could scale or grow based on today’s results,” he says.


So, the plan is to continue at the same pace until business picks up enough for the van to operate at capacity all week, then buy more bins and sub-contract couriers to do additional deliveries.


And there’s no plan to cut out the free delivery that gives his business its edge.


“We have a 75 per cent operating margin on every delivery we do, and that’s with free delivery and pickup,” says Applebaum, “so we will always be able to offer that price advantage.”


The greater challenge, he stresses, and one that his competitors also face, is getting more people to recognize the virtue of plastic moving bins.


In this case all the competition is actually an advantage. Frogbox is helping to raise consumer awareness in Toronto, and CityBoxes is riding on the gorilla’s marketing coattails.


Having worked for years in the corporate brand management world — for Cott Beverages, Kraft and Loblaws — Applebaum figures he’s got the traditional side of marketing “down pat.”


“We’ve got posters on every lamppost downtown, we also have door hangers distributed to each downtown condo. And our branding is incredible — I get calls all the time, ‘Saw your van and I’m following up.’”

Things are tougher for CityBoxes online.


“Digital marketing is where we’re struggling to be found,” says Applebaum.


The company has a sleek, user-friendly website, Twitter and Facebook accounts, and positive feedback on HomeStars.com, Canada’s most popular contractor review website. But when it comes to attracting attention from search engines, Applebaum feels lost.


“Unless you know our name, you’re not going to find us.”


Adam Green, who runs Toronto’s Maple North internet marketing agency, says the company should establish itself as a “thought leader” in the moving industry.


“These guys need to be blogging, writing about interesting stuff and getting that content indexed by Google and shared socially,” he says.


Plus, he adds, the fact that the company website has a static image — instead of text — describing its offering makes it much more difficult for search engines to locate.


But developing and executing an effective web strategy takes time and money, both of which are in short supply.


“I don’t know how to do this cost effectively at the moment,” says Applebaum. “But I know that this business is setup to survive.”

EXPERT VIEWS

As Interviewed by: Tom Henheffer

CityBoxes is just one man in a van, so Applebaum is overworked -- but he needs better SEO. The best solution is probably to get some help and contract to a third party, such as Rogers Outrank, to improve the company’s search ranking. It’s a small investment, but one that can give him a sales boost without piling on a lot of additional work. Also, lots of small businesses are changing locations in the city as they grow. Applebaum should approach business incubators, coworking companies and the owners of traditional office space to have them recommend his service to incoming tenants. It’s a totally new market he hasn’t tapped, and could make for a fairly stable revenue stream. Plus he should look to improve delivery efficiency. All it takes is a tablet with mobile broadband running a fleet management or route optimization program, or even something as simple as the real-time traffic overlay in Google Maps. Choosing smarter routes can reduce fuel costs and the amount of time the van spends in gridlock, and help make room for new clients while the business scales up.

by Tisha Rattos

City Boxes is a labour intensive business with a lot of fixed costs, such as warehousing, owner salary, and vehicle depreciation. Since charging for delivery is already standard in this market, offering this type of service for free may not be enough to win over a lot of customers. At present, it's not scalable and is effectively only providing a job for its owner. To be successful, Applebaum should consider finding something that really differentiates himself from the other services. He has dollies and packaging, but so do competitors. What else can he offer? Perhaps he could look at the entire moving process holistically and see if there are any other products or services the business can provide. If he does that and projections indicate the business is scalable and profitable, partnering will become key. Maybe he could build relationships with realtors and other service companies involved in the moving chain to drive big volumes of business in exchange for referral fees. Once he starts to add extra vans and drivers, he’ll have to manage his costs tightly so the business is profitable as it grows.

by Peter Conrod

Applebaum understands the importance of branding, although he doesn’t seem to realise his company has no brand at the moment. He still needs to build it. But free delivery isn’t going to do that for him. It doesn’t give the company an actual competitive advantage. If someone like Frogbox wants to squash him, they could easily cut rates and do so. Scalability is also an issue — his margin is 75 per cent now, but what happens when he has more trucks and more drivers? I’d recommend Applebaum rethink his approach and start targeting a niche. He’s been advertising in condos, maybe he should make that his primary business — become an expert and establish a wealth of relationships in that market. Then he will have a real advantage over the competition. Targeting a specific geographic area, say Forest Hills or Oakville, and then expanding outward gradually could also work. And he might consider partnering with moving companies, get them to recommend CityBoxes and maybe even do the pickups, so he isn’t always chasing consumers. It’d make for a more steady revenue stream, and potentially be more scalable.

by Steve Tissenbaum

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