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The template only earns its keep if you actually put two cases next to each other.

This is the reason every teardown answers the same questions in the same order. Put a luxury house beside a console platform and the differences stop being vibes — one is refusing sales to protect a price, the other is selling below cost to collect a toll, and both are defending a moat.

Case ACase B

Consumer · NASDAQ: LULU

Lululemon

Designs and sells technical athletic apparel almost entirely through its own stores and website, at full price, to customers who wear it when they are not exercising.

Technology · NASDAQ: AMZN

Amazon

Runs a near-breakeven retail operation at enormous scale, and earns essentially all of its profit from renting out the two things that operation forced it to build — computing capacity and shelf placement.

The thesis in one line

Lululemon's real invention was not the fabric. It was permission to wear gym clothes to lunch.

The store is not the business. The store is the customer acquisition cost for the businesses.

Verdict

Watch it

Own it

Moat

Contested

Brand · Counter-positioning · Distribution

Wide

Scale economics · Network effects · Process power · Switching costs

Porter's five forces

Competitive rivalry

Threat of new entrants

Threat of substitutes

Buyer power

Supplier power

Competitive rivalry

Threat of new entrants

Threat of substitutes

Buyer power

Supplier power

Headline figures

Revenue: $10.6B
Gross margin: ~59%
Marketing spend: ~6% of revenue
Pants recalled, March 2013: ~17%

Net sales: $638B
AWS share of operating income: ~58%
Retail operating margin: ~5.4%
Third-party share of units: ~60%

Unit economics

One pair of Align leggings

Almost none of the $98 is fabric and almost none of it is advertising. The money goes into stores and staff — Lululemon spends on the room where the customer is convinced, not on the media that would convince her elsewhere.

One $50 third-party item sold through Amazon

Amazon captures roughly 38% of the sale price and carries none of the inventory risk. The seller took the risk, paid for the warehouse, and then paid again to be found in a search of Amazon's own catalogue.

What would change her mind

Four consecutive quarters of positive Americas comparable sales with gross margin held at or above 58%. That combination would prove the brand can grow in a saturated home market without discounting — which is the only evidence that would settle whether the moat is community rather than novelty. Conversely, two quarters of negative Americas comps accompanied by gross margin below 56% would mean the company is buying volume with price, and the verdict becomes Pass.

If AWS revenue growth falls below 15% for two consecutive quarters while segment operating margin also declines, the cloud business is being commoditised rather than merely contested, and the capex is being spent defending share rather than buying growth. That combination — decelerating growth and compressing margin at the same time — breaks the thesis outright. A single weak quarter on either measure alone does not.

1 mechanism in common

own the customer