I mentioned earlier this week that I spent last week in Las Vegas with about 150 people in our profession. Lots of items get bantered about at this event and one that was visited about quite frequently last week was the opening of Tulip Cremations.
While I have only anecdotal knowledge of Tulip Cremation, I have checked them out on their website (www.tulipcremation.com) and tried to learn as much as I can about them. Here is some of what I found out:
- They bill themselves as the “Best Affordable & Low Cost Cremation” for consumers
- They are operating now in five states – Washington, California, Illinois, Texas, and Florida
- They advertise nationally making great use of Google Ads and other technology based fields to appear first in search ads for “Cremation”
- They appear to want to create a “National Brand”
- They appear to have financing behind them
So, I did a little web-based search research and sure enough when I Googled “San Francisco Cremation” or “Orlando Cremation”, Tulip Cremation popped up at the top of the results with a headline that included “$650 – No Hidden Costs”. And, when you go to their website it is impressive including the fact that a screen pops up with an on-screen helper that you can communicate with.
It appears to me what this company is doing is creating a network of working with trade services or crematories in different locales to be able to cover the United States with a complete service area, or in some locales, possibly starting their own trade service to handle their calls. Not much different than Inman has done for trade call services. The big difference to me is that while Inman is created for industry use, Tulip Cremation is being created for consumer use. With the ever growing consumer choice of Direct Cremation No Services (DCNS) I believe that there is a market for this service as loyalty is being eroded and price and simplicity of the consumer is an utmost concern.
Ironically, I had an idea very similar to this over ten years ago. However, I am not all that internet and search engine savvy and I could never get over the hump on the cost of bringing knowledge (advertising) to the consumer public while offering a low-price DCNS product to the masses while maintaining a profit. My customer acquisition costs were just too high. My guess is that Tulip Cremation believes that thru internet search engines they have conquered that hurdle.
My question is will they really become profitable? I’m guessing that in each major market a low-cost provider will work to match them in price. My internet search research points out that is the case in San Francisco where “Best Cremation Society” is listed right under Tulip Cremations on the result page and advertises direct cremation for $698 and a search of Orlando found “Compass Point Funeral Services” lower on the search result page but with a $695 cremation service charge.
What will it take to be profitable in this type of business? In my opinion, the costs to acquire the consumer business will be Tulip Cremation’s major expense. Almost every thing else on their expense side will be variable – such as only paying trade services when they do the work. However, customer acquisition can be really expensive in a national market.
Take Uber for instance. As they prepare for a stock offering we now know that they did gross revenue of $50 billion in 2018. Yet, they lost $1.8 billion on that revenue. When does “scale” start being profitable. . and they are an international company. . . how much bigger can they scale?
I think Tulip Cremation will be good for the consumer. It appears to be very professional and it appears to me that they will present a very low bottom cost to consumers, in the growing DCNS market, who want only those services. On the other hand, I have seen individual operators in the death care space be very reluctant to give up market share and fight to keep it — even when it means dropping prices. Those operators will provide lots of local competition for Tulip Cremations.
As for now, I’m going to sit back and watch how this development plays out.