The Locust is the business model that sells to the consumer market.
Nearly all retailers are Locusts. Restaurants are Locusts. Businesses that transport people are Locusts.
The Locust business needs expensive infrastructure to service, process, and manage an enormous number of customers and transactions. These fixed assets make Locusts highly vulnerable to small swings in capacity utilization. A 1 percent drop in customer traffic can be the difference between profit and loss.
In 2008, Home Depot (NYSE: HD) recorded 1.4 billion customer transactions. The average sales transaction was $56.
In 2008, Southwest Airlines (NYSE: LUV) flew 88.5 million "revenue passengers." The average passenger fare was $119.
Through the fiscal year ending in the spring of 2008, 1-800-Flowers (NASDAQ: FLWS) fulfilled approximately 11.5 million customer orders. The value of the average order was $65.
I've always found Home Depot's 10K filings to be particularly informative. If you'd like to learn more about the ups and downs of managing a Locust, HD is your best source. A piece of trivia to tantalize you: they're the second largest retailer in the U.S.
To improve your mastery of the types of business models: Chickens and Pigs - The Book
