Sunday, November 9, 2014

Inventory Management & ModCloth's Be the Buyer

 Inventory Management with ModCloth’s “Be the Buyer”

The topic for this week of class is Inventory Management, and after completing the assigned readings, I immediately thought about ModCloth’s “Be the Buyer” program.  The Core Curriculum reading on “Managing Inventory” used fashion as an example when discussing inventory replenishment because long lead times can exist for replenishing fashion inventory while many fashion items have a short life cycle.  ModCloth seems to have developed an innovative approach to managing its inventory dilemmas. 

ModCloth is a women’s online fashion retailer started by two CMU graduates, Eric Koger and Susan Gregg Koger.  The company specializes in vintage, retro and indie styles of clothing most often produced by small and independent designers.  The company was originally headquartered in Pittsburgh, but moved its headquarters to San Francisco in 2010.  ModCloth is also known for its use of social media for marketing and for buying decisions. 

Inc. Magazine profiled ModCloth’s “Be The Buyer” in 2010 shortly after the program was launched in late 2009.  The program asks customers to view clothing samples online and vote for their favorite designs. 

In the article, Susan Gregg Koger explained that because ModCloth is relatively small they are not able to order large quantities of specific clothing items that larger retailers can.  Sometimes, the ModCloth buying team loves a certain style but is unsure if customers will feel the same way.  They cannot take a chance on placing large orders for their inventory without some assurance, so they created “Be the Buyer.”

The article explains: “Clothing manufacturers generally need large order commitments -- typically anywhere from 120 to 500 pieces, says Koger -- before committing to production. If a larger retailer hadn't already plucked a certain sample out of the lineup, ModCloth often wouldn't risk committing to the kind of large-scale purchase needed to push it into production.”

With “Be the Buyer” in place, ModCloth can take chances on interesting and unique styles because they know their customers are interested in purchasing the items.  They claim that it benefits all parties involved because customers get what they want, designers get to produce more products, and ModCloth has better input on its inventory management.

ModCloth immediately saw positive results from the program.  As Inc. said, “The first batch of 66 product samples appeared on ModCloth's site in late October. By the end of November, those items had received more than 100,000 customer votes, and Koger had decided to carry about 40 percent of them.”  In addition, the program actually increased traffic to the ModCloth website by 25%.  Today, ModCloth continues to use this program, and customers can simply sign up to participate on the company’s website. 

In 2013, Mashable also published an interesting article about ModCloth’s business.  The article features a Q&A with CEO Eric Koger.  Of note to our class, is the following Q&A:

How have you been able to anticipate growing demand for ModCloth products?
We know our customers exceptionally well. Because we're digital, we're able to keep track of things better than any brick-and-mortar retailer is. When Zara or H&M or Urban Outfitters [want to test demand for a product], they do a pilot run in pilot stores. If they sell out of all the smalls immediately, they know it's popular, but don't really know how much demand they have for a small. With our Be the Buyer program, we get a more precise read on demand because people are on the wait list for specific sizes. On top of that, we have all this historical sales data on products, and we're also interacting with customers on Pinterest and Polyvore and other external sites to see what [our customer] is saving and playing with, the styles that are inspiring her. Combined with Be the Buyer and Make the Cut, we're able to anticipate what she'll want down the line.

Numerous articles can be found online that discuss this program by ModCloth and praise it as an innovative way to look at inventory decision-making.  In my opinion, “Be the Buyer” was a great idea for a smaller company like ModCloth.  It allowed them to take the risk out of buying decisions and, at the same time, make customers happy.

I was particularly interested in this topic because I was briefly employed by ModCloth during the holiday season in 2008.   While at ModCloth, I was able to see inventory management first hand.  At that time, ModCloth was still quite small, so all employees were asked to help out with shipping at the warehouse during peak holiday shipping days.

Lastly, I wanted to mention that ModCloth had an interesting approach to “goods for resale” inventory.  Items that were returned and not resold were placed into an “auction,” and periodically, employees were given the chance to pick items to keep.  Employees were able to rummage through this inventory and make a choice based on their seniority with the company.


1.  Can you think of other companies that use social media or crowd sourcing to make inventory decisions?  I also thought of the Lays “Do Us a Flavor” contest.

2.  Can you anticipate any problems that this type of program could cause for ModCloth’s inventory management?


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