The FashionStake Diaries is a four-part series that gives BoF readers a behind the scenes look at the crucial first months of a crowdfunding fashion startup, seen through the eyes of its founders. Today, in the final diary entry, they reflect on the crucial first weeks following launch: what worked, what did not, lessons learned and plans for the future.
NEW YORK, United States —On the day of “go live” for any startup, planning is quickly overtaken by the reality of operational work. For us, September 1st was a memorable launch day. Months of pre-launch strategising, building, debating and recruiting was replaced with the business of actually running the company: answering customer calls, shipping our first items and managing our online merchandising.
We’d like to share our first month in business with you and, since this is our final post in the FashionStake Diaries, thank you for reading and commenting on our entries.
How we launched
After a sleepless night, we launched the website at 9am on September 1st. All of us huddled around our Lead Developer’s laptop and held our collective breath as he turned on the site. The actual launch went pretty smoothly. As we slowly migrated back to our own desks, the day’s first press coverage and social sharing started to drive thousands of hits to the site. Our server actually crashed a few times during the morning. Heart stopping, but memorable moments!
By the afternoon we were busy with actually operating the company. That was the biggest surprise for us: just how quickly the team had to shift modes from planning to doing. Although the launch date had been on the horizon for months, transitioning to the everyday tasks of answering the phone and checking up on the warehouse was an initial shock to many of us too. We also learned that you need to improvise, no matter how well-planned you think your business is.
Funding Lauren Merkin and Nicholas K
Early October was an exhilarating time for us. Lauren Merkin and Nicholas K hit their funding targets of $10,000 and $50,000, respectively, and their collections went into production. The secret to hitting the targets? A genuine co-marketing effort between the designers and FashionStake. Indeed, both these designers marketed their collections to their own existing customers and received a solid response. The folks at Nicholas K also decided to debut their FashionStake collection on the New York Fashion Week runway, which generated tons of interest.
But as expected, there were a few designers who did not meet their targets within the predefined timeframe. We realised that we need to make sure it’s as easy as possible for designers to tell their existing fans about their FashionStake collections through email, social networks and selected offline channels.
A few days after launching, we noticed that many of our customers were pre-ordering pieces. In fact, when we took a look at the data from September, we realized that over 70 percent of our transaction value was actually coming from pre-ordered items. We also observed that many customers were pre-ordering without purchasing the standard $50 stake. We concluded that our customer behaviour was moving us away from the original premise of consumers investing in designers and towards a model where consumers, in essence, fund collections by pre-ordering pieces.
Pre-ordering is a great way to support designers. This way, designers only produce what consumers order (supply is in tune with demand) and can use the revenue they collect to fund production and remain cash flow positive.
Assuming lead times from production to final delivery can be kept within a reasonable timeframe, pre-ordering is a great way to eliminate inventory costs in the supply chain and offer genuine value to customers. It’s also a way for the public to access “sneak previews” of upcoming merchandise, another win-win for designers (who want to generate demand) and consumers (who want early access to their favourite designers).
After careful analysis, we decided to ‘zoom in’ on this aspect of our business and focus on optimising the pre-order experience, since that’s what our customers were doing anyway.
On reflection, our ability to course-correct and listen to exactly what our customers and our internal data were telling us was crucial. What’s more, this process never stops. Doing a startup is iterative and we think it’s important that we remain flexible enough to continually evolve and solve our customers’ changing needs.
Three e-commerce lessons
Amongst the mayhem of the first month, three e-commerce-specific lessons also stood out:
1. Consumers want “pace” online. It’s no use having only a handful of designers on the website for an extended period of time. Consumers made it clear that they wanted a larger cast of designers coming in and out of the website more frequently. We listened to this feedback and are now offering daily trunk shows, with several new designers a week.
2. Emails are important. The biggest mistake we made was overlooking the value of our email database as a driver of traffic to our website. Our problem was that we didn’t really promote our email signup form anywhere on our website, which meant that we weren’t able to open a dialogue with first time visitors to the site.
3. Make things sharable. The power of people’s social graphs is huge and increasing. We’ve seen the significant impact of Facebook sharing and other means of customers referring their friends in our traffic logs. We’re spending a lot of time at the moment making more of our content instantly shareable, with clear incentives for people to refer friends to FashionStake. A fashion democracy only works with a critical mass of people!
We hope you’ve enjoyed reading The FashionStake diaries and look forward to seeing you on FashionStake soon.
Vivian Weng and Daniel Gulati are co-founders of FashionStake, a new online marketplace for fashion that launched September 1, 2010.