Building a Speedy Supply Chain for Fast Fashion

August 3, 2013 Leave a comment

August 2, 2013, 5:09 PM ET

Building a Speedy Supply Chain for Fast Fashion

Emily Chasan

Senior Editor

At vintage-style online retailer ModCloth, Chief Financial Officer Jeff Shotts is using customer analytics to speed up the supply chain. Mr. Shotts oversees an analytics team as well as the finance operations at the venture-backed online retailer, which sells retro-style dresses, jewelry and apartment accessories. “Understanding customers and what they’re telling us is a critical area for us,” Mr. Shotts said. “Our analytics team is essentially looking at customer behavior, customer demographic and customer responses. Ideally there’s an early warning if a trend starts to deviate.” Rather than buy hundreds of items months in advance and try to sell them as traditional retailers do, Mr. Shotts says the company is using the information it gets from customers before and after it launches an item to predict supply, adjust inventory and understand what type of products will do well as quickly as possible. “We have a very rapid supply chain,” Mr. Shotts said. “We buy shallow quantities up front, and then, as customers purchase we think about doubling or tripling down on our inventory position for what’s selling well.”The company’s analytics team closely tracks details such as how long it takes customers to receive shipments, as well as changes in customer trends, so it can channel that information back to its operations and supply chain.  For example, the company knows that its plus-size customers buy 17% more items per order and are 66% more likely to talk about their purchases on social media. The aim, Mr. Shotts says, is to keep inventory both lean and responsive, and also make sure customers can react to products that are most popular.

In a program it calls “Be the Buyer,” ModCloth lets online shoppers vote on dresses and jewelry designs they would like to purchase, before the company places an order with a supplier.  The company tracks comments, such as one that suggests a dress would look good without a particular kind of ruffle. ModCloth often makes adjustments with suppliers and tracks how votes in the program affect ultimate purchases and predicts demand. Shoppers participating in ModCloth’s “Be the Buyer” votes tend to purchase twice as much, Mr. Shotts says.

ModCloth, which passed $100 million in revenue last year, launched an iPad App in February for shoppers to make mobile purchases, but its first mobile app was launched years ago as part of the company’s supply chain. The supply-chain app was designed to let the company’s buying team make choices more quickly after meetings with designers and vendors by speeding up how photos and details about potential products were sent to decision makers.

“It’s really about speed,” Mr. Shotts said, noting the app allowed the company to make faster comparisons and trade-offs between different types of products. “The key was how do we minimize paperwork and maximize the speed with which we can make a decision.”

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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