Modcloth E-Commerce

Marisol Hurtado E-Commerce Strategies + Analytics Spring 2017 Professor John Luer

Company Information 1-2

Table of Contents

Research 4-10 Campaign 11-13 References 14

Company Information About

ModCloth.com is a rip-roaringly innovative, rapidly growing e-tailer of vintage-inspired fashion and decor that’s out to shake up the way fashion is discovered, developed, and delivered. Through groundbreaking technology and press-recognized social media, they’re creating a user-empowering platform that’s redefining the face of social commerce. ModCloth now has over 400 employees and offices in San Francisco, LA, and Pittsburgh.

Headquarters

San Fransisco, CA

Founded

July 18, 2002

Founders

Susan Gregg Koger and Eric Koger

Status

Acquired by Jet on March 16, 2017

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Categories

Crowdsourcing, E-Commerce, Retail, Fashion

Competitors

Etsy, Bonanza, Storenvy

Social

Facebook, LinkedIn, Instagram, Mobile App

Points of Purchase

Mostly web-based, with one brick and mortar store located in Austin, Texas

Company History

Capital investments allowed ModCloth to source independent designers and morph into a bonafide player in the fashion retail market, offering new, vintage-y looking, and retro-inspired alternatives to more conventional fast fashion and ready-to-wear brands. Koger emphasizes that building a conversation with ModCloth’s shoppers from the get-go proved essential as the company came of age in those early years. “If you think about launching back in 2002, that was before Facebook, before the iPhone.

It’s just really amazing to think about how things have changed. But we saw this opportunity to build a brand that had not just a fashion point of view, but had a community at its center.”

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Positioning Statement For whom is ModCloth designed for?

Younger women ages 21-35 who are indie-driven in fashion. This means they are fearless in their fashion by wearing statement pieces that are one of a kind, but not exclusive to just one body type

What kind of product is it?

Modcloth sells unique gifts, clothing, accessories, and shoes What is the single most important benefit it offers?

Modcloth’s offerings are unique compared to other fast fashion retailers. They offer plus sizes on all of their clothing items, no matter what the garment.

Who is ModCloth’s most important competitor?

Etsy would probably be their biggest competitor because of their vintage and unique product offerings

How is ModCloth’s product different from Etsy?

Variety on product, availability and brand security

What is the significant customer benefit of that difference?

Shoppers have a wider selection of items from which to choose from, know that what they are buying is quality, and the variety of size options for differet body types 3

Research Since its founding in 2002, Modcloth as no doubt garnered an eclectic fan base. Their fashions aren’t the usual ones found in most stores, or online retailers. They cater to a more quirky demographic and don’t shy away from wild prints, textures, and colors. Modcloth customers love signature prints, love cats, and love dressing up for the holidays (Racked 2017) With the inception, also came a different demographic group, plus size women.

What brought plus sized women to Modcloth in the first place was the fact that they now had a ton of variety in their clothing, compared to other retailers. The truth is that while traditional department stores and clothing chains offer dresses, shirts and other clothing in plus sizes -- out of the 25 largest clothing retailers by revenue, all but four have some plus-size options. It’s just that their offerings are more limited than the ones in the so-called straight sizes (Bloomberg 2016) Simply put, if you are plus size and looking for great statement pieces and fashionable trends, you are left behind.

The reserach goes even further than just the variety of the clothing that is available for women in this segment. It also plays a psychological and emotional role. A survey of about 1,500 women ages 18 to 35 who wear size 16 and above conducted by online retailer ModCloth found that 60% of respondents feel embarrassed by shopping for clothing in a separate store or in a separate department.Nearly two-thirds (65%) would like to see plus sizes included in the same section as other sizes.“Women prefer to shop by types of clothing, not types of bodies,” said ModCloth co-founder Susan Koger.ModCloth made this discovery first hand when it opened a pop-up store in San Francisco in July. ModCloth made 90% of its merchandise available in the full range of sizes, from XS to 4X (Marketwatch 2015)

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Source: Modcloth 8

That being said, Modcloth isn’t simply a great place to shop if you are looking for plus sizes. As stated earlier, the online retailer has also been popular among its shoppers because of its unique offerings and diverse fashion pieces. They were drawn to Modcloth because of its almost hip, exclusive, and boutique worthy garments and accessories. Fashion aside, Modcloth also provided a haven for women to feel safe and welcomed and a sense of community through the Modcloth blog.

This is where the acquisition of Modcloth by Jet.com, a Wal-Mart subsidiary, comes in. In March 2017, Modcloth was acquired by Jet for roughly $50 million-$75 million. The move is likely to help Walmart gain young shoppers of ModCloth and will also enhance its expertise in the online apparel segment, which is one of the top-selling categories in digital commerce. It could also boost the company’s merchandise offerings. Walmart stated that ModCloth would continue to operate as a standalone brand (Marketrealist 2017) While this new partnership no doubt means financial security and continued success for both parties involved, the move created much backlash from the many faithful Modcloth shoppers that held the e-store with high regards. The reason? Wal-Mart is one of the most hated corporations in the United States. Some reasons include: • • • • • •

Walmart hurts local communities The company uses foreign labor, including child workers Walmart underpays women and neglects pregnant workers The company also discriminates against workers with a disability and elderly employees It isn’t a safe environment for employees The company is notorious for wage theft (Daily Dot 2015) 9

Because of the acquistion, Modcloth lost a number of returning customers, all who took to Twitter to vent out their frustrations with the indie retailer and how they “sold out” to corporate greed. While the move is no doubt frustrating, many of what these angry customers don’t understand is that Modcloth was seeking financial security when it decided to be bought out by such a large corporation. In a message to customers from co-founder Susan Gregg Koger, she writes “I am excited to announce that we are joining the Jet.com and Walmart family. This will give us the necessary resources and support that we need as a business to grow. Growth allows us to reach more women, grow our community, and amplify our message. Our mission to help our customers feel like the best version of themselves continues. And our commitment to inclusivity continues. Our amazing team continues. And we can open more stores — in your hometown! I hope you will continue to join us as well on this next phase of our journey together.”

The issue that Modcloth must address and correct is the following: How do they gain back their customers trust and loyalty, which was damaged by the Wal-Mart/Jet merger?

I believe one way to go about it is to look at the Tom’s shoe model. When someone purchases a shoe through Tom’s, the company donates a pair of shoes to a child in need. They also donate to healthcare, water, and educational programs in third world countries through proceeds from the initial customer purchases.

For the campaign, I believe a great organization to get involved with would be Planned Parenthood.

While having nothing to do with fashion, or plus/straight sizes, women of all shapes and colors have and continue to benefit greatly because of healthcare organizations like Planned Parenthood. It would be a means by which ModCloth can give back to this charitable company that continues to look after the well being of all women for the past 100 years.

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Campaign Background / Overview:

The acquisition of ModCloth subsidiary Jet.com caused a huge decrease in sales and customer loyalty.

In order to regain these customers, and to bring entirely new customers as well, the company must take a step back and approach them from a humanistic approach.

Objective: What Is The Goal of The Ad or Campaign?

The goal of this campaign is not only to increase internal sales, but to re-brand ModCloth as a caring and philanthropic focused company. Because Wal-Mart has such a negative public opinion record, the end goal is to divert their feelings of contempt towards Wal-Mart by placing ModCloth on an ethically superior standpoint.

Target Audience: Who Are We Talking To?

We are looking primarily at urban women, living in major metropolitan cities around the U.S. Their ages will be between 25 - 35, with household incomes of over 50K per year. We will target both single and married women who are working in office settings and are involved on social media and are acitvely engaged with fashion blogs and brands.

Focus: What’s The Most Important Thing To Say Or Show?

We want to focus on our customer and their well-being, not just in the fashion sense, but physically and mentally. We also want to focus on the positive efforts that ModCloth has made in order to re-gain customer loyalty and interest.

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Facebook Post

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Instagram Post 13

Plante, Stephie Grob. “You Can Finally Shop at ModCloth in Person.” Racked. Racked, 05 Jan. 2017.

Web. 05 June 2017.

Banjo, Shelly. “Retailers Ignore Most of America’s Women.” Bloomberg.com. Bloomberg, 10 May 2016.

Web. 05 June 2017.

Garcia, Tonya. “ModCloth says 60% of plus-size women are embarrassed to shop separately.” MarketWatch. N.p., 08 Oct. 2015. Web. 05 June 2017.

Lutz, Ashley. “The Plus-Size Industry Is On The Verge Of A Revolution.” Business Insider. Business Insider, 23 June 2014. Web. 05 June 2017.

References

Stevens, Adrian. “Why Walmart Acquired ModCloth.” Why Walmart Acquired ModCloth - Market Realist. N.p., n.d. Web. 05 June 2017.

Osterndorf, Chris. “10 reasons you should never, ever shop at Walmart.” The Daily Dot. N.p., 11 Dec. 2015. Web. 05 June 2017.

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