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Glossy E-Commerce Summit: 10 spots left to attend | June 2-4, Miami

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Glossy E-Commerce Summit: 10 spots left to attend | June 2-4, Miami

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Exponential growth: The silent brand-killer nobody wants to talk about

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By Stitch Labs
Oct 30, 2018

Gone are the days of fast-fashion, big retail and generic products. The modern wave of e-commerce is all about clever marketing, niche products and unique customer experiences.

Millennials are going crazy over hot, new, up-and-coming brands across all spaces, with brands like Soko Glam, Chubbies, Everlane and Billie achieving cult-status followings from loyal customers pledging their support.

In short, they’ve somehow cracked the proverbial demand-generation code that so many brands struggle with.

But, that doesn’t mean it’s all champagne and profit for these brands. Exponential growth comes with its own set of pains and challenges too. And when unchecked—or at least unplanned—that growth becomes the silent brand-killer nobody wants to talk about.

The silent brand-killer: poorly managed inventory

In retail, brands live and die by their inventory. It’s the largest asset on their balance sheet; it’s what their customers are demanding; it’s what’s making (or breaking) the business.

When inventory is poorly managed, your brand bleeds cash and begins to lose customers left and right due to issues like backorders, cash tied up in excess inventory, missed or delayed orders and poor customer experiences.

In the earlier days of smaller order volumes, limited product offerings and a single online store setup, managing inventory is pretty manageable. A couple of spreadsheets and some careful data-consolidation a few hours a week can get you pretty far.

But what happens when you start to see growth? All of a sudden, you’re spending hours a day managing your orders, consolidating data from various systems and making sure nothing is falling through the cracks. Your operations team is struggling to understand where, what and how much inventory they have, let alone be able to support logistically challenging merchandising techniques like pre-orders and bundles.

And it only gets exponentially difficult as you add more products, channels and customer demand. It’s not at all uncommon for seemingly successful brands to close shop because of their inability to scale their back-office.

Agility is the name of the game

Dan Wang, director of operations at high-growth brand THINX, said it best:

“Our team is relatively small. So, we’re constantly balancing how we can get maximum results with the minimal starting resources. We’re trying to be lean and do things smart as opposed to with brute force.”

THINX came to Stitch in late 2017 in search of a scalable, multi-channel, multi-warehouse inventory management software with the capacity to process high-order volumes.

With 400 SKUs across their two brands, Icon and THINX, they found that their inundated processes of manual inventory management weren’t a scalable solution to support their global expansion plans. They were looking to route orders based on geographic order location to shorten delivery times while still keeping shipping costs low. Their current operational set up was, as Wang put it, “not an optimal solution by any means”.

Since implementing Stitch they’ve been able to test out new international markets at a low investment of resources to prove positive ROI while gaining the ability to run pre-order campaigns once again—an initiative the team previously dismissed because it was an operational nightmare to execute.

Chubbies Shorts has a similar success story when it comes to implementing inventory and order logistics built for scale and volume.

A few times a year, the Chubbies’ marketing team would orchestrate successful flash sale campaigns that would bring hundreds of thousands of customers to their website to purchase their most popular shorts and weekend attire.

While these sales are a huge success from the standpoint of marketing and sales, the team was struggling with overselling and backorders on these particular sale days because their inventory management solutions weren’t able to handle volume at scale.

These oversold items and backorders end up becoming unfulfillable orders, negatively impacting the overall success of the campaign, as well as leading to a frustrating customer experience that impacts the likelihood of return customers.

Since implementing Stitch, Chubbies was able to reduce backorders by 93% compared to the previous year, allowing them to run their growing sale campaigns with peace of mind.

These are only two examples of ways Stitch Labs helps modern, high-growth brands avoid inventory issues that could ultimately lead to the demise of the business. Stitch Labs has helped over 2,000 modern brands like Chubbies, THINX, Peak Design and Brooklinen implement a lasting foundation for their operations built for scale and growth so that the team can focus on what they do best: sell.

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