Summary List Placement
If business owners want to survive the next phase of the coronavirus pandemic, which indicates no end in sight, they’ll need to home in on their core products and customers.
In a recent article, Harvard Business School senior fellow Karen Mills advised entrepreneurs to identify their most valuable products with the strongest profit margins and eliminate everything else. Then, she said it’s equally important to identify your company’s most loyal and profitable customers.
Richer Poorer, a brand known for its comfortable basics like t-shirts and socks, provides a blueprint for that exact strategy. The company sold three times as many sweatpants and sweatshirts in March compared to all of last year. CEO and cofounder Iva Pawling said this sales surge propelled the brand to shift the bulk of its inventory from wholesale to focus on direct-to-consumer ecommerce. It also sent Pawling a clear business message.
“The customer wants to be comfortable,” she told Business Insider. “If you don’t currently have something in your collection that makes people feel comfortable, you need to find a way to do so.”
Her analysis is in line with a larger fashion trend of people dressing more casually to work remotely — and many want to purchase their new attire from the comfort of their homes. High-end designers have capitalized on an 80% spike in sweatpants sales, like Thakoon Panichgul who released a pair for $95.
Pawling told Business Insider how the brand identified its most profitable offerings and shifted its wholesale approach to focus on what customers really want right now.
Reimagining the wholesale model and supply chain
Richer Poorer relied on wholesale for the nine and a half years since it was founded. But within weeks of the coronavirus pandemic outbreak in the US, revenue slowed and the company had to shift its model to favor ecommerce. This included cutting down on some wholesale staff and repositioning others to focus on digital.
The company moved all of its inventory from cancelled wholesale orders to its online store, which helped the company recover initial lost sales from supply chain delays. “We doubled our February number in March and then we doubled our March number in April,” Pawling said.
The company manufactures its products in countries like Vietnam, Guatemala, China, and Indonesia. This made sense for the quantities it needed for wholesale, but then worldwide quarantines and shutdowns held up production. Richer Poorer began selling out of products as it shifted more online and the company connected with a new supplier in Los Angeles to produce its latest robe styles.
“What e-comm has allowed us to do is to really start looking at some of those factories and partnerships that we have turned away from historically, because we didn’t have enough margin,” Pawling said.
Customer retention is a key indicator of success
Richer Poorer’s Instagram account has more than 115,000 followers, but branding isn’t everything. Customer retention, or tracking repeat purchasers, is the number one metric the company focuses on. This slightly differs from the retail industry’s standard …read more
Source:: Business Insider