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ONLINE MARKETING

Using Crowdsourcing to Control Inventory

ModCloth's Be the Buyer program lets customers tell the company exactly what they want.
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Susan Gregg Koger is a lot like her customers. The 25-year-old co-founder of ModCloth, a $15 million online clothing retailer based in Pittsburgh, Koger lives and breathes fashion, eschewing mainstream mall taste in favor of offbeat, often vintage-inspired pieces such as floral housedresses and flapper hats. "Our customers are young women in their 20s who live for fashion-forward clothes the same way we do," says Koger. ModCloth has always prided itself on having an open channel of communication with customers, through, for example, frequent contests and an active Twitter feed. Says Koger: "Our internal motto is 'ModCloth is a company you're friends with.' " So she decided to do what any good friend would do: take her customers shopping with her and ask for their advice before making a big purchase.

In October, ModCloth began asking customers to help the company decide whether to carry certain items in its store. ModCloth's initiative, called Be the Buyer, encourages customers to vote online on clothing samples. If a garment receives enough votes, ModCloth will sell the item.

In the past, Koger and her three-person buying team relied on their own fashion sense to select the items offered on ModCloth.com. They traveled around the country, sifting primarily through small collections from independent designers. But the buying team sometimes found clothing samples it loved but couldn't afford to purchase because of the minimum order size. Clothing manufacturers generally need large order commitments -- typically anywhere from 120 to 500 pieces, says Koger -- before committing to production. If a larger retailer hadn't already plucked a certain sample out of the lineup, ModCloth often wouldn't risk committing to the kind of large-scale purchase needed to push it into production.

But now, says Koger, the company can confidently gamble on what were once risky items by securing the most valuable of opinions before taking the plunge -- those of its customers. Each sample is put up for a vote on ModCloth's website for 14 days, and after tallying the votes, the company decides whether it's worth the investment. If an item is picked, the customers who voted in favor of it receive an e-mail when their chosen design becomes available for sale. There is also a comments section for each garment and a feature that lets customers send a link to the clothes to their Facebook and Twitter friends.

Koger says the program benefits everyone involved. Not only do the customers get to play a firsthand role in choosing their own fashions, but ModCloth reduces much of the guesswork involved in fashion buying. "The customers are helping us make a safer financial bet by eliminating the risk," says Liz Bensink, ModCloth's site manager. "Now if we order some of those samples, they'll be exclusive to ModCloth, and we already know that our customers voted them into existence." Plus, the designers get a chance to produce the clothes that larger, more mainstream outlets passed on.

The first batch of 66 product samples appeared on ModCloth's site in late October. By the end of November, those items had received more than 100,000 customer votes, and Koger had decided to carry about 40 percent of them. Molly Miltenberger, a regular ModCloth shopper, weighed in on some of the samples. A self-proclaimed scarf lover, she voted in favor of a green plaid scarf with tassels and another brightly colored striped one with pompon fringe. Only the latter received enough votes to make it into production, but Miltenberger says that's OK. She will buy the one that will be produced. Plus, she is thrilled that the company is letting her vicariously experience her "dream career" of being a professional buyer.

In addition to the votes, ModCloth also received thousands of comments, some of which were harsh -- and often amusing. One customer quipped about a printed yellow dress, "It looks like a cat shred a '70s polyester and then threw up on the shreds." Of another multicolored outfit, a shopper wrote, "I like the cut, but the pattern makes me want to kill myself."

Snarky or not, the comments reflect a high level of customer engagement. Plus, many of the remarks proved insightful, says Bensink. For instance, a heather-gray cotton dress, which did not make it into production, got a fair number of yes votes, but commenters kept pointing out the same flaw in the dress: It was too sheer. In the future, ModCloth may even consider asking a designer to make changes based on the criticisms of customers. "The customers are letting us know why they voted the way they did," Bensink says, "and the point is to see how comments and votes translate to sales."

It's too early to tell what the exact conversion will be, says Koger, but the initiative has already boosted traffic to ModCloth.com. The number of visitors increased 25 percent in the first month after launch, partly because enthusiastic participants were promoting their favorite samples on their Facebook pages, Twitter feeds, and personal blogs. Thrilled by the response, the ModCloth team has continued to add new samples to the voting page. "Items are getting 50 votes mere minutes after we upload them on the site," says Bensink. "It's so exciting for us to watch. We had this customer base ready to interact with us, and we just needed to give them a proper forum."

For more on incorporating customer voting, read senior writer Max Chafkin's June 2008 cover story about Threadless, which produces T-shirts only after they receive high scores from customers. Find it at www.inc.com/keyword/feb10.

Last updated: Feb 1, 2010




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