Selling Online In 2016 For The First Time – What Works When You Have A Blank Slate?

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A version of this article previously appeared in Forbes.

Kate Hudson, Emma Roberts, Eva Longoria, Jessica Biel and Rihanna began wearing Z Supply's clothing before it could be purchased online. It may seem hard to believe, but even in 2016, there remain a number of successful consumer brands that are not sold online. The reasons companies elect to sell exclusively offline differ, but they often center on managing channel conflict with their retail partners.

I thought it would be interesting to understand the challenges and concerns of entrepreneurs who began selling online for the first time in 2016, so I sat down with Heidi Muther, COO at Z Supply, LLC. This is the first of a two part, extensive interview I recently conducted with Ms. Muther.

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Founded in 2011, Z Supply, LLC has created five women’s fashion brands with a sixth brand and extension into Men’s, launching Spring 2017. In addition to the Z Supply brand, which offers comfortable fashion basics, the company has created Black Swan, Others Follow, Rag Poets and White Crow. According to the company, “Black Swan is targeted towards the refined, romantic city woman, Others Follow to a carefree, coastal lover, Rag Poets to a classic sophisticated woman and White Crow to the vintage loving, edgy woman.”

John Greathouse: Hello Heidi. The fashion industry can be tough to break into. What was your path to your current role? Did you always have the goal to work in the fashion industry?

Heidi Muther: I entered college with the intent of becoming a Mathematics professor, but after taking multiple economics classes, I changed my major to Business Economics. I ended up really relating to the nuance and intricacies of product supply and customer demand. That in parallel with my interest in clothing trends since a young age, it was a natural fit for me to enter the fashion business. I was fortunate to acquire my first job with Robinsons-May in 1989. Their executive training program was unparalleled, providing a sturdy foundation for young and highly motivated buyers. After seven years at May company as a buyer, I spent ten years at Pacific Sunwear as a senior buyer, DMM and VP, where the company experienced tremendous growth, expanding from 114 stores to over 1100.

After Pacific Sunwear, my career covered two new ends of the retail spectrum; off price at Ross and women’s luxury at St. John Knits. Both of these executive positions rounded out my retail/wholesale experience and led me to this new opportunity at Z Supply as the COO. This position embodies everything I love about the fashion industry from merchandising to corporate planning and strategy.

Greathouse: Fashion, much like music and the arts, inspires a large number of young entrepreneurs. As a UC Santa Barbara alum, do you have any advice for my UCSB students who desire to break into the fashion industry?

Muther: I do believe internships, while in college, provide great insights to what a person’s strengths are and where their passions lie. There are so many different routes a person can take to enter the industry, such as design, buying, production, marketing, eCommerce and styling to name a few. I would strongly recommend researching companies in their area and applying directly for a summer internship or use the (campus) career center, to arrange internships and interviews for your first job.

Besides individuals with a merchandising/design degree, many other degrees can be applied to fashion industry jobs. I used to recruit at both May Company and Pacific Sunwear and individuals with communication degrees, business degrees and even psychology degrees did well in the fashion business. It really comes down to a person’s drive and personality… you must be malleable. Some of the more crucial skills in the fashion business include the ability to observe and translate trends, understand your customer and work well with cross-functional teams.

Greathouse: Z Supply has developed a highly successful network of boutique retailers. What factors led you to consider augmenting your retail channel with direct, online sales?

Muther: We were very careful when launching our first eCommerce site. Boutiques are the backbone of our company’s sales and we did not want to negatively impact their business. That being said, we were getting inundated with inquiries regarding where to find our product. Frequent placement of our Z Supply clothing on celebrities piqued interest in the brand even more. So first, it was the need for accessibility to our product and, ultimately, accessibility to the entire line; not just the few styles boutiques were carrying.

Secondly, eCommerce is a powerful marketing platform for us. It allows us to reach tens of thousands of consumers, while simultaneously providing direct access for customers who could not find it in their own town. Lastly, it is healthy source of revenue for our company. We are proud of our first site, which is clean, easy to shop and represents what we are trying to sell - comfortable, chic essentials made of amazing fabrics. Our second site will be launching in August 2016, followed by a third eCommerce site in Spring of 2017.

Greathouse: Channel conflict is an obvious concern when adding new avenues of distribution. What have you done to minimize such conflict and what has the reaction been from your retailers?

Muther: I am happy to say that our sales reps and retail boutiques have not been negatively concerned with our site. They too see it as a marketing tool, where digital outreach brings more brand awareness and as a result, they are experiencing more demand at their store level. They will often repost our Instagram posts and draw local customers to their own stores. Additionally, we never promote (directly) on our site. Our goal is to ensure the value of our brand stays intact and that we do not threaten the small boutique business in any way.

Greathouse: It was smart to begin the process with one of your brands and learn from your mistakes, rather than rushing all of your designs online and making the same mistakes over and over. What caused you to select Z SUPPLY as the first fashion line to take online?

Muther: Z Supply is the widest reaching brand in both age and ease of wearability. We are reaching 18-60 year old’s with the line, which focuses on great fits, fabrics and assortment of colors. You can fall in love with our pocket tee and then buy it in 5 other fabrics or 30 different colors. We have expanded the line with dresses, joggers, shorts and long sleeve items, so now the use of our line is truly for every occasion from day to night. It is just an easy to wear, but fashionable brand for EVERYONE.

Greathouse: What did you learn from Z Supply’s online rollout that you will do differently as you make your other brands available for online purchasing?

Muther: We actually hired a few consultants for the first 90-days, to mitigate any hiccups along the way and ensure we made as few mistakes as possible. They assisted with building the site, building marketing plans and general analytics. This gave our new eCommerce team access to digital professionals they could learn from and a “website-building template” to replicate in-house for our next site. The key takeaways from our initial launch were one, invest a bit more money on marketing up front, because it builds your “shopping” customer base, which pays off in folds down the road. Two, create significant marketing assets, in order to keep your social media posts and emails fresh. Three, do not launch the week of Black Friday!

Greathouse: What have the results been so far?

Muther: To date, it has exceeded all of our expectations. We have tripled our original plan and are running between an 8-10 times return on our marketing spend. I credit that to our very smart, driven and constantly inquisitive eCommerce team, who really enjoy exceeding their numbers each month. Our marketing is becoming more sophisticated and we recently added an affiliate program, which is showing great promise for incremental sales. Due to the site’s success both in sales and the breadth of marketing it provides, we are confident about launching our White Crow site and how it will promote the brand growth nationally.

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Photo Credit: Z Supply, LLC <zsupplyclothing.com/press>

 

 

John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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