How JustFab saves time and money by working directly with manufacturers to produce its own designs.
Katie Evans , Managing Editor, International Research
JustFab delivers a personalized shopping experience based on a style quiz consumers take when they visit the site for the first time.
The Company: JustFab Inc.
The Project: To use online feedback to help it design in-house more of the fashion apparel and accessories it sells, while working with overseas manufacturers to make the designs quickly and affordably. This is in contrast to the retailer's previous approach of primarily working with suppliers.
The Reason: The shoe, handbag and denim retailer, which primarily sells via subscriptions, must please the more than 6 million fashion-forward shoppers who head to its e-commerce and m-commerce sites each month by providing them the latest trends for a flat $39.95 a pop.
But typical JustFab members want more than just budget-friendly styles, they want items that are in fashion right now—albeit with a twist so that they stand out from the other hip dressers, says Russel Steingold, JustFab's senior vice president of global sourcing. Because of this the retailer needs to source, market and get goods up for sale before they become stale.
Nailing that combination of speed, affordability and individuality led the retailer, which launched in 2010, to hire Steingold last year. Steingold had two immediate responsibilities: to hire an in-house design team to create products based on consumer feedback it receives on its e-commerce site, and to find manufacturers who can make quality versions of those products quickly and for a reasonable price.
"We don't like other retailers having our products," Steingold says. "We also wanted to be able to react more quickly to sales trends and consumer reviews on our site and save money by procuring products ourselves."
The Method: JustFab started out building design teams for each of the retailer's denim, shoes and accessories product lines. The retailer recruited designers from well-known fashion brands including BCBG Max Azria Group Inc., Coach Inc. and Tory Burch LLC to join its teams. It put candidates through four to five rounds of interviews, along with a step in which it asked applicants to design an item that would resonate with its target customer, women ages 18 to 35, Steingold says. Candidates were required to present several original designs that they thought would sell well on JustFab.com. If JustFab felt the designer understood what its shoppers wanted, the designer got a job.
JustFab also wanted more control over the quality of its products. Steingold says JustFab occasionally received items from suppliers that were defective or poor quality. For example, in one case a large shoe order arrived at JustFab's warehouse with the left upper attached to the right sole. The retailer had designed creative assets featuring the shoe, and the blunder meant that all went to waste. "We had to cancel the entire order," Steingold says. "It was devastating."
In vetting candidates JustFab insisted that manufacturers tick the many boxes on its list of sourcing requirements, which includes the flexibility and capacity to make more of a hot-selling item right away if needed—and the commitment to do that for JustFab. "We want to be a big deal to our suppliers," Steingold says.
In choosing manufacturers Steingold relied on his more than two decades in fashion manufacturing, which included owning his own company for sourcing private-label products for upmarket fashion brands. Steingold visited each factory on his short list. While there, he inspected working conditions and made sure they were abiding by child labor laws. He also walked the inspection and product-testing lines to examine quality control processes. Many of the factories in Eastern Europe, India and other parts of Asia JustFab selected are ones Steingold worked with before.
Once JustFab signs a deal with a factory, the retailer often works with vendors that send agents to visit factories and conduct quality and safety inspections when JustFab's orders are in production. JustFab declined to share how much it pays for the service, but says it pays a daily rate per inspector, plus travel expenses.
With designers and a short list of manufacturers in place, now when JustFab's team designs a product the retailer can quickly assign it to one of its approved manufacturers.
In many factories, JustFab also has its own product lines to create samples. "We don't want to have to wait in line for other customers' samples to be made," Steingold says.
It now takes JustFab about six months from the time it starts work on a design to when it appears for sale on JustFab.com, Steingold says. That shaves three to six months off the production cycle. "Typically, you need nine months to a year to launch a new collection, but because we work directly with the manufacturers we are able to design and produce a collection in half the time," Steingold says.
JustFab also uses its manufacturers' resources to ramp up production speed to jump on emerging trends. For example, JustFab gets ideas for each upcoming season by examining what high-end designers are including in their seasonal collections. When it saw wedge sneakers appear in many fashion collections, the design team came up with a handful of such shoe styles and prioritized manufacturing the shoes. The approach helped JustFab have several wedge sneaker styles for sale in about five months. The footwear quickly sold out, Steingold says.
To help manage the production process, each design team has a dedicated product development point person responsible for communicating with the manufacturers. They correspond via e-mail with suppliers about JustFab's order progress to ensure the orders stay on schedule and meet the retailer's specifications. "We are shipped samples of each style that are inspected and any comments or changes that are needed are communicated back to the factory to confirm that the styles are being developed as directed by JustFab," Steingold says.
While staffers and manufacturers currently correspond via e-mail, JustFab is in the process of implementing a product life cycle management system, or PLM, that allows its teams to track projects from start to finish and through various iterations and prototypes in a central database. JustFab plans to begin using the software by the end of the year, Steingold says.
Having an in-house design team also enables JustFab to quickly respond to what its customers post online, such as in ratings and reviews. For example, JustFab recently noticed that consumers were saying that they wanted denim that was more comfortable and had more stretch, and so JustFab added more spandex into its denim fabric. After making the change, denim sales increased and People magazine's StyleWatch section named JustFab's line the best denim for curvy bodies.
The new setup also enables JustFab to react quickly to online sales data. JustFab looks at sales trends each week to identify best sellers and uses the numbers to inspire new designs. For example, the design team will quickly design new products similar in style to top-selling items or will order more of an item that is selling well. "Being able to react quickly to trends is critical to our business," Steingold says. "It's part of why we decided to bring design in-house and to work with manufacturers and factories directly."
The Results: JustFab says it is saving between 20% and 40% in product and production costs by working directly with manufacturers. And being able to refine existing products based on customer feedback and sales data, combined with the ability to get on-trend products to market months faster, is helping drive sales. The retailer says it is on track to do $250 million in sales this year—more than double its 2012 sales of $100 million. That figure is just for JustFab and doesn't include any added sales it will get from its recently announced merger with subscription-based retailer ShoeDazzle.com.