Sunday, June 19, 2011

When An Online Community Becomes A Ghetto

We manufacture a brand of big and tall tee shirts that has amassed quite a loyal fan base, with consumers and retailers over the course of the last 20 years; when we added screen printed tees two years ago sales doubled.  When we tested going B2C via the internet we found our sales doubling again!  

I attempted to take every single telephone call from consumers over the last 10 years and I was fascinated to find out how far the big and tall consumer would drive to buy our shirts, I have heard numerous stories of how they still own the first shirt they bought from us 15 or 20 years ago.  I found out that their wives love how our shirts wash up and I was surprised  at the number of women who would wear their husband's shirts as nightgowns after their husband had bought new ones.  I was also surprised at the number of women who bought our shirts for themselves when we added long sleeve and a couple of fashion colors to our line; in fact, they accounted for 35% of our sales. 

I have retailers who claim that they have customers that only shop at their stores because of our shirts and if they are out of stock then their customers walk out!  I have one elderly woman who buys her son 6 new shirts every month; she will not place her order on the internet because she doesn't trust the computer with her credit card, which she will only share with me!  I have doctor in Germany who buys 20 white tee shirts every three months; he must be one big surgeon!

That is a foundation from which to build a 'sized centric' community! 

Of course, as I am seeking investors to grow the business, I am constantly reviewing what other companies are doing to determine what innovations could benefit our niche in the future.  Since our basic product line is big and tall tee shirts, that we can also screen print, the idea of providing the big and tall consumer the same opportunity that Threadless, Cafe Press, and or Custom Ink offer regular sized consumers is obvious.  To look at Bonobos and realize how they have added product to their basic line, makes the concept of big and tall sunglasses, hats, and sandals logical.  As I am big and tall I know that hats, sunglasses, and sandals are impossible to find and they fit so well with our basic line.

In a six month period with nothing more than social media, and a direct mail of 5,000 postcards we built up a community of 67,000 consumer addresses; of which 87% are now purchasing 5 shirts on average twice a year; 10 basic tee shirts at a minimum of $17.50 each! 

That is a foundation from which to build a 'sized centric' community! 

So then I find out that companies such as ShoeDazzle, Jewelmint, and now Beachmint have redefined the concept of 'community.'  Apparently, now the concept is something you develop and then herd into a buyers club, where for a monthly membership fee you are offered a predetermined style of goods which you have automatically purchased unless you request not to purchase that month within a time window.  Or, from the Jewelmint website:
"Your credit card will not be charged until you make your first purchase! After you make your first purchase, you can always click "skip this month" in your Showroom from the 1st to the 5th of each month to avoid the $29.99 membership charge. This charge will add one credit to your account which may be redeemed for any piece of jewelry in our collection, at any time during the month."

I belonged to a record club in the late 1970's and I know that my neighbor belongs to Gevalia Coffee Club and I find it really hard to believe how much money folks are willing to pour into this concept!  In college, 15 of us decided to join a record club at the same time and within 6 months only one of us still continued their membership; with this type of business model you are not building a customer base as much as you are churning one and hoping that you attract more new members every month than you lose.  After six months in the coffee club my neighbor has threatened his coffee club customer service person if they mail him one more month's worth of coffee and that was two months ago!

Reading the consumer reviews on Facebook for Jewelmint, the concept, the product, and the customer service, I realize that the concept of 'community' has become a ghetto!

Over 20 years our brand has never experienced returns of more than 1/10th of 1 percent of sales!  Returns at Jewelmint have to be averaging 20%!  We sell a basic commodity which have no "fashion" and or "season" and as such we have never had to clearance sale anything; I am not real sure how one would deal with the fact that at anytime 20% of your inventory is floating around in the return system especially in light of the fact that your "selling" season is only one month.

Herd young ladies into your club with low cost product and the idea that you tailor their product offerings through your "style guide" and you have turned the concept of community into that of a ghetto!

I cannot help but wonder how many of these young ladies are actually old enough to have their own credit card and or to have a credit card with much of a credit line?

Not all change is a good idea and not all innovation is worth implementing.  I think business has to be sustainable and scalable thus I will focus on building our loyalty card program, our tee shirt of the month club, and try to figure out how to expand into Canada, Europe, Russia, and Australia in a manner that makes the shopping experience for our consumers a pleasant one, and makes the shipping of the product not such a nightmare for us.  Then of course I have the consumers in Singapore.... 

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