Kath Purkis sees fashion as a numbers game. When the online entrepreneur launched fashion e-tailer Le Black Book in April 2008, she did so with a premium mix of Australian designer brands. Within a few seasons, this came to include a house line and the injection of mid-market labels.
“A change in the economic climate, changing consumer spending habits and designer brands closing up shop as a result of the GFC were all significant factors leading Le Black Book towards developing its own house brand,” she says. “To be successful in business, one must adapt and change and be disruptive before being disrupted.”
Purkis decided to disrupt her luxury positioning after noting that while website traffic from key international markets was growing, the average price per order was dropping. There was interest, but she needed more competitive pricing. Le Black Book, which offers trend-driven pieces at under $100, was introduced and now sits alongside brands such as Rachel Gilbert, Fleur Wood, Kirrily Johnston and Karen Walker.
Regular analysis of sell through reports and online traffic has now inspired another change, this time outside the business. Last month, Purkis launched Her Fashion Box, a subscription commerce platform which gifts consumers a fashion item or accessory per month based on their style profile.
The item is packaged along with five beauty samples, gift vouchers and a trend report for $49.95 per month.
“The idea of Her Fashion Box bloomed after identifying ‘hero’ products that season after season, sold in high volume, and knowing there was a better way to market these aside from stand-alone products in a retail store,” she explains.
“We are able to look at key items each season and analyse various metrics such as search converting to the direct product, page views per product and highest conversion to sale. Once you can identify what consumers want, it’s a matter of delivery in a timely and engaging manner.”
Purkis knows she is at an advantage, being able to produce fashion items through existing suppliers for Le Black Book and in turn, growing her production runs.
“When it comes to negotiating cost prices, it’s a numbers game and the larger the volume, the better the profit margins,” she says.
“With Her Fashion Box I immediately saw an opportunity to identify key styles that would suit a wide range of women and offer across a subscriber network.
“Analysing past data and hero products is crucial to the success of any business. In order to predict future high sell through items, you must look to why the previous products sold so well. Once you figure out why, it’s easily achievable to increase sell through for future seasonal products.”
The subscription commerce model is not new, and Purkis herself is inspired by the success of US beauty giant Birchbox. Launched in 2010, the service partners with top brands such as Kiehl’s, Benefit, Deborah Lippmann and Stila to offer its subscribers monthly product and information drops on beauty. In 2010, it secured $1.4 million in seed funding and the following year, this swelled to $10.5 million in Series A funding.
Purkis is confident in securing a similar reception, and has attracted CEOs in both subscription commerce and apparel to form an advisory board.
“Her Fashion Box has already had some serious investment opportunities and the profit margins are very generous as opposed to traditional retail of x2 + 10% mark ups,” she explains. “As a buyer, I have the confidence and skill set for picking the hero products each season and knowing what trends will have high sell through.
“Each month, a product will be included in the box that is on trend and tailored to the style profile of either trendy, classic or feminine. Subscription model business means you know your sell through a month in advance, allowing you to order the exact units you have to fulfill. It gives great buying power with suppliers and plenty of time for production if Her Fashion Box is manufacturing that product in-house.”
When customers sign up to Her Fashion Box, they are required to fill out a style profile to ensure product deliveries are personalised.
Purkis says there will be no major changes to back-end processes, having spent the last five years securing key contacts for both sourcing and in-house manufacturing on Le Black Book. In fact, aside from setting up a second business, she sees few operational challenges.
“The challenges are limited as opposed to traditional retail. Knowing what stock levels to purchase directly from suppliers or manufacturers removes the traditional challenges such as excess stock levels, seasonal selling patterns and consumer abandonment.
“Beauty brand alignments are important to Her Fashion Box as many female consumers will purchase a full sized product after trialing a sample. We forecast customer engagement will be at a high, trying before they buy and reading the product via the trend report. The conversion to sale for the beauty samples is forecast to be higher than traditional conversion via e-commerce or physical retail experiences.”
Purkis declines to reveal her subscription targets, but says promotional campaigns have been mapped out for the first 12 months with a call to action to convert to sale or become a subscriber. While the venture is still in its early days, Purkis believes her five years experience in the e-commerce field will make it easier the second time around.
She has had to adapt before, trialling her private label on a separate platform noirshop.com.au before folding it back into the Le Black Book stable. The hero business now features value-add editorial platforms such as Le Magazine and Le TV, which feature trend reports and interviews with designers, and a strong presence in social media.
“As I now have five years experience in online retail, the start up was very seamless. I have designed the Her Fashion Box website myself with a a great team and implemented content management components to increase conversion rates. Once you have launched a business the first time, the second time round is much easier. All the learning and teething times are behind you as long as you apply the right knowledge to the business.”