Question

What people, organization, and technology problems were responsible for Nasty Gal's failure as a business?
In 2006, Sophia Amoruso was a 22-year-old hitch hiking, dumpster-diving community college dropout believed customers were at the center of everything with a lot of time on her hands. After reading a book Nasty Gal did. When she sold on eBay, she learned to called Starting an eBay Business for Dummies, she respond to every customer comment to help her under- launched an eBay store called Nasty Gal Vintage named after a song and 1975 album by the jazz singer they wanted. Amoruso said that the content Nasty Gal Betty Davis, second wife of the legendary Miles Davis Amoruso took customer feedback very seriously and stand precisely who was buying her goods and what customers created has always been a huge part of the Nasty Gal brand. It was very important to see how cus- Nasty Gal's styling was edgy and fresh-a little bit rock and roll, a little bit disco, modern, but never graphs they took. They were inspiring. hyper-trendy. Eight years after its founding, Nasty Ga Social media is built on sharing, and Nasty Gal gave had sold more than S100 million in new and vintage clothing and accessories, employed more than 350 people, had more than a million fans on Facebook and vintage piece, a quote, or a behind-the-scenes photo. At Instagram, and was a global brand. It looked like a genuine e-commerce success story. Or was it? tomers wore Nasty Gal's pieces and the types of photo- its followers compelling images, words, and content to share and talk about each day. They could be a craz most companies the person manning the Twitter and Facebook accounts is far removed from senior man- When everything herself out of her tiny San Francisco apartment-merchandising, photographing, copywrit ing, and shipping. She got up at the crack of dawn to make 6 a.m. estate sales, haggled with thrift stores, spent hours photoshopping the images she styled and shot herself using models she recruited herself, and ensured that packaging was high quality Amoruso began her business, she did agement. Amoruso did not always author every Nasty Gal tweet, but she still read every comment. If the cus- tomers were unhappy about something, she wanted to hear about it right away. At other businesses, it might take months for customer feedback to filter up to the CEO. When Nasty Gal first joined Snapchat, Amoruso tested the water with a few Snaps, and Nasty Gal fol- lowers responded in force. She would inspect items to make sure they were in good enough shape to sell. She zipped zippers, buttoned off eBay and onto its own destination website, www buttons, connected hooks, folded each garment, and slid nastygal.com. In 2012, Nasty Gal began selling clothes it into a clear plastic bag that was sealed with a sticker. under its own brand label and also invested $18 million Then she boxed the item and affixed a shipping label on in a 527,000-square-foot national distribution center in it. She had to assume that her customers were as particu Shepherdsville, Kentucky, to handle its own shipping lar and as concerned with aesthetics as she was. In June 2008, Amoruso moved Nasty Gal Vintage and logistics. Venture capitalists Index Ventures pro- Amoruso had taken photography classes at a com- vided at least $40 million in funding. Nasty Gal opened munity college, where she learned to understand the importance of silhouette and composition. She bought another in Santa Monica in 2015 vintage pieces with dramatic silhouettes- a coat with a big funnel collar, a 50s dress with a flared skirt, orhigher inventory replenishment requirements driven a Victorian jacket with puffy sleeves. Exaggerating everything about the silhouette through the angle from warehouse management system. The warehouse man which it was photographed helped Amoruso produce agement system investment was designed to increase tiny thumbnails for eBay that attracted serious bidders. warehouse productivity and shorten order cycle times She was able to take an object, distill what was best about it, and then exaggerate those qualities so they were visible even in its tiniest representation. When the time period between placing of one order and the next thumbnail was enlarged, it looked amazing. a brick-and-mortar store in Los Angeles in 2014 and With growing dircct-to-consumer demand and by new store openings, Nasty Gal invested in a new so that Nasty Gal's supply chain could better service its mushrooming sales. (Order cycle time refers to the order.) The company selected HighJump's Warehouse Amoruso has been a heavy user of social tools to promote her business. When she first started out, she used MySpace, where she attracted a cult following of more than 60,000 fans. The company gained traction on social media with Nasty Gal's aesthetic that could be both high and low, edgy and glossy Management System (WMS) with the goal of increas- visibility and overall productivity while keeping fill rates above 99 percent. (The fill rate is the percentage of orders satisfied from stock at hand.) Key considerations were scalability and capabili- ties for handling retail replenishment in addition to

Answer 1

Analysts state that Nasty Gal's swift growth was propelled by heavy expenditures on advertising & marketing. It is a tactic that several start-ups utilize, but one which only pays off in the long term if one-time purchasers become loyal shoppers. In this case, the inability to hold on to clients led to what is known as ‘a leaky bucket’ circumstance. Once the firm exhausted its fundraising capital & slowed down on marketing, sales started declining in 2014 & continued to do so. Some consumers found the commodity quality to be lacking. Several others were more attracted to the fast-fashion retailers like H&M and Zara, both of which deliver a broader array of trendy clothing to online & bricks-&-mortar outlets with military precision.

Also, there was a ceiling to the amount of ladies Nasty Gal appealed to; the brand’s specificity aided the firm grow — but only to a particular point.

Nasty Gal wasted funds on things that did not warrant huge expenditures.

Nasty Gal quintupled the size of its H.Q. by moving into a 50,300 sq. ft. site in Los Angeles in 2013. The offices — though a stunning showstopper visually — were far more area than the firm required.

The firm also opened a 500,000 sq. ft fulfilment site in Kentucky to run its own logistics. And the once online retailer started 2 bricks-&-mortar outlets, in LA & Santa Monica.

In the highly competitive trendy fashion industry, firms have to be operationally savvy to move commodities at a scale sufficiently large to make a profit. Nasty Gal's primarily young personnel concentrated heavily on the creative aspect instead of the business aspect.