A. nasty ending for Nasty Gal PDF

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A nasty ending for Nasty Gal...

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MIS presentation Summary - Nasty Gal Vintage was an e-commerce retailer that focuses on new and vintage clothing, shoes, and accessories for young women. Its styling was edgy and fresh—a little bit rock and roll, a little bit disco, modern, but never hyper-trendy. - Founded by Sophia Amoruso, a 22-year-old community college dropout who had recently been fired from a high-end shoe store, Nasty Gal was launched on ebay in 2006 which was inspired by a book that Amoruso had read called Starting an eBay Business for Dummies. -

Eight years after founding, Nasty Gal had sold more than $100 million in new and vintage clothing and accessories, employed more than 350 people, had more than a million fans on Facebook and Instagram, and was a global brand.

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Amoruso did everything by herself including merchandising, photographing, copywriting, and shipping. To promote her business, she has used many social tools and when she first started out, she used MySpace, where she attracted a cult following of more than 60,000 fans.

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Amoruso took customer feedback very seriously and believed customers were at the center of everything Nasty Gal did. When she sold on eBay, she learned to respond to every customer comment to help her understand precisely who was buying her goods and what they wanted. She said that the content Nasty Gal customers created has always been a huge part of the Nasty Gal brand.

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In June 2008, Nasty Gal Vintage was moved off eBay and onto its own destination website, www.nastygal.com. In 2012, Nasty Gal began selling clothes under its own brand label and also invested $18 million in a 527,000-square-foot national distribution center in Shepherdsville, Kentucky, to handle its own shipping and logistics. It also opened large physical stores in diferent states in the US.

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With the investment of a new warehouse management system and other factors, Nasty Gal experienced tremendous growth, being named INC Magazine’s fastestgrowing retailer in 2012 and earning a number one ranking in Internet Retailer’s Top 500 Guide in 2016.

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However, after a few years, annual sales started to drop and the business encountered problems such as huge expenditure on advertising and marketing and wasted money on things that have no benefit for the company that lead her to sale the brand name at the beginning of 2017 and close its stores.

1. How was social media related to Nasty Gal’s business model? To what extent was Nasty Gal a “social” business? There is no doubt that social media has help serval business growing up and contributed to its business models, basically. The idea of Nasty Gal generated from an online space, as mentioned before, Amoruso has been a heavy user of social tools to promote her business, she start with MySpace account and attract more than

60000 fans on it , in addition to a million fans on Facebook and Instagram. Since her target market was large enough, she took her business to eBay to attract an even more diverse set of buyers. Further, she utilized the opportunity and created her own website to sell her products on. One of the main reasons she was able to attract such a broad audience was due to her creative marketing strategies. Social media is built on sharing, so to grab the consumers attention, Nasty Gal gave its followers compelling images, words, and content to share and talk about each day. They could be a crazy vintage piece, a quote, or a behind-the-scenes photo. She was also very considerate of customer feedbacks further contributing to the social aspect of her business since her belief was that customers were at the center of everything Nasty Gal did. If the customers were unhappy about something, she wanted to hear about it right away whereas, at other businesses, it might take months for customer feedback to filter up to the CEO. Therefore, The extent of how Nasty Gal was a “social media” business was to which where all growth in social media was needed to reach her target customers so they could visit her website and they could buy. 2. What management, organization, and technology problems were responsible for Nasty Gal’s failure as a business? Nasty Gal was an organization wanted to grow quickly and rapidly. Nasty Gal’s rapid expansion had been fueled by heavy spending in advertising and marketing. This is a strategy used by many start-ups, but it only pays off in the long run if one-time buyers become loyal shoppers. Otherwise, too much money is spent on online marketing like banner ads and paying for influencers. If a company pays $70 on marketing to acquire a customer and that customer only buys once from it, the company won’t make money. Nasty Gal had a “leaky bucket” situation: Once it burned through its fundraising capital and cut down on mar- keting, sales continued to drop. From management perspective, while the business was growing, Nasty Gal built its management team, hiring sizzling junior talent from retail outlets such as Urban Outfitters. But their traditional retail backgrounds clashed with the start-up mentality. As Nasty Gal expanded, Amoruso’s own fame also grew, and she was sidetracked by other projects which caused many complaints from the employees about Amoruso’s management style and lack of focus. From a technological stanpoint, companies will go for years on end without being profitable in exchange for scale, which is hard for apparel companies, that must create loyalty and repeat customers, not quick hits, in order to pay up front for physical inventory. Nasty Gal’s mostly young staff focused too much on the creative side of the business and not paying enough attention to all the other expenses that could have been optinized to perfrom better and more efficiently handle their inventory, distribution and logistic. Even in the hyper-trendy fashion business, companies have to closely monitor production, distribution, and expenses for operations to move products at a scale big enough to make a profit. 3. Could Nasty Gal have avoided bankruptcy? The answer is yes. Nasty Gal could have avoided bankruptcy if it had not focused on excessive growth without having the merchandise and the customers for it. Growth is indeed important, however, maintaining liquidity and profit matters more. E – commerce brands need to look at what real customers want to wear, not just the assumption what fits their profile. While clothing is individual, Nasty Gal’s clothing is

not as wearable and versatile as their competitors such as Zara and H&M, which both deliver a wider array of trendy clothes through online and bricks-and-mortar stores at lower prices and are constantly changing their merchandise....