ModCloth: Using Social Networking Technology to Build an Online Retailer
In 2006, Eric Koger and Susan Gregg Koger started ModCloth, a web-based vintage clothing retailer, using leading-edge social-networking techniques to market the company and build a community of dedicated customers. Today, the company employs 30 in the Pittsburgh area.
Judging from the current economic meltdown, where icons of economic stability are falling left and right, “business as usual” just isn’t cutting it anymore. ModCloth, a web-based vintage clothing retailer, knows this-and it’s thriving because the company embraces change.
“We are bringing new technology to an old industry,” says CEO Eric Koger from his Pittsburgh office. “There has never been an easier time to reach customers. We have tools at our disposal that didn’t exist 10 years ago.”
ModCloth started as an obsession of his then-girlfriend Susan Gregg Koger, who is now his wife and business partner. After gaining some initial traction while she was obtaining her undergraduate degree at Carnegie Mellon University, the business became a full-time pursuit in 2006. The two built a team of employees, most of whom are members of the company’s customer demographic. In fact, more than 60 percent of ModCloth’s 30 full-timers fit the company’s target demographic—the fashion-conscious young female who views unique clothing as a way to distinguish herself.
“We have an intimate understanding of who she is, where she is, what she likes and how she’ll be driven to action,” Koger says.
Investing in New Technology
Koger knew that in order to succeed, his technology platform had to be leading edge. Marketing efforts needed to have laser-sharp focus and embrace social networking sites like Facebook, MySpace, Twitter, Google and popular style and fashion blogs.
“We go well beyond e-marketing,” he says. “Our approach enables us to zero in on the key demographic, understand where she is online, capture a 360 degree view of her interests and connect on as many fronts as possible.”
Building a business based on leading-edge technology requires serious startup capital, so the company turned to Innovation Works, the Ben Franklin Technology Partner (BFTP) of Southwestern PA. In May 2008, BFTP invested $100,000 n ModCloth, seeing serious potential in the forward-thinking company’s business model and technology focus.
“BFTP’s assistance has been invaluable,” says Koger. “The funds helped us scale the team, build up inventory and fund our proprietary e-commerce platform. But the value went way beyond the dollars. They opened a lot of doors for us, helped hone our pitch for angel investors and gave us invaluable credibility.” Koger also credits BFTP with helping them identify solid resources critical to their growth, including guidance on insurance and HR best practices.
Striking a Chord with Customers
The response has been overwhelmingly positive. While most retailers showed a slump in sales last year, ModCloth saw 600 percent growth. December was the company’s most successful month ever, with more than a million people shopping on the site.
Marketing through social networking sites like Facebook is no secret, but it is challenging. “Getting these women to leave the site they are on is the biggest hurdle, but we’ve become very good at it by tapping into their social community orientation.” ModCloth creates its own sense of community by enabling customers to be contributors to the site. For example, over the holidays, customers were asked on a daily basis to give names to different products with the opportunity to win the products.
“We received thousands of submissions,” Koger says. “We’ve created an experience where our customers are in the driver’s seat for how we merchandise products, and that resonates extremely well with our target audience.”
Providing a Feeling of Ownership
Soon ModCloth members will get to suggest and vote on new clothing and accessories that the site should carry. Those who vote consistently in line with the community consensus will earn status in the community and may be asked to contribute features, blogs or other input.
“We are creating a total social experience on our site by taking customer focus to the extreme, where they are both producing the site and consuming the product,” says Koger. “Our customers feel it’s ‘their’ store.”
Koger credits the team, the technology and repeat customers with the company’s success in 2008. “We also had a number of new marketing initiatives hit. The largest was a Facebook campaign, which accounted for about 20 percent of our growth. We’ll continue to take the concept of the niche online community to the next level as a key driver of our business.”
Tags: internet technology, social media marketing, filed under News, Southwestern PA 