Winning with Lolly Wolly Doodle: Saving “Made in America” by being the “The Dell of Apparel”
Lolly Wolly Doodle: Being Just-In-Time with customizable fashion.
Company History:
The small economically repressed town of Lexington, North Carolina is not the first place one would expect to find an innovative start-up that has attracted tens of millions of dollars in investment from the likes of billionaire American Online co-founder Steve Case. (1) Lolly Wolly Doodle (LWD), however, has done just that.
The company’s founding in 2008 can be traced back to the humble living room of owner and founder Brandi Temple. At the time, Temple and her husband were financially down on their luck, which forced Temple to save money by sewing clothes for her daughters as opposed to buying them. Realizing that she had extra product she placed the extra“inventory” for sale on e-Bay and it was gone in a matter of minutes. (1) That pivotal moment in 2008 was the last time that Temple would have excess inventory. Since that day, the company has transformed into a $10 million dollar plus company that the likes of Steve Case believe can be a billion dollar company. (1)
Using a just-in-time production process, Temple has taken what Dell did to the computer industry and applied it to women and children’s clothes, creating a direct-to-consumer, highly customizable clothing line. (1) Using this operating model, she has saved incredible amounts of inventory costs, eliminated inventory risk, avoided having to source products from abroad where humans are forced to work in inhumane conditions, and has created a “Made in America” brand that can compete on price with large international production firms. Temple has accomplished all of this through incredible alignment between LWD’s operating and business models.
Business Model:
LWD’s business model is captured in the company’s moto “You Design-We Make”. The company’s success has been the result of two key business model decisions. First, the company targeted the underdeveloped market for reasonably priced, customizable clothes for women and children. Second, the company doesn’t need to spend any money on marketing or advertising, but rather it can organically generate free advertising and earned media by doing most of its business through social media, including its 1.2 million Facebook friends (10-15% of which LWD interacts with regularly) and 25,000 Instagram followers. In particular, LWD generates over 60% of its sales through Facebook, making it the largest business in the world successfully transacting on Facebook (2).
Operational Process:
Derived in conjunction with a business model that requires customizable products at reasonable prices, the operational model accomplishes both of these goals. The operational process is built on two pillars. First, that the company avoids inventory risk by not creating a product until there is demand. Second, that fashion and design are highly customizable and ever evolving. This means that the company’s products should constantly be in an iteration cycle and looking to improve.
In order to understand the alignment between the two, one must understand, at a high level, the company’s operational process (described below):
- LWD posts a prototype for a type of clothing on its Facebook page
- If a customer likes a product they can simple comment on the photo with their e-mail address, size, any specific alterations or customization and quantity of product desired and LWD will send them an invoice. (A customer can also do this through the phone or through LWD’s website directly if worried about security.)
- Once the company receives the payment, the fabric is cut and production of the order starts.
- For efficiency, items are batched together by the similarity of sewing required to minimize the number of seamstresses required to touch an individual product. (See below for an image from the shop)
- Item is completed and shipped to the customer. (This usually happens in about a week from receipt of the order).
- If enough of a certain variety of product is ordered the company labels it a “winner” and continues to iterate on that product to the point where they can present another prototype on Facebook or their website. (2)
Conclusion:
Through alignment of the business and process models three major synergies are realized.
- By using Facebook as a platform for business, the operational process is able to iterate designs off of insights gained from customer’s commenting, liking, sharing and ordering the products on Facebook.
- A business proposition that is based on customizable products, requires a highly customizable operational process. The just-in-time production system, in conjunction with the use of humans instead of machines as the primary source of labor, allows for a highly customizable process.
- The business proposition demands reasonable prices. By using an operational model that eliminated inventory costs and inventory risk the company has been able to do just that.
Sources Quoted:
- http://blogs.wsj.com/venturecapital/2013/06/13/steve-cases-revolution-growth-leads-20m-investment-in-lolly-wolly-doodle
- http://www.inc.com/magazine/201406/tom-foster/lolly-wolly-doodle-explosive-growth-from-facebook-sales.html
Other Sources Used:
1. http://www.dailyfinance.com/2014/05/15/small-business-success-brandi-temple-and-lolly-wolly-doodle/
2. http://www.inc.com/magazine/201406/tom-foster/lolly-wolly-doodle-business-model.html
3. http://www.inc.com/jill-krasny/5-most-innovative-business-models-inc-500.html
Doug!
I was drawn to your post by the name of the company—I was intrigued by what kinds of products a company called “Lolly Wolly Doodle” makes. 🙂 I may or may not be gifting those “customizable blankets” to everyone in my family this year.
Anyhow, I would not have thought that the operations of a clothing company could be analogous to that of Dell, but the operations of Lolly Wolly Doodle seem pretty seamless.
I’m wondering about what Lolly Wolly Doodle might have to change about their business and operating model as they seek to expand. Currently, it seems like they focus mainly on direct-to-consumer methods (through Facebook or their online store). What do you think about other potential distribution channels? For example, currently, Dell sells computers through retailers like Best Buy or Costco. Do you think LWD’s just-in-time manufacturing would be able to provide products to these channels to expand future sales?
It is interesting that they have managed to keep their advertising spend to only their company page on Facebook, but do you think that they are pursuing other, more mass-advertising methods? I, for one, had never heard of Lolly Wolly, so perhaps they will need to expand from this part of their business model. Their monogrammed items reminded me a lot of the items in L.L. Bean mail catalogs, however, so perhaps those may be another option.
Perhaps LWD is ok with its niche market of customizable clothing, as it is trying to build a smaller yet stronger brand, in which case expansion wouldn’t really be a concern. But it seems like other large clothing manufacturers may be able to take away something from LWD’s operations as well!
Great post! Thanks for the introduction to LWD!
Alison
Alison–thanks for the comments! I agree with most of your questions. I think that they will look to expand channels. A few things I thought they could potentially do is partner with a big retail chain and offer an “in-store” display and ordering system. This could keep there operating and business models aligned. They could view the expense of entering the store more of a “marketing” expense. Additionally, I believe they are probably missing a good portion of their target customer base by being so focused on internet sales. A direct mail campaign to drive customers to use their hotline (with customers that are not internet savvy) could be a cheap way to drive more business. It will be really interesting to watch them grow! Thanks again. Doug
Great to read about an all American company that so does well in such a competitive industry!
After reading your discussion, I had the following 3 questions:
• LWD’s innovation process reminds me of Threadless, whose community members vote on the first ‘decision’ point in the innovation funnel. LWD’s Facebook friends seem to provide a similar role, though there is no voting involved – and it seems that any ‘like’ will yield production of the garment (whether it’s number 1 or 1,000). I am curious to understand how LWD goes about prototypes generating very little interest, and therefore do not lend themselves to batching? Is there a minimum threshold of likes – and how are consumers informed of this? To understand how likely this scenario would be, I’d be interested to know how many SKUs LWD presents at any given point – and what’s the average length of presentation online?
• Another distinction between Threadless and LWD is the sourcing of designs; the former uses its community for this and the latter performs this in-house. Given the unique following that LWD has created (1.2 million Facebook friends and 25,000 Instagram followers sounds impressive) – I can imagine there is great potential for LWD to involve consumers more actively in the prototype design process. So instead of iterating with the consumers based on a LWD prototype, let them ideate on how the prototype should look like in the first place. For instance, could there be a Facebook forum where LWD followers can discuss garments they would really like to see produced?
• Since a majority of sales is achieved through Facebook LDW faces constraints that it would not have faced if it had only sold through its own website. A key limitation in my view is the ability to price flexibly, i.e. explore and exploit different prices in different geographies/ age groups / educational background. I would be very interested in understanding how much value capture LDW is leaving on the table through its inability of flexible pricing – especially given the wealth of data they have about the background of their consumers through the social media channels