Susan Gregg's closet was stuffed with vintage clothing and shoes. She couldn't possibly wear them all, and she didn't have space for new purchases. So she did the only thing a budding entrepreneur could do: start her own business. Gregg and her then-boyfriend (now husband), Eric Koger, launched a quirky, retro online vintage clothing boutique called ModCloth.com, selling fashion from independent designers and their own ModCloth-branded lines.

Within two years, the site netted 60,000 visitors a month, and in a recent year revenue growth of 50%. After graduation, the couple married and grew the business by hiring designers to create an allnew, indie, retro-style line.

Recently ModCloth launched a wedding collection, ranging from boho-chic to beach bride. ModCloth plans to expand product lines to include intimates, athletic wear, accessories, and even home goods.

In addition, a temporary West Coast shop was launched as a “fit shop” to provide women, mainly in their 20s and 30s, a place where they can try on more than 100 items of clothing prior to placing an order online for two-day shipment. In addition to pop-up shops, the company recently hired a vice president of stores and retail operations to expand its bricks-and-mortar presence to become a clicks-and-mortar phenomenon offering quirky vintage appeal.

In a recent year, ModCloth was acquired by Walmart for close to $75 million, which came as a shock to the brand's fans. Subsequently the brand has struggled, due mainly to increased online competition.

When Walmart, in its strategy to build its fashion brands, included the acquisition of ModCloth, the company assured its longtime customers that Walmart's deep pockets would allow for a better and continued shopping experience for the unique brand.

Questions for Critical Thinking

1. Can you think of other e-commerce companies that have added retail stores? How do the two business models differ?

2. What kind of e-business could you run from your current residence? What tips might you take from the founders of ModCloth?