Chapter 10 E-commerce Digital Markets, Digital Goods 415 : management system investment was designed to Galbrand was quickly saturated. There was a limit to increase wareho productivity and shorten oder the number of women Nasty Gal appealed to Nasty cycle times so that Nasty Gal's supply chain could Galda California cool, young girl look, and it was better service its mushrooming sales (Order cycle unclear how attractive it was in other parts of the time refers to the time period between placing of United States and around the world. one order aml the next order) The company selected he company selected Nasty Gal also wasted money on things that didn't Highlump's Warehouse Management System (WMS) warrant les expenditures The company quin with the goal of increasing visibility and overall pro tupled the site of its headquarters by moving into a ductivity while keeping till rates above 99 percent 50.300.square foot location in downtown Los Angeles (The fill rate is the percentage of orders satisfied in 2013- for more space than the company needed, from stock at hand) according to industry experts. The company had also Key considerations were scalability and capabili opened a 500,000 foot fulfillment center in ties for handling retail replenishment in addition Kentucky to handle its own distribution and logis to direct-to-consumer orders. Highlump's imple tics as well as two bricks and mortar stores in Los mentation team customised the WMS software to Angeles and Santa Monica. Even in the hypertrendy optimize the business process that worked best for fashion business, companies have to closely monitor an e-commerce retailer that ships most of its items production, distribution, and expenses for open straight to the customer, with a small subset going to tions to move products at a scale big enough to make retail stores. The WMS software was also configured a profit Nasty Gal's mostly youngstal focused too to support processes that would scale with future much on the creative side of the business krowth. Picking efficiency and till rates shot up. With While it was growing, Nasty Gal built its manage till rates above 99 percent, even though onder vol ment team, hiring ning junior talent from retail umelimbed outlets such as Urtxan Chutfitters. But their traditional Nasty Gal experienced tremendous growth retail backgrounds clashed with the start-up mental In its early year, being names INC Maine's ity. As Nasty Gal expanded Amor's own fame fastest growing retailer in 2012 and earning anum also grew, and she was sidetracked by other projects ber one ranking in cel Reler's Top 500 Guide in She wrote two books. The first titled Gloss, de 2016. Hy 2011, annual sales hit 524 million and then scribed the founding of Nasty Gal and Amer's nearly $100 million in 2012. However, sales started business philosophy and was adapted by Netflix into dropping to $85 million in 2014 and then $77 million a show with Amoruso as executive producer. (The In 2015. Nasty Gal's rapid expansion had been fueled series was cancelled in June 2017 after just one sa by heavy spending in advertising and marketing son) Employees complained about Amonaso's man This is a strategy used by many start-ups, but it only agement style and lack of focus pays or in the long run if one-time buyers become Amoruso resigned as chief executive in 2015 but loyal shoppers. Otherwise, too much money is spent remained on Nasty Gal's board of directors until on online marketing like banner ads and paying for the company filed for Chapter II bankruptcy on influencers. If a company pays $70 on marketing November 9, 2016. Between 2015 and 2016, Nasty Gal to acquire a customer and that customer only buys had raised an additional $24 million in equity and once from it, this company won't make money. A debt financing from venture-focused Samos Capital company that spends $200 million to make $100 mil. Partners LP and Hercules Technology Growth Capital lion in revenue is not a sustainable business. Nasty Inc. Even though the fundin helped Nasty Galsty Gal had a "leaky buckor situation: Once it burned float the company still had trouble paying for now through its fundraising capital and cut down on mur inventory, rent, and other operating expenses. keting, sales continued to drop. Within weeks of filing for Chapter 1l protection, Nasty Gal couldn't hold onto customers. Some Nasty Gal sold its brand name and other intellec were dissatisfied with prodhict quality, but many tual property on February 28, 2017 for $20 million were more attracted to fast fashion retailers such as to a rival online fashion site, the United Kingdoms Zara and HEM, which both deliver a wide array of Boohoo.com Boho is operating Nasty Galas trendy clothes through online and bricks-and-mortar standalonte website, but Nasty Gal's stores are con stores at lower prices and are constantly changing ing Roohoo believes Nasty Gal's arresting style and their merchandise. The actual market for the Nasty loyal customer base will complement Boohoo and 416 Part Three Key System Applications for the Digital Age Try 24, 2017 Shin Lay Gal Once a cha World Darling. We are: What Went Wigs , bruary 24, 2017 Sady Nasty Gali 2016, Yelena Shusty Galender Sephia Ameow Home Mar 15, 2014 expand global opportunities for growth. Many cus tomers have complained about the quality of fabric and customer service, Amoruso subsequently turned to developing Girlboss-media company that hosts a website, a podcast, and two annual conferences called the Girlboss Rally. She also launched the Girlboss Foundation, which has given out $130,000 to women-owned small businesses Cady Sophia Arth and Dikud of the Malay 24 2000 de Cinema, Gibo's Sophia Cast Charter July 20, 2018, Sun Chytlow Nasty Gal Webm 1 Million Company paywall CASE STUDY QUESTIONS 10-15 How was social media related to Nasty Gal's business model to what extent was Nasty Gala "social business? 10-16 What management, organization, and tech nology problems were responsible for Nasty Gal's failure as a business? 10-17 Could Nasty Gal have avoided bankruptcy? Explain your answer MyLab MIS Go to the Assignments section of MyLab MS to complete these writing exercises 10-18 Describe the six features of social commerce Provide an example for each feature, describing howa business could use that feature for selling to consumers online 10-19 List and describe the main activities involved in building an e-commerce presence Chapter 10 References Alt Etie, Chechender The Wilt Harvard Business Manch April Hape navid and Almeden Freem Coming om in Social Chy. No Well David San Galland Atlan Dead long time the SMUTS. Us Digitales 2008 Stateter March 2018) US Digital Vale View and lehet 2022 March 2013 Facebook memewaomb.com, Jay 2008 "Top de Prediction for 42 No (March 414 Part Three Key System Applications for the Digital Ago A Nasty Ending for Nasty Gal CASE STUDY 2006 Sophia Amoruso was a 22 year old hitch Amoroso has been a heavy use of social tools to hiking, dumpster-diving community college drop promote her business. When she first started out, she out with a lot of time on her hands. After reading used MySpace, where she attracted a cult following a book called starting an eyers for Dummie of more than 60,000 tone. The company gained tre she launched an eBay store called Nasty Gal Vintage, tion on social media with Nasty Gal's aesthetic that named after a song and 1975 athum by the jax could be both high and low, edgy and glossy singer Betty Davis, second wife of the legendary Amoniso took customer feedback very seriously Miles Davis and believed customers were at the center of ev. Nasty Gal's styling was edgy and fresh a little erything Nasty Gal did. When she sold only, she bit rock and roll, a little bit disco, modern, but learned to respond to every customer comment to hyper-trendy. Eight years after its founding Nasty Gal help her understand precisely who was buying her had sold more than 100 million in new and vintage goods and what they wanted. Amoruso said that the clothing and accessories, employed more than 350 content Nasty Gal customers created has always people, had more than a million fans on Facebook and been a huge part of the Nasty Gal brand. It was very Instagram, and was a global brand. It looked like a important to see how customers wore Nasty Gal% genuine e-commerce MIC story. Or was it pieces and the types of photographs they took. They When Amorus began her business, she did were inspiring everything here out of her tiny San Francisco Social media is built on sharing, and Nasty Gal apartment-merchandising photographing, copywrit- save its followers compelling images, words, and con- ins, and shipping She got up at the crack of dawn to tent to share and talk about each day. They could be make 6 a.m. estate sales, heled with thrift stores, a crazy vintage piove, a quote, or a behind-the-scenes spent houes photoshopping the images she styled and photo. At most companies the person maining the shot photos herself using models she recruited her Twitter and Facebook account is far removed from self, and ensured that packaging was high quality senior management Amordid not always a She would inspect items to make sure they were thor overy Nasty Gal tweet, but she still read every in good enough shape to sell. She zipped zippers comment. If the customers were unhappy about buttonedhuttons, connected hooks, folded each gar something she wanted to hear about it right away ment, and slid it into a clear plastic bag that was At other businesses, it might take months for sealed with a sticker. Then she boxed the item and tomer feedback to filter up to the CEO, When Nasty affixed a shipping lahel on it. She had to assume that Gal first joined Snapchat Amorisoteated the water her customers were as particular and as concerned with a few Snaps, and Nasty Gal followers responded with aesthetics as she was Amoruso had a photography classes at a com June 2008, Amoruso moved Nasty Gal Vintage munity college, where she learned to understand offe Bay and onto its own destination website the importance of silhouette and composition. She www nastygal.com. In 2012, Nasty Gal began selling bought vintage pieces with dramatic silhouettes clothes under its own brand Label and also invested a coat with a big funnel collar asos dress with a $18 million in a $27.000-square-foot national distribu- flared skirt, or a Victorian jacket with pulty sleeves tion center in Shepherdsville, Kentucky to handle its Exaggerating everything about the silhouette through own shipping and logistics, Venture Capitalists Index the angle from which it was photographed helped Ventures provided at least 540 million in funding Amoruso produce tiny thumbnails for eBay that Nasty Gal opened a brick-and-more store in Los attracted serious bidders. She was able to take an Angeles in 2014 and another in Santa Monica in 2015 object, distill what was best about it, and then With growing direct consumer demand and gerate those qualities so they were visible even in its higher inventory replenishment requirements driven tiniest representation. When the thumbnail was en by new store openings, Nasty Gal invested in a new larged, it looked amazing warehouse management system. The warehouse Chapter 10 E-commerce Digtal Markets, Digital Goods 415 management system investment was designed to Gal brand was quickly saturated. There was a limit to increase warehouse productivity and shorten order the number of women Nasty Gal appealed to: Nasty cycle times so that Nasty Gal's supply chain could Gal had a California cool, young girl look, and it was better service its mushrooming sales (Order cycle unclear how attractive it was in other parts of the time refers to the time period between placing of United States and around the world one order and the next order) The company selected Nasty Gal also wasted money on things that didn't MichJumps Warehouse Management System (WMS) warrant lange expenditures The company quin: with the goal of increasing visibility and overall pro tuple the size of its headquarters by moving into a ductivity while keeping hill rates above 99 percent 50.300 square foot location in downtown Los Angeles (The fill rate is the percentage of orders satisfied in 2013 - far more space than the company needed, from stock at hand) according to industry experts. The company had also Key considerations were scalability and capabil opened a 500,000-square-foot fulfillment center in ties for handling a replenishment in addition Kentucky to handle its own distribution and lots to direct-to-consumer orders. Highlampsimple tics as well as two bricks-and-mortar stores in Los mentation team come the WMS software to Angeles and Santa Monica. Even in the hypertrendy optimize the business processes that worked best for fashion business, companies have to closely monitor an e-commerce retailer that ships most of its items production, distribution, and expenses for opera straight to the customer with a small subset going to tions to move products at a scale big enough to make retail stores. The WMS software was also configured #probit. Nasty Gal's mostly young staff focused to to support processes that would scale with future much on the creative side of the business growth. Picking efficiency and fill rates shoot up with While it was growing, Nasty Gal built its manage till rates above 90 percent, even though onder vol ment team, hiringing junior talent from retail me climbed outlets such as Urban Outfitters. But their traditional Nasty Gal experienced tremendous growth retail backgrounds clashed with the start-up mental in its early years, being named ING M ity. As Nasty Gal expanded, Amoruso's own fame fastest-groning retailer in 2012 and earning anum also grew, and she was led by other projects. ther one ranking in Internet Retailer's Top 500 Guide in She wrote two books. The first, titled Girls, de 2016. Hy 2011, annual sales lit $24 million and then scribed the founding of Nasty Galand Amors' nearly 100 million in 2012. However, sales started business philosophy and was adapted by Netflix into dropping to $35 million in 2014 and then $77 million a show with Amorusos executive producer (The in 2015. Nasty Gal'smapid expansion had been fueled series was cancelled in June 2017 after just one sea by heavy spending in advertising and marketing son) Employees complained about Amor's man This is a strategy used by many start-ups, but it only agement style and lack of focus pays off in the long run if one-time buyers become Amoniso resigned as chief executive in 2015 but loyal shoppers. Otherwise, aboard of directors until 11 Chapter 10 E-commerce Digital Markets, Digital Goods 415 : management system investment was designed to Galbrand was quickly saturated. There was a limit to increase wareho productivity and shorten oder the number of women Nasty Gal appealed to Nasty cycle times so that Nasty Gal's supply chain could Galda California cool, young girl look, and it was better service its mushrooming sales (Order cycle unclear how attractive it was in other parts of the time refers to the time period between placing of United States and around the world. one order aml the next order) The company selected he company selected Nasty Gal also wasted money on things that didn't Highlump's Warehouse Management System (WMS) warrant les expenditures The company quin with the goal of increasing visibility and overall pro tupled the site of its headquarters by moving into a ductivity while keeping till rates above 99 percent 50.300.square foot location in downtown Los Angeles (The fill rate is the percentage of orders satisfied in 2013- for more space than the company needed, from stock at hand) according to industry experts. The company had also Key considerations were scalability and capabili opened a 500,000 foot fulfillment center in ties for handling retail replenishment in addition Kentucky to handle its own distribution and logis to direct-to-consumer orders. Highlump's imple tics as well as two bricks and mortar stores in Los mentation team customised the WMS software to Angeles and Santa Monica. Even in the hypertrendy optimize the business process that worked best for fashion business, companies have to closely monitor an e-commerce retailer that ships most of its items production, distribution, and expenses for open straight to the customer, with a small subset going to tions to move products at a scale big enough to make retail stores. The WMS software was also configured a profit Nasty Gal's mostly youngstal focused too to support processes that would scale with future much on the creative side of the business krowth. Picking efficiency and till rates shot up. With While it was growing, Nasty Gal built its manage till rates above 99 percent, even though onder vol ment team, hiring ning junior talent from retail umelimbed outlets such as Urtxan Chutfitters. But their traditional Nasty Gal experienced tremendous growth retail backgrounds clashed with the start-up mental In its early year, being names INC Maine's ity. As Nasty Gal expanded Amor's own fame fastest growing retailer in 2012 and earning anum also grew, and she was sidetracked by other projects ber one ranking in cel Reler's Top 500 Guide in She wrote two books. The first titled Gloss, de 2016. Hy 2011, annual sales hit 524 million and then scribed the founding of Nasty Gal and Amer's nearly $100 million in 2012. However, sales started business philosophy and was adapted by Netflix into dropping to $85 million in 2014 and then $77 million a show with Amoruso as executive producer. (The In 2015. Nasty Gal's rapid expansion had been fueled series was cancelled in June 2017 after just one sa by heavy spending in advertising and marketing son) Employees complained about Amonaso's man This is a strategy used by many start-ups, but it only agement style and lack of focus pays or in the long run if one-time buyers become Amoruso resigned as chief executive in 2015 but loyal shoppers. Otherwise, too much money is spent remained on Nasty Gal's board of directors until on online marketing like banner ads and paying for the company filed for Chapter II bankruptcy on influencers. If a company pays $70 on marketing November 9, 2016. Between 2015 and 2016, Nasty Gal to acquire a customer and that customer only buys had raised an additional $24 million in equity and once from it, this company won't make money. A debt financing from venture-focused Samos Capital company that spends $200 million to make $100 mil. Partners LP and Hercules Technology Growth Capital lion in revenue is not a sustainable business. Nasty Inc. Even though the fundin helped Nasty Galsty Gal had a "leaky buckor situation: Once it burned float the company still had trouble paying for now through its fundraising capital and cut down on mur inventory, rent, and other operating expenses. keting, sales continued to drop. Within weeks of filing for Chapter 1l protection, Nasty Gal couldn't hold onto customers. Some Nasty Gal sold its brand name and other intellec were dissatisfied with prodhict quality, but many tual property on February 28, 2017 for $20 million were more attracted to fast fashion retailers such as to a rival online fashion site, the United Kingdoms Zara and HEM, which both deliver a wide array of Boohoo.com Boho is operating Nasty Galas trendy clothes through online and bricks-and-mortar standalonte website, but Nasty Gal's stores are con stores at lower prices and are constantly changing ing Roohoo believes Nasty Gal's arresting style and their merchandise. The actual market for the Nasty loyal customer base will complement Boohoo and 416 Part Three Key System Applications for the Digital Age Try 24, 2017 Shin Lay Gal Once a cha World Darling. We are: What Went Wigs , bruary 24, 2017 Sady Nasty Gali 2016, Yelena Shusty Galender Sephia Ameow Home Mar 15, 2014 expand global opportunities for growth. Many cus tomers have complained about the quality of fabric and customer service, Amoruso subsequently turned to developing Girlboss-media company that hosts a website, a podcast, and two annual conferences called the Girlboss Rally. She also launched the Girlboss Foundation, which has given out $130,000 to women-owned small businesses Cady Sophia Arth and Dikud of the Malay 24 2000 de Cinema, Gibo's Sophia Cast Charter July 20, 2018, Sun Chytlow Nasty Gal Webm 1 Million Company paywall CASE STUDY QUESTIONS 10-15 How was social media related to Nasty Gal's business model to what extent was Nasty Gala "social business? 10-16 What management, organization, and tech nology problems were responsible for Nasty Gal's failure as a business? 10-17 Could Nasty Gal have avoided bankruptcy? Explain your answer MyLab MIS Go to the Assignments section of MyLab MS to complete these writing exercises 10-18 Describe the six features of social commerce Provide an example for each feature, describing howa business could use that feature for selling to consumers online 10-19 List and describe the main activities involved in building an e-commerce presence Chapter 10 References Alt Etie, Chechender The Wilt Harvard Business Manch April Hape navid and Almeden Freem Coming om in Social Chy. No Well David San Galland Atlan Dead long time the SMUTS. Us Digitales 2008 Stateter March 2018) US Digital Vale View and lehet 2022 March 2013 Facebook memewaomb.com, Jay 2008 "Top de Prediction for 42 No (March 414 Part Three Key System Applications for the Digital Ago A Nasty Ending for Nasty Gal CASE STUDY 2006 Sophia Amoruso was a 22 year old hitch Amoroso has been a heavy use of social tools to hiking, dumpster-diving community college drop promote her business. When she first started out, she out with a lot of time on her hands. After reading used MySpace, where she attracted a cult following a book called starting an eyers for Dummie of more than 60,000 tone. The company gained tre she launched an eBay store called Nasty Gal Vintage, tion on social media with Nasty Gal's aesthetic that named after a song and 1975 athum by the jax could be both high and low, edgy and glossy singer Betty Davis, second wife of the legendary Amoniso took customer feedback very seriously Miles Davis and believed customers were at the center of ev. Nasty Gal's styling was edgy and fresh a little erything Nasty Gal did. When she sold only, she bit rock and roll, a little bit disco, modern, but learned to respond to every customer comment to hyper-trendy. Eight years after its founding Nasty Gal help her understand precisely who was buying her had sold more than 100 million in new and vintage goods and what they wanted. Amoruso said that the clothing and accessories, employed more than 350 content Nasty Gal customers created has always people, had more than a million fans on Facebook and been a huge part of the Nasty Gal brand. It was very Instagram, and was a global brand. It looked like a important to see how customers wore Nasty Gal% genuine e-commerce MIC story. Or was it pieces and the types of photographs they took. They When Amorus began her business, she did were inspiring everything here out of her tiny San Francisco Social media is built on sharing, and Nasty Gal apartment-merchandising photographing, copywrit- save its followers compelling images, words, and con- ins, and shipping She got up at the crack of dawn to tent to share and talk about each day. They could be make 6 a.m. estate sales, heled with thrift stores, a crazy vintage piove, a quote, or a behind-the-scenes spent houes photoshopping the images she styled and photo. At most companies the person maining the shot photos herself using models she recruited her Twitter and Facebook account is far removed from self, and ensured that packaging was high quality senior management Amordid not always a She would inspect items to make sure they were thor overy Nasty Gal tweet, but she still read every in good enough shape to sell. She zipped zippers comment. If the customers were unhappy about buttonedhuttons, connected hooks, folded each gar something she wanted to hear about it right away ment, and slid it into a clear plastic bag that was At other businesses, it might take months for sealed with a sticker. Then she boxed the item and tomer feedback to filter up to the CEO, When Nasty affixed a shipping lahel on it. She had to assume that Gal first joined Snapchat Amorisoteated the water her customers were as particular and as concerned with a few Snaps, and Nasty Gal followers responded with aesthetics as she was Amoruso had a photography classes at a com June 2008, Amoruso moved Nasty Gal Vintage munity college, where she learned to understand offe Bay and onto its own destination website the importance of silhouette and composition. She www nastygal.com. In 2012, Nasty Gal began selling bought vintage pieces with dramatic silhouettes clothes under its own brand Label and also invested a coat with a big funnel collar asos dress with a $18 million in a $27.000-square-foot national distribu- flared skirt, or a Victorian jacket with pulty sleeves tion center in Shepherdsville, Kentucky to handle its Exaggerating everything about the silhouette through own shipping and logistics, Venture Capitalists Index the angle from which it was photographed helped Ventures provided at least 540 million in funding Amoruso produce tiny thumbnails for eBay that Nasty Gal opened a brick-and-more store in Los attracted serious bidders. She was able to take an Angeles in 2014 and another in Santa Monica in 2015 object, distill what was best about it, and then With growing direct consumer demand and gerate those qualities so they were visible even in its higher inventory replenishment requirements driven tiniest representation. When the thumbnail was en by new store openings, Nasty Gal invested in a new larged, it looked amazing warehouse management system. The warehouse Chapter 10 E-commerce Digtal Markets, Digital Goods 415 management system investment was designed to Gal brand was quickly saturated. There was a limit to increase warehouse productivity and shorten order the number of women Nasty Gal appealed to: Nasty cycle times so that Nasty Gal's supply chain could Gal had a California cool, young girl look, and it was better service its mushrooming sales (Order cycle unclear how attractive it was in other parts of the time refers to the time period between placing of United States and around the world one order and the next order) The company selected Nasty Gal also wasted money on things that didn't MichJumps Warehouse Management System (WMS) warrant lange expenditures The company quin: with the goal of increasing visibility and overall pro tuple the size of its headquarters by moving into a ductivity while keeping hill rates above 99 percent 50.300 square foot location in downtown Los Angeles (The fill rate is the percentage of orders satisfied in 2013 - far more space than the company needed, from stock at hand) according to industry experts. The company had also Key considerations were scalability and capabil opened a 500,000-square-foot fulfillment center in ties for handling a replenishment in addition Kentucky to handle its own distribution and lots to direct-to-consumer orders. Highlampsimple tics as well as two bricks-and-mortar stores in Los mentation team come the WMS software to Angeles and Santa Monica. Even in the hypertrendy optimize the business processes that worked best for fashion business, companies have to closely monitor an e-commerce retailer that ships most of its items production, distribution, and expenses for opera straight to the customer with a small subset going to tions to move products at a scale big enough to make retail stores. The WMS software was also configured #probit. Nasty Gal's mostly young staff focused to to support processes that would scale with future much on the creative side of the business growth. Picking efficiency and fill rates shoot up with While it was growing, Nasty Gal built its manage till rates above 90 percent, even though onder vol ment team, hiringing junior talent from retail me climbed outlets such as Urban Outfitters. But their traditional Nasty Gal experienced tremendous growth retail backgrounds clashed with the start-up mental in its early years, being named ING M ity. As Nasty Gal expanded, Amoruso's own fame fastest-groning retailer in 2012 and earning anum also grew, and she was led by other projects. ther one ranking in Internet Retailer's Top 500 Guide in She wrote two books. The first, titled Girls, de 2016. Hy 2011, annual sales lit $24 million and then scribed the founding of Nasty Galand Amors' nearly 100 million in 2012. However, sales started business philosophy and was adapted by Netflix into dropping to $35 million in 2014 and then $77 million a show with Amorusos executive producer (The in 2015. Nasty Gal'smapid expansion had been fueled series was cancelled in June 2017 after just one sea by heavy spending in advertising and marketing son) Employees complained about Amor's man This is a strategy used by many start-ups, but it only agement style and lack of focus pays off in the long run if one-time buyers become Amoniso resigned as chief executive in 2015 but loyal shoppers. Otherwise, aboard of directors until 11