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.
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).
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)
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.
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