‘Inventory is a huge problem’: DTC brands are using limited quantities and the drop model to get off the ground
Several direct-to-consumer fashion brands have launched in the last year that use a monthly drop model. The goal is to roll out limited qualities of products to minimize waste and keep production costs low while the new brands find their bearings.
Je Ne Sais Quoi (JNSQ) and Choosy have both adopted these drop models, pushing their sustainable messaging to millennials and Gen Z through social media.
“While a traditional fast-fashion player might take a bet on a trend months out, and be wrong about that bet and be stuck with the inventory, we are never in a position where we own a huge amount of inventory of a trend that the customer is not interested in,” said Tracey Lomrantz Lester, vp of brand marketing at Choosy.
Choosy uses artificial intelligence that can sort through trends across social platforms. The brand, which raised $5.4 million in funding last year, marries that with feedback it gets through Instagram polls sent to its 91,600 followers on color preference, silhouettes and trends.
“[The algorithm] gives us a daily report of what’s trending most across 95 million Instagram posts daily. We then have a five-person in-house design team that creates styles based on those inputs, and those end up in customers’ hands via a monthly drop model,” she said.
That process, from gathering data to dropping a new style, takes the brand 21 days. Data collected from Instagram and the brand’s own algorithm also helps Choosy determine how much of a specific item it should make, avoiding waste. If there’s a lot of response to an Instagram poll and the brand gets a lot of direct messages about a potential product, then it will make more of that product. Once a product sells out, the brand uses waitlists to determine how much of the product it should reorder and make, and can restock within days.
“The waitlist function is a very helpful predictive tool because there are some styles where we [at Choosy] are not feeling it anymore, but if we have 400 people on the waitlist, then it’s a pretty good indicator that we should fulfill those orders,” she said. “The best part is we don’t get in a situation where we say we own 1,000 units of some trend and it’s not moving. We never have to think about markdown. We can avoid a lot of the traditional retail pitfalls because we are never stuck with a surplus of inventory.”
A recent survey from marketing agency Element Three found 87% of millennials in the U.S. are willing to pay more for products from sustainable brands. While cutting back on waste and connecting with younger shoppers is key for these brands, the adoption of drop models and limited quantities upfront also means less risk and less cost for the brands out of the gate.
JNSQ, which launched in April, takes a similar approach, rolling out 10 to 30 new styles every month. However, JNSQ isn’t using AI and data to inform how many pieces should be made. It makes just 50 pieces of each style (all are available in sizes 2 to 10, but the brand is looking to expand its size range down the line), and once a garment sells out, it likely won’t be remade. The brand works with high-end materials, including mulberry silk, which would mean high costs for the brand should it produce styles that don’t sell.
“Inventory is a huge problem; [waste] is very harmful to the environment. Once you buy one of our items, it’s one of the 50 in the world right now,” said Malcolm Yam, CEO and founder of JNSQ. “We make sure every piece is delivering quality, that we make it carefully and also that it’s unique to the customer.”
JNSQ uses digital and email marketing to spread the word about the brand, but influencer marketing makes up the bulk of the brand’s marketing spend, Yam said. Currently, JNSQ works with about 100 influencers of various sizes, sending them product to test out and working with them only if they like the styles and quality of the products. The brand is also using influencers and its own social channels to raise awareness about its new, free membership program, launching in the coming weeks. In the future, members will have first access to drops, giving them a chance to score a limited quantity style before anyone else.
“We make fewer pieces because we know that the season is going to change, styles are going to change. We don’t do too much edgy, trendy stuff. We want to make sure the customer is actually wearing the clothes,” he said.
Since launch, Yam said the brand has sold hundreds of items and currently only has about 30 to 40 pieces left in its inventory, with the next drop coming in a few weeks.