Strategy and Operations, Technology

Case Study: Ellie Kai

Insider-Wang-EllieKaiWhy buy a dress when you can make one in three weeks?

Traditional retail is being disrupted. The consumer has too much choice, too much information to get through, and too many channels in which to shop. However, the consumer now demands to have an experience that is personalized with an emotional connection.

In the past year we have seen a lot of talk around omnichannel retailing, local delivery programs, and why experiencematters.

But at the end of the day with fashion apparel, it is about getting a garment that fits and flatters, that serves an occasion, and that makes one feel empowered with each wear.

Enter made-to-order brand Ellie Kai. We first met Elizabeth “Liz” Hostetter, founder and president of Ellie Kai, in 2014 in Hong Kong where she was living with her family. She told us about her experience of “being your own designer,” and how good it felt to be living in Asia designing unique product that suited her personal needs. Liz told us about her small business where she knew her clientele intimately. When the customer walked in, she knew the number of children she had, which school they attended, and what the family dog loved eating. “She might love V-necks, hate her triceps and prefer 3/4 sleeves. She doesn’t think that mid-thigh dresses flatter her; although the sales person thinks her legs are her best assets,” said Liz. We were intrigued. The marketing departments of major apparel brands would be hyperventilating to have this level of detail on their clients.

What Liz didn’t mention then was how her small business had already served 7,200 women, that she made customized product, and that she had shipped 25,000 garments in 2014 alone! So what we had assumed to be a small business really had operational legs. When we dove deeper, we recognized that there was a great business in the works. According to Liz Koons, U.S. style consultant, “Ellie Kai has it all: great products, talented women and strong corporate and philanthropic values. In addition, the clothes make women feel great.”

How it Works: Personalized On-Demand Fashion

Liz has driven Ellie Kai to embody a new model of direct selling; one that provides direct access to on-demand, personalized fashion by defining, and thus controlling, the entire supply chain. Unlike other direct sales companies, Ellie Kai’s just-in-time manufacturing model owns every part of the process—from design concept, fabric sourcing, and production (overseen by Liz herself), all the way to the company’s own sales network and clients.

Creating Passionate Brand Ambassadors

At Retail’s BIG Show 2016, digital marketing expert Kristy Sammis explained the power of authentic, customer-led storytelling to enhance brand awareness and influence purchasing decisions. Reflecting this idea, most, if not all, of Ellie Kai’s sales force were customers first. Sales consultants who run the social shopping trunk shows work directly with clients to select and customize each style. And since they are also customers, they intimately understand how to sell the merchandise. The garment is then ordered online through the website, www.elliekai.com, and sewn on-demand to a client’s specifications at Ellie Kai’s ethically monitored facility in Shenzhen, China. The garment is shipped to the client in just three weeks. Prices range from $115-$200.

Ellie Kai’s collaborative model empowers women to be “partners in design” and encourages them to build their own businesses as sales consultants. “Our typical Ellie Kai style consultant is somebody who never thought she would be in direct sales yet loves the idea of fashion, personalizing garments for clients, being busy, and getting back to work. She is someone who is very switched on and dialed up within her community,” says Liz. She adds: “The other key motivator is that women feel really empowered to be part of an organization that is mission driven—that focuses on not exploiting workers, reducing waste, and providing the best working conditions for all our employees in China.”

The Studio Experience

Today, Ellie Kai is headquartered in Boston, MA, designed, sourced, and manufactured in Asia, and sold through trunk shows across the United States. The brand is also available through the company’s website, and through two seasonal studio showrooms in Nantucket, and Boston, MA. By opening physical studios, the brand aims to increase awareness and forge closer customer relations. The big benefit of a physical pop-up space is that it’s a terrific marketing vehicle. These stores tend to be economically successful on their own and generate a huge lift in incremental shopping online. For Ellie Kai, having a pop-up store in Nantucket brought in new customers who could size and sample the collection. It also created a sense of anticipation among customers, while offering the instant gratification of an immediate sale. Customers can buy a light cashmere shawl, which they can take away immediately and wear in three weeks with their customized Ellie Kai dress.

In 2015, Ellie Kai’s business grew by 68 percent, with similar growth in personalized trunk parties; plus they shipped 40,000 customized garments. The company has demonstrated consistent growth with its unique business model. Ellie Kai is now looking to increase its network of style consultants from 90 to 160 by the end of 2016.

In today’s modern global retail environment, customers and businesses alike are increasingly empowered by digital technologies and channels. At Ellie Kai, customers can expect a seamless, relevant and personalized experience across all channels of communication. Liz has demonstrated that a traditional small business with great customer service really can pivot in a digital age to being an omnichannel success.

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