ModCloth for Indie Designer
(Post: English)
But Eric and Susan Koger, the husband-and-wife team that launched ModCloth in 2002, near the end of their freshman year at Carnegie Mellon University, have managed to raise a little over $3 million from angels like StubHub co-founder Jeff Fluhr and venture capital firms First Round Capital and Maples Investments.
ModCloth's inventory strategy helps explain its success.
Eric says Susan and her buyers build rapport with independent designers, try to get payment terms of net 30, and normally sell 70% to 90% of the goods within the net-30 period.
"We can turn our inventory faster than we have to pay for it. That's enabled us to scale as fast as we have."
Being online only and located in Pittsburgh keeps operating costs low, too.
ModCloth employs 104 people—mostly young women who, Eric says, "come at it from a perspective that's truly aligned with the customer, because they are our customers" - up from 22 people a year ago.
The company became profitable in 2007 but wasn't in 2008, largely because it spent a lot of money to redesign its Web site - which now gets more than 1.25 million unique visitors a month.
Eric says ModCloth has around $1 million a month in sales and forecasts more than $15 million total in 2009.
INFO:
The Company: ModCloth
What It Does: Online marketplace for indie designer fashion and decor
Founders: Eric Koger, 25, and Susan Koger, 24
Based: Pittsburgh
Source: BusinessWeek
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