Founded in 2015, M.Gemi is a direct-to-consumer high-end Italian footwear brand for both man and women. Each pair is hand-made and offered at a price point between $198 and $598. New models are released on a weekly basis. In the last 18 months, the company has opened two \u201cfit shops\u201d (Boston, New York). When the customer purchases a pair of shoes, the transaction flows through their online account and is delivered straight to their homes.<\/p>\n
The company was founded by Maria Gangemi, Cheryl Kaplan, and Ben Fischman, and has currently raised $47.2mm 1<\/sup> through VC funding.<\/p>\n <\/p>\n An industry ready for digital disruption<\/strong><\/p>\n The business model of the designer footwear industry has remained stable for decades. Via digitization, M.Gemi has found a way to provide faster, better, and cheaper luxury footwear to consumers:<\/p>\n <\/p>\n Customer-centric supply chain through data collection<\/strong><\/p>\n M.Gemi has managed to incorporate both online and offline customer feedback into both the design process and production forecasting.<\/p>\n Online, data is collected through their website and the weekly newsletter. Each Monday, M.Gemi sends the \u201cMonday Drop\u201d, promoting their new models. Their tools allow to instantly track consumer clicking and purchasing behavior, which enables them to respond quickly to consumer preferences, by either ordering more inventory of some models, sizes, or colors, or adjusting designs to consumer preferences. In addition, the M.Gemi website allows to pre-order new styles and to add your name to waitlists for models that have sold out. This data directly feeds into the supply chain, adjusting production volumes.<\/p>\n Through their retail stores, M.Gemi has found an elegant way to bridge online and offline experiences. While in store, the Sales Associate tracks the customer in the database. This allows for a more personalized experience, as the Sales Associate can now look up previous purchases and returns. As the stores are \u201cfit shops\u201d and don\u2019t actually sell products, the Sales Associate will add the desired products to the customer\u2019s online cart. The customer can check out online, and have the products shipped directly from the warehouse to their desired address. Cheryl Kaplan, President of M.Gemi, states that \u201cthose who do shop both channels spend more money with the brand overall.\u201d4<\/sup><\/p>\n <\/p>\n Future opportunities<\/strong><\/p>\n M.Gemi should continue driving customer engagement, both online and offline. According to Kaplan, one of the biggest challenges M.Gemi faces in converting shoppers to make their first purchase online. Their policy of \u201cFree Shipping, Free Returns \u2013 Always\u201d5<\/sup> may not be enough for customers to start buying the shoes. Increasing the amount of fit shops in major cities will allow for both greater brand awareness and higher conversion rates.<\/p>\n <\/p>\n Open questions<\/strong><\/p>\n How scalable is this business model, given that M.Gemi works with small Italian manufacturing firms, which are limited in presence and capacity?<\/p>\n How easy is it to copy this model?<\/p>\n <\/p>\n (789 words)<\/p>\n References:<\/p>\n\n
\nAll models are produced in small volumes<\/strong>. Behavioral analysis predicts that customers are more likely to buy a product when they sense that availability is limited. It is estimated that the majority of product styles sell through 50% of inventory in their first week3<\/sup> , partly due to the scarcity effect.
\nOnline and offline data collection enables a customer-centric design<\/strong> and production process<\/strong>. Product feedback is directly looped back to the design team and production forecasting unit. For example, when a model experiences high returns, the designers will adjust the model, or halt production.
\nThe combination of scarcity, frequent new releases, and a customer focus results into a higher potential purchase rate.<\/li>\n
\nOnline, a possible approach could be to drive more interactivity by creating an online loyalty program. Each time a customer reviews a past purchase, he\/she could be rewarded with loyalty points, that could either be saved for exclusive (offline) events, or for product discounts.
\nOffline, the company could host events in their stores for valued customers. Customers would sign up through their online profiles, allowing M.Gemi to track customer interest.<\/p>\n