{"id":4537,"date":"2015-12-09T07:09:26","date_gmt":"2015-12-09T12:09:26","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/realizing-growth-through-the-potential-of-e-commerce\/"},"modified":"2015-12-09T07:09:26","modified_gmt":"2015-12-09T12:09:26","slug":"realizing-growth-through-the-potential-of-e-commerce","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/realizing-growth-through-the-potential-of-e-commerce\/","title":{"rendered":"Realizing Growth Through the Potential of e-Commerce"},"content":{"rendered":"

Bonobos is an online retailer that was founded in 2007 to address a perceived gap in the men\u2019s retail clothing sector \u2013 specifically the fit of men\u2019s casual pants.\u00a0 From the company\u2019s inception, they have carefully and effectively aligned their business model with their operating model in order to penetrate the men\u2019s clothing industry.\u00a0\u00a0 With the stated mission of becoming a vertically integrated retail store in the e-commerce era, Bonobos has successfully created a product line and a service experience that their customers value, and executed on this model through a hybrid of online and brick and mortar store fronts\u00a0(Business of Fashion, 2013).<\/p>\n

\"Andy<\/p>\n

[Andy Dunn, Co-Founder and Chief Executive of Bonobos]<\/p>\n

Bonobos\u2019 business model has been to create clothing that fits their customers and deliver this clothing in a hassle free and time conscious manner.\u00a0 Co-founders Andy Dunn and Brian Spaly had two important observations about their customers\u2019 behavior in the men\u2019s retail clothing industry that led them to this model:<\/p>\n

    \n
  1. A trend toward more tailored, slimmer fitting clothing that reduced excess material.<\/li>\n
  2. The purchasing behavior of men, particularly millennial men (ages 18-34), which was skewed toward e-commerce and the hassle free experience which it offered.<\/li>\n<\/ol>\n

    \"Lightspeed\"<\/a><\/p>\n

    [Lightspeed Venture Partners]<\/p>\n

    Bonobos built an effective operating model that capitalized on these insights by delivering their products through their online store and physical Guideshops, while simultaneously leveraging customer service representatives, termed \u201cninjas\u201d to ensure a superior consumer experience.\u00a0 The success of this model was predicated on realizing growth through the potential of e-commerce, while securing margins through brand equity (Chen, n.d.).<\/p>\n

    By not burdening themselves with the traditional brick and mortar store fronts, Bonobos was able to scale more quickly and focus on their product line, as well as customer acquisition.\u00a0 In the traditional retail model, companies were forced to balance the use of their employees\u2019 time between serving the customer and operating the store \u2013 namely managing and displaying the inventory\u00a0(Chen, n.d.).\u00a0 Typically this equation results in either higher labor costs or reduced customer satisfaction.\u00a0 Additionally, careful management of where and when to open new stores could be a cumbersome task for any retail clothing business, but arguably most potently for a new business.\u00a0 The capital intensive nature of operating a traditional store front, as well as the logistical challenges with adequately supplying it (inventory management), can stretch the managerial capabilities of any entrepreneur, and force their focus to stray from product innovation.\u00a0 Bonobos avoided this path, and instead focused on the first component of their business model – namely creating clothing that fit and that their customers valued.\u00a0 They\u2019ve since expanded their product line which now includes everything from active wear to suits and most things in between (Bonobos, n.d.).<\/p>\n

    Bonobos decision to open a limited number of physical locations where customers could make an appointment to visit and try on clothing before purchasing marked an important decision point for their continued growth\u00a0(Thau, 2015).\u00a0 By pursuing this strategy, they stayed true to the second component of their business model \u2013 a hassle free shopping experience.\u00a0 Although their targeted customers may not want to purchase clothing through the traditional channels, there were obvious benefits to being able to physically experience the clothing before making a purchase decision.\u00a0 The online shopping experience is prone to customers ordering incorrect sizes, which leads to delayed order fulfillment as customers are forced to return products and reorder in the appropriate sizes.\u00a0 This runs counter to Bonobos\u2019s model, and the introduction of Guideshops was an innovative solution that allowed its customers to try on clothing before purchasing without forcing these shops to carry inventory for sale \u2013 there was only enough inventory to allow customers to experience the full product line in varying sizes.\u00a0 Bonobos\u2019s decision to create Guideshops further demonstrated the alignment between their business model and operating model.<\/p>\n

    \"Guideshop\"<\/a><\/p>\n

    [Bonobos Guideshop]<\/p>\n

    The ultimate success of Bonobos is still unclear.\u00a0 They are certainly not immune to the challenges of navigating through a series of fundraising events and meeting lofty expectations set by optimistic valuations.\u00a0 Continuing to design and produce clothing that their customers want, while innovating along distribution channels and effectively managing inventory will present ongoing challenges for Bonobos as it does most clothing retailers.\u00a0 The pressures to scale and cross the threshold to profitability will remain daunting, but at least for now, they\u2019ve maintained alignment between their business and operating models.<\/p>\n

     <\/p>\n

    References<\/h1>\n

    Bonobos. (n.d.). Bonobos<\/em>. Retrieved from Bonobos.com: https:\/\/bonobos.com\/<\/p>\n

    Chen, J. (n.d.). Joy Chen of Strategy<\/em>. Retrieved from http:\/\/cargocollective.com\/joychen\/Reinventing-Retail-A-Bonobos-Case-Study<\/p>\n

    KANSARA, V. A. (2013, July 19). Business of Fashion<\/em>. Retrieved from http:\/\/www.businessoffashion.com\/articles\/founder-stories\/founder-stories-andy-dunn-on-building-the-giorgio-armani-of-the-e-commerce-era<\/p>\n

    Thau, B. (2015, July 8). Forbes<\/em>. Retrieved from Forbes.com: http:\/\/www.forbes.com\/sites\/barbarathau\/2015\/07\/08\/bonobos\/<\/p>\n","protected":false},"excerpt":{"rendered":"

    A vertically integrated retail store in the e-commerce era, Bonobos has successfully created a product line and a service experience that their customers value.<\/p>\n","protected":false},"author":878,"featured_media":4538,"comment_status":"open","ping_status":"closed","template":"","categories":[4,194,663],"class_list":["post-4537","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-effective","category-operational-innovation","category-product-innovation"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nRealizing Growth Through the Potential of e-Commerce - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/realizing-growth-through-the-potential-of-e-commerce\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Realizing Growth Through the Potential of e-Commerce - 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