One startup retailer is breaking the cycle of deep discounts and might be starting a retail revolution in the process.
JackThreads CEO Mark Walker had a problem: He was successful at moving a lot of merchandise fast, but his online men’s clothing business had come to rely on flash sales that didn’t drive the kind of revenue he needed to keep investors interested long-term. As Recode recently reported, JackThreads had grown rapidly since its founding in 2008 but had come to be known among its customers for flash sales.
"We were guilty of talking out of both sides of our mouth because we wanted to make top-line revenue goals," Walker told the outlet. "We were continuing to send 10 to 14 emails a week to our guy, and we were still relying on the 25-percent-off-all-boots."
After some tough love from his board, Walker's task was clear: get out of the “death spiral of discounting." He and his team came to the realization that you can't build loyalty among customers and expect to make money if you only attract customers who shop with you during a sale. And as the flash sale fad comes to a close, many online retailers are looking to replace this gimmick with something that has more lasting power.
The big pivot for JackThreads came in the form of the "Tryout." As Recode explains, JackThreads’ new approach makes everything on the site — that’s the JackThreads' line of clothing, as well as all other brands offered — free of delivery charges and free of return charges. There’s no minimum spend threshold to receive the free shipping, and what’s even better, once a customer orders a piece of clothing, they have seven days to decide whether they like it enough to keep or if they’d like to make a (no charge) return.
It admittedly sounds like a risk, but it’s one that Walker believes is going to pay off big for his company. The move also means delaying payment on shipped merchandise by a week. To accommodate the shift, JackThreads is reallocating money from its online advertising campaigns to make up the difference.
JackThread’s customers will have to be weaned off of the deep-discount model they were used to, but the Recode reporter (who tried the service and found that it did lower his inhibition to order more clothes) thinks that innovations like this are going to have to become the norm as more and more retail business moves online.
"In the end," Walker said, "we're trying to bring the fitting room into the online experience."