Retail

Building The ‘Anti-Subscription’ Model For Online Kids’ Apparel

children's clothing

Outfitting children can be a shockingly expensive proposition for parents. According to the United States Department of Agriculture, families might spend up to $1,280 annually on clothing, and over the 18 years formally designated as childhood approximately 6 percent of the total cost of parenting will go toward clothing. And given the average U.S. household income is $63,000 according to the Census Bureau, the average family is spending about 1 percent of their annual income buying their kids clothes. 

Or, as Kids on 45th Founder Elise Worthy put it, “too much,” particularly considering amount of new and nearly new kids clothes that are getting dumped into landfills each year. And so two years ago Worthy purchased a local physical thrift shop in Seattle that was on the doorstep of shutting down — the eponymous Kids on 45th — and decided to expand its mission. She wanted to not only do what the firm had done for the roughly three decades it had been in business — sell high-quality, lightly used and tags-on new children’s clothes — but also to think bigger and take the store and its mission online and into the digital age with a new business model more suited to the needs of modern parents.  

In short, she put consignment on subscription for parents. 

But, she noted, with an awful lot of adjustment made for how parents actually shop — and what they are actually looking for when it comes to children’s clothes. Among her first observations when she began operating Kids on 45th is that moms who came into the store weren’t exactly hitting the door with a styling vision in mind — they wanted whatever clothing item it was that they suddenly found they needed, on the cheap and as soon as possible.  

“We optimize for the mom who is holding both her cell phone and her kid,” explained Worthy. “We want her to be able to check out in less than two minutes, then hand over that hunting experience to us,” she told TechCrunch.

Which they do.

The startup’s main business is sending seasonally-appropriate clothing bundles to the front doors of their customers. The clothes themselves come sight unseen, so the shopper gets what they get in the box, though the choices are made to match the style, size and need guidelines the customer sets out when they first join up with the site. That setup, Worthy noted, allowed the firm to drastically simplify its online sales shop, which doesn’t need a lot of rich photographic or descriptive content, since the customer essentially buys blind. But that blind buy comes with big savings — each item in the 10-item box is $3 to $4, substantially less than the per-item cost in any other kids’ clothing box.  

Moreover, the firm has found a skillful work-around for one of retail’s more gruesome cost centers — returns. If a customer doesn’t like something in the box, or it doesn’t fit or work right, Kids on 45 asks that the purchaser simply donate the item locally so that a different customer for whom it might work will have a crack at it. The shopper is then given an account credit for the return. 

And, while Kids on 45th does bear something of a resemblance to a startup like Rockets of Awesome — which also specializes in selling kids clothes by the box — there is a massive and major differentiator. Kids on 45th is very explicitly not a subscription service — customers can buy a box once, twice, as many times as they want or never again. But what will never happen, the firm told PYMNTS, is charging a fee merely for being able to order the box. 

“We are anti-sneaky subscriptions,” she said.

Subscriptions are often a useful way for companies to try to trap their consumers by creating a layer of friction between then and departing. And in the Kids on 45th case, she said, it is not actually a necessary value-add for the company. When they compare their return rates with those of comparable firms in the space that are charging for a subscription, they are similar. They don’t need to force their mom customers to come back. People buying clothes for smaller people who are constantly outgrowing, staining and ripping their clothes to shreds don’t need to be reminded to come back to buy new clothes on the cheap in bulk.  

Because they are coming back all on their own, according to Worthy.

——————————

LATEST PYMNTS REPORT: MARCH 2020 B2B API TRACKER  

B2B APIs aren’t just for large enterprises anymore — middle-market firms and SMBs now realize their potential for enabling low-cost access to real-time payments and account data. But those capabilities are only the tip of the API iceberg, says HSBC global head of liquidity and cash management Diane Reyes. In this month’s B2B API Tracker, Reyes explains how the next wave of banking APIs could fight payments fraud and proactively alert middle-market treasurers to investment opportunities.

TRENDING RIGHT NOW