How a Subscription-Box Founder Is Using Data to Survive — and Thrive

This story appears in the December 2017 issue of Entrepreneur. Subscribe »

Kids are picky and grow constantly. As a parent of two, Rachel Blumenthal knows that well. “Every season, my kids had outgrown the previous season’s clothes, and I was replacing complete wardrobes,” she says. “It was time-consuming and expensive and, frankly, not much fun.” 

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Blumenthal wanted to fix her own problem. She’d previously founded online baby registry Cricket’s Circle, so she knew the world of parenting ecommerce. But as she thought about kids’ clothes, she began drifting toward what seemed like a troublesome solution: a subscription box service. It’s a model that many other startups, selling many other wares, have tried and failed at. It’s hard to line up vendors, difficult to keep subscribers for long and nearly impossible to anticipate demand.

But Blumenthal thought she had the answer. While most apparel-focused services curate items from existing brands, meaning the service is beholden to what’s on the market, hers would design its own collections based on sales, customer feedback, proprietary machine-learning algorithms and a detailed style quiz that each parent would fill out (Tommy likes dinosaurs but not astronauts). In essence, Blumenthal would predict what people want — and then make it. Members would keep and pay for the items they want, and return what they don’t.

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In 2016, she launched her company, Rockets of Awesome, offering boxes of personalized, 12-piece clothing sets for kids ages 3 to 12 at the start of every season. “The decision to be vertical was very strategic,” Blumenthal says. For starters, it allowed Rockets of Awesome to create what she calls a “trifecta” of style, quality and value. More important, though, it made the sort of data collection that subscription box services routinely do significantly more valuable. “We get real-time data on how a product will perform in less than a week [after boxes reach customers]. That lets us make smarter, faster decisions that impact our supply chain.”

Case in point: When the company launched, one of its first products was the Comfy Crew sweatshirt, made of what Blumenthal calls “the most magically soft fabric you will ever touch.” Customers agreed. “Everyone was keeping this product, going to our e-commerce store to buy more, asking for it in more colors and styles,” she says. “We went directly to our mill to get more of the fabric, in more colors and more weights and to make sure we could print graphics on it.” The fabric is now available in a range of products, from tees to pants and dresses, all of which are best-sellers. 

Those efficiencies make the entire operation a self-­sustaining loop. Better boxes lead to more orders; more orders means more data; more data means better targeting; better targeting means even more orders. And because the company oversees production, items are manufactured and shipped quickly — with little risk of ending up on a surplus-inventory rack in the back of a warehouse. “When we order a specific item, we can make an assumption about who we’re going to ship it to,” Blumenthal says. “And it’s not, ‘Oh, a girl will like this dress.’ It’s ‘A 2- to 4-year-old girl in this zip code will like this dress.’”

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Some customers have been so pleased that they’ve taken to sharing even more details about what their kids want. “Moms are now writing us long messages letting us know that their kids are maybe gender nonconforming or have sensory issues and don’t like buttons or zippers,” Blumenthal says. “They’re sharing their Facebook pages so we can see pictures of their kids. And that all leads to a better experience for the customer.” And a better business, too. 

Published at Wed, 13 Dec 2017 14:00:00 +0000