Opportunity
M.M.LaFleur is a leading women’s fashion brand. The company designs stylish, comfortable clothing for women with functional details that their loyal customers love. M.M.LaFleur was a pioneer of the curated box model, launching the Bento box in 2014. Each month, customers would receive a new Bento box that contained a curated selection of products selected by a dedicated stylist. The customer could keep and pay for what they wanted, sending the rest back. While the company also had a traditional e-commerce site and seven showrooms in the U.S., the Bento box was M.M.LaFleur’s primary customer acquisition channel and the company’s largest sales channel.
Challenge
Bento turned out to be a terrific way to grow the M.M.LaFleur brand, but it proved to be a difficult sales channel to scale profitably. Bento required a team of in-house stylists to curate each box. The e-commerce platform needed a high level of customization. The company had an owned and operated warehouse to manage the movement of Bento boxes between customers but was not yet at the scale where the cost efficiency was on par with a 3PL. The cost of logistics to support the program, where at least one product from each box came back to the warehouse, was much higher than traditional e-commerce. The elevated inventory levels required to support so much inventory moving between customers, and the delayed timing of customer payments for the products they kept, was capital intensive.
Solution
The Founder engaged me to help the company find the path to profitability and positive operating cash flow. After a 30-day discovery process, it was clear that the best way forward was to wind down the Bento sales channel. While this would lower overall company sales in the short term, it would immediately improve the profitability profile of the company and allow the team to focus growth efforts on the e-commerce, retail, and nascent wholesale channels. Together with the company’s executive team, we developed an implementation plan and a communications strategy for the Board, investors, and employees that secured broad support.
Results
This strategic shift allowed M.M.LaFleur to reduce expenses and inventory on hand significantly. Projected gross margin increased by nearly 700 basis points. Compensation costs were reduced by over 30%. Marketing as a percentage of net sales was reduced by 500 basis points. Total operating expenses were reduced by 22%. Inventory turnover increased by more than 3x. Over the next 18 months, the company moved to a 3PL, reduced the cost of packaging, and migrated the e-commerce platform to Shopify. These changes put the company on a path to profitability and extended the projected cash runway.
