J. Crew just did something revolutionary with Pinterest.
Have you heard about it?
Let me explain it using our small business as the example. And allow me to explain the problem thoroughly, so you understand how revolutionary the break-through is.
Our business is 80% digital goods & 20% physical goods. Right now we’re trying to grow the physical product sales, so I’m doing my best to learn how to make that happen.
Even though we’re a small company – and most of our revenue is from digital goods – I can’t afford to have a lot of physical inventory backing up and sitting on the shelves. We manage this by doing our own sewing with our small team of 20 sewers. Still, I often notice things that aren’t selling well – and I wonder:
- Why didn’t those do as well as the darker denim version?
- How am I going to get rid of these slower sellers without lowering the price and damaging our pricing power?
- How can we get better at predicting what will sell – so I can make more of the winners and avoid over-producing the losers?
So our “Perfect World” is simple:
- The designers design what’s in popular demand.
- The sewers sew an amount that we can sell quickly.
- The price & promotion work well – and customers see the item, and say “yes to the dress”.
But what really happens is this:
- The designers design things that are popular, but also a few things that are less popular.
- The sewers make an even amount of each since we don’t know which will be “really popular” and which won’t.
- The less popular items sit on the shelf – and I have a problem – I paid the sewers & designers a lot of money to work on those items, but I’m not making my money back.
The growing inventory costs can kill you. To cope – most retailers give the unsold items away to charity at an industrial scale for distribution oversees (yes, I used to work at World Vision – they receive hundreds of millions of dollars of Gift-In-Kind donations).
Now let’s look at this same process and insert the J. Crew revolution…
- The J. Crew designers design things that are popular, but also a few things that are less popular (like everyone else).
- (This is my assumption, since J. Crew isn’t talking about it) They make a small amount of the physical items – say enough to be super conservative & not have inventory problems.
- They publish their catalog on Pinterest & (this is the revolutionary part) use the customer response to all the items to predict the future sales.
- (Again, my assumption) with this information they can scale production for the “really popular” and throttle back production for the “less popular”.
Inventory nightmare avoided (maybe not entirely, but this has got to help a lot).
Benefits Of Pinterest Powered Predictive Production:
In addition to making more of the truly popular items and making less of what you won’t be able to sell profitably (and therefore must hold in warehouses and eventually right off and donate), with this Pinterest Powered Predictive Production (give me a shout out for coining that phrase) retailers can:
- Raise the prices for the really popular items so they can maximize earnings.
- Feature the popular items on display in the front of their stores – winning the walk-by prospective customer.
- Feature the popular items more prominently in their paper/offline catalogs and ads.
- They have less inventory to right off since they used Pinterest to help predict which items would sell the best.
This is a real break-through…it will be interesting to see how other retailers follow the J. Crew lead. Here’s a nice graphic to pin :)
Ps. We first wrote about the idea of creating a product catalog on Pinterest back in May of 2012, you can see that original post here.
All the best on your Pinterest Marketing efforts!
Author of (the bestselling) Pinterest Power