(2010 update: I’ve been told very recently that Joanna Van Vleck is no longer running the Trunk Club, and that there may have been problems under the surface that I wasn’t aware of as I wrote this post. It was written in almost a year ago. Tim)
This is refreshing: the Trunk Club is booming. While so many businesses are struggling, this one has virtually tripled since November, and grew about 25 percent or so just last week. It’s a great example of a well-executed plan-as-you-go business planning process.
I’ve posted on the Trunk Club‘s success story on this blog before, and I wrote about it in my Plan-As-You-Go Business Plan book too. I have an obvious bias. Founder Joanna Van Vleck, still only 25 years old, is a survivor of my “Start Your Business” class at the University of Oregon, just four years ago. Like anybody else who teaches entrepreneurship, I love it when one of my students makes it big.
And there are some other reasons to like this example too. Such as having a huge growth spurt during the worst recession in 60 years. Also, having the sense to find (or invent) a very interesting market segment, listen carefully to customers, revise a business plan (more than once), and innovate.
I asked Joanna how things are going. She said:
Awesome. Could not be growing more. Last week was our biggest ever. We started our new virtual service in November, and it’s quadrupled our members since then.
The “new virtual service,” as it turns out, is a great example of how successful entrepreneurs revise and correct as they go, keeping the planning process alive, changing it when they have to.
Trunk Club helps men shop for clothes. A year a go it was a membership service opening new locations in Portland, Seattle, Dallas, and maybe the San Francisco Bay Area. Members paid an annual fee for expert shopping help. Today it’s only physical office is in Bend, Oregon, members no longer pay an up-front annual fee, and business is booming.
The key is the new virtual service, based on practical use of a webcam to give members a best-of-both-worlds. They get a personal style expert to buy their clothes at retail price, no-hassle returns, they get to try the clothes on first, but without having to go to the Trunk Club office. They use the webcam instead.
There’s no recession in this business. And, as I dig into it, this is not just random luck. Regarding the recession, Joanna says it may have helped by spurring people to try something new.
People don’t try new ways unless something’s not working. Economic hard times have made the retail industry as a whole come to a sudden halt and almost collapse. So I think we now have a new retail model emerging. This is something like traditional retail shopping, but using the web, and the webcam, to make it work wherever you are.
This was a major revision of the business plan. Opening the other locations was hard, getting members to sign up with significant up-front membership fees was hard, so Joanna changed the business model. She now has Trunk Club style experts, trained, certified, and supervised, who help each member with his individual wardrobe. The member signs up over the website at trunkclub.com and fills out a questionnaire. The style expert and he get together with a video call (using Skype or Yahoo! or Google video conferencing software) for an interview to determine what the member wants and needs in new clothes. The expert orders the clothes, Trunk Club receives them and gets a batch together, and ships. The member tries them on, consults with the style expert, keeps what he likes and sends back what he doesn’t. At that point, his credit card is billed for what he keeps.
There’s no longer a need for expanding via physical locations. The service now extends to any client with access to broadband Internet. The style experts can be wherever they have access to the Web. The Trunk Club consolidates the purchasing, shipping, and returns management at the main office in Bend.
I also like the excellently cut target market. Trunk Club members are male, with disposable income recession or not, who have broadband Internet at home or in the office or both. If they don’t have a webcam, the Trunk Club sends them one.
I see four lessons for struggling entrepreneurs:
- Focus that target market. Some of the best businesses grow by understanding who isn’t their customer.
- Recession doesn’t stop businesses selling something people need or want at a reasonable price.
- Keep your eyes open. Your best market might be a subset of your current market. New technology can resolve problems and offer new opportunities.
- Be willing to change, and change quickly when there’s a real opportunity worth pursuing.