Tech-Enabled Retail with Mel Cummings, Fabletics

Episode Transcription

Melanie Cummings:

When I first started, we started with six retail stores that were essentially six test stores. It's been a long growth, but I think we did it really methodically, which I think is a little different from how other brands may approach going into retail. We took that digital AB testing model and basically applied it to retail, taking different variables, understanding what stores would work, why they worked, and then growing that base from there.

Meghan Pfeifer:

I'm Meghan, and you're listening to a Better Product original series. To kick off our series on DTC brands and what we can learn from them, we've got Mel Cummings, VP of product at Fabletics. For those of you who are like Christian and don't know what Fabletics is, we'll start there.

Melanie Cummings:

Fabletics is an active lifestyle brand, but we were co-founded by Kate Hudson in 2013. We're basically just a membership company for customers who want to buy awesome active lifestyle apparel. Customers come to our website or our retail stores, they take a short quiz, we recommend really great styles for them. They get a discount on their intro offer. And then from there, each month they're invited to come to our site. They can either skip and choose to not buy anything that month and not get billed. If they choose not to skip, they'll get billed a 49.95 member credit and that gives them access to a ton of awesome products, up to $80. You get this built in discount if you do choose to get billed.

Melanie Cummings:

We have a ton of product, we're launching new styles every week. And then, we also have our physical retail stores where customers can come in, also use those member credits and interact with the brand.

Meghan Pfeifer:

Since 2013, Fabletics has been doing things differently. They've been taking a unique approach to retail since day one by creating a membership program for shoppers, which goes beyond a subscription model, and builds a relationship with shoppers and encourages repeat business. Each monthly purchase is optional and members get access to exclusive discounts. They also built their own tech solution because the market wasn't mature enough yet to meet their needs.

Melanie Cummings:

The first brand was JustFab, that was founded in 2010. Back then, membership was not a super common thing, people didn't totally understand it. We live in a world now where you can be a member for so many different things, it's such a common thing. But back then, it really wasn't. And then, the few technology companies that provided membership, it was very rigid. It was like, "You're doing membership our way."

Melanie Cummings:

We really wanted to have a lot more control over how the customer was going to experience our membership, and flexibility to change as the market was changing, which we've done, which has been really awesome.

Meghan Pfeifer:

Fabletics' tech-meets-retail approach means that they have to straddle the line between the two. They can't think too much like a traditional retail company, but they also can't be too tech focused and forget to focus on their customer.

Meghan Pfeifer:

But, the Fabletics custom-built solution allows them to blend the in-store and online shopping experience, unlike any traditional retailer. They collect in-depth customer data that sets them up to better understand and serve their customers.

Melanie Cummings:

We have a 360 view of your membership. When you buy stuff online, we can pull that order history up in-store. If maybe you favorited something online and thought about buying it later, we can pull that up in the retail store and allow the customer to try it on. Maybe they had been on the fence about buying it. Returns can go both ways, I think that's super meaningful. And then, obviously we have just purchase insight for customers, across the board, so we can see how much customers are buying in-store, how much they're buying online, what the lifetime value difference is between those and how we can just continue to improve the experience for customers who are shopping both.

Meghan Pfeifer:

Mel shares so many insights into how Fabletics is elevating the entire shopping experience in a way that wouldn't be possible without their unique approach to technology.

Christian Beck:

Hey, on today's show I've got a really exciting guest. Mel Cummings, the VP of product for Fabletics, which is one of our direct-to-consumer stories that we're going to be telling. Thank you so much for joining us, Mel.

Melanie Cummings:

Thank you, guys. I'm really happy to be here.

Christian Beck:

Let's dive into what Fabletics is. But before we get there, tell me how you ended up at Fabletics, what the goal was when you started and where you're at today.

Melanie Cummings:

Yeah, for sure. Just like a lot of other product people, I have a super non-traditional background. I used to be in account management, but I actually jumped into Fabletics via an old boss who was looking for someone to be the manager of retail operations and project delivery, which is a really long title.

Melanie Cummings:

But, it basically meant I took care of anything that happened within the four walls of the retail store. There was some random things like security and accounting, but I also did all of our technology and supported all of our store tech that we had to do. It was really my first full product role. We didn't have a product title at the time, but that was the bulk of my day-to-day. And then, I jumped over to our eCommerce team as the director of product in 2017 and I've been running different components of Fabletics product since then.

Christian Beck:

There's a few angles to make that business model work and we'll get to product [inaudible 00:04:48]. But it seems to me, too, that if you're going to bet on that subscription model that you're charging people to give discounts, then you better make sure that the products you're selling are good, first. But second, that Fabletics is continuing to engage with the customers.

Christian Beck:

Tell me a little bit about what that is like. How do you engage people in between purchases?

Melanie Cummings:

Yeah, for sure. I think the one thing that's a little bit of a difference is we really think of ourselves as this membership program, a little less subscription. From the membership perspective, you really have that choice on if you want to pay each month or not. I think that's a really core component of who we are. We really want to give the customer ultimate choice in what they're going to buy, how they're going to interact with us. That permeates everything that we're doing.

Melanie Cummings:

We do have pretty consistent engagement with our customers. When they come into the store, we have this Beautiful Moments program that we have, where we just really try to connect with our customers on a one-on-one basis. From a digital perspective, we're consistently launching new styles and try to get customer feedback on how those are performing. We really take our customer sentiment really seriously and are consistently trying to improve the product based on what they're saying, not just the site experience that they're seeing as well.

Christian Beck:

All right. You have great product and so far, the product you're talking about is the apparel. That's what's interesting about having you on this show, on Better Product, which is about digital products. But, I really wanted to cover this because you really have to manage two things at once, and that's what's interesting about you. You're not the VP of the apparel line itself, but you're actually looking over the product side.

Christian Beck:

I know what's really interesting about Fabletics is the technology that you're building, which you oversee. When we back up from what you provide customers, subscription, membership and all that, and ways to buy clothes, at the root of that is technology enabling it. How does technology actually facilitate Fabletics?

Melanie Cummings:

Yeah. Technology is super, super meaningful for us. Unlike most companies, we've built all of the technology that we interact with.

Melanie Cummings:

Our core eCommerce technology, we actually call that Bento in-house, it's something we have homegrown. The membership components of that, the billing, the checkout, all of that is something that we have as proprietary technology. We're able to customize the experience to meet both business needs and customer needs, in a way that I think is far more flexible than many retailers out there.

Christian Beck:

When you started home growing the technology, why not use other third parties? What was the deciding factor to actually build it yourself?

Melanie Cummings:

It really goes back to the moment in time when the brands were created. Fabletics, again, is part of this membership umbrella, there's a bunch of brands in the portfolio, and the first brand was JustFab, that was founded in 2010. Back then, membership was not a super common thing, people didn't totally understand it. We live in a world now where you can be member for so many different things, it's such a common thing. But back then, it really wasn't. And then, the few technology companies that provided membership, it was very rigid. It was like, "You're doing membership our way."

Melanie Cummings:

We really wanted to have a lot more control over how the customer was going to experience our membership, and flexibility to change as the market was changing, which we've done, which has been really awesome.

Christian Beck:

Was there, at the time, just not really great technology even available? Was it just you had to build it if you wanted to make that work?

Melanie Cummings:

Yeah, that's how we felt. There was other competitors who were doing similar things and they were also building it because, again, the market just wasn't there for something you could buy off the shelf. If you really wanted to provide that custom, more one-to-one experience, you needed more of the data, you needed to be able to customize the program. That's what we were able to do in-house versus shopping outside.

Christian Beck:

A lot of what I see in the eComm, I view the web team, the website team is managing the site. I don't know, I've always felt like that doesn't feel like technology even though it is. But for you all, there is the website, that is obviously a bit part of it, and you're obviously looking at conversions and things like that, and abandon carts, all that.

Christian Beck:

But, you're actually at a more core level of technology that's enabling internal processes. When I think about that, I imagine you're in this silo of technology, and then there's the people working on apparel and in marketing, and you all don't talk to each other. You just do your thing with the product, make sure everything's humming, and the people. I'm guessing that's not the case.

Melanie Cummings:

It's super not the case. Yeah.

Melanie Cummings:

Some of my favorite partners are people on our marketing team, our acquisition team, our strategy and ops team because we have a whole different perspective on technology than I think other companies do. It really is an amplifier, an enabler of a lot of strategic initiatives that we want to accomplish. So very rarely do you have the business working on its initiatives in a silo, there's this very healthy interplay discussion, dialogue that's happening between the teams. There's times where the business will bring a suggestion on a strategic initiative and we'll actually be able to level that up by saying, "Hey, there's a technology way we can do this and we can make it better."

Melanie Cummings:

I know that's typical in a lot of product orgs, but I think with a lot of retailers who are using technology that's a little less customizable, it's a little more challenging to do that.

Christian Beck:

I'd imagine on marketing's side and on the apparel side, there must be some education that they understand technology's role.

Melanie Cummings:

Yeah. It's actually one of the most challenging things. I think it's hard to hire anywhere you work, but sometimes it's more challenging to hire folks here because you do need to have a certain level of technical proficiency to really be magical in your role, because there's just so much about the company that we've built.

Melanie Cummings:

I have a whole spiel for our new hires. A lot of times when you start a new job, you've used technology that the company uses somewhere else, so you're instantly able to get out of the gate and run. Here, because we've built all our own stuff, we're very comfortable with a little bit more training time up front, because we know that the benefit of that is so much more flexibility. People have to learn to use our internal tools, plus learn how they interact with the site, to really drive that fully custom experience for our end user.

Christian Beck:

Now when we switch to the other side, on your side of the house on the product side, I would also imagine you've then also got to get them to understand, if you have an engineer, or even somebody that maybe even comes from software, what the ultimate driver is. It's not the technology itself, we're not here to just build product for product's sake, we're here to actually use this for the broader business.

Christian Beck:

How do you get that message and get people on your team to really understand that? Both when they start and just on an ongoing basis.

Melanie Cummings:

A lot of it, I think just comes from a core passion and, what's the right word, an obsession if you will, for the end customer. We have lead engineers who will talk about when they travel, they're looking at the leggings at other girls are wearing. They're like, "Oh my gosh, is that Fabletics?" We all know who we're here to serve, we're here for that Fabletics customer who just loves our leggings. I think that's something that we really obsess about internally, across the org. It's easy, because of that internal focus, to understand that our end user is really the focus.

Melanie Cummings:

But it can be hard sometimes, when people are just joining if they're coming from a pure technology place, to adapt to that shift if you will.

Christian Beck:

For me, my background is in software design. The parallel I draw from my discipline is that it's challenging sometimes to convey to a designer that you can start to get very obsessed for your own design for its sake. "I'm doing something that looks cool and I want to make sure it looks nice," and you can start to get away from hey, design is actually meant to enable something else. You have to almost course correct.

Christian Beck:

Is there an example you can give? How do you actually help reinforce that at your company? Or, does everybody just gets it, and they know what they're doing, they see what they build so they just naturally do it? Or, do you have any things internally that you help reinforce to just keep the focus on the right thing?

Melanie Cummings:

I think a lot of is just about reflecting on our customers. I think the generic and easy answer is we just try to make a consistent focus on the customer. But, I think part of it is we really try to circle back to our data you understand how our technology is impacting our customer.

Melanie Cummings:

A super great example, our retail technology is, again, something that we've built. We call it OmniSuite. We were able to discover that there were customers who were coming into our fitting rooms, they were trying on our Hero capri legging in our smaller sizes, our extra small and our extra-extra small, and they weren't converting at the same rate as customers who were trying it on for small and above. We're like, "I wonder why this is," so we brought in a fit model, our design team had them try it on and we found that there was a fit issue on the calf where the product flared out where it should have hugged the calf. We made a really slight change to how that product fit and a couple months later, once that product hit the stores, conversion jumped right back up to be in line with the rest of the sizes.

Melanie Cummings:

How do you take this data from these technology platforms you're building, understand how it's impacting the customer, and then use it to really provide that feedback loop to all teams? Those are things that I think other companies could never accomplish, but it's something really meaningful for us and things that we try to do on the regular.

Christian Beck:

That's really interesting, because I would imagine that this also solves one of these problems that I hear about in eComm, which is if you're only online, you don't always know if someone's using or likes your product. Because there's always the big, cognitive burden of returning something, so you don't know. I'm guessing there were people that also weren't happy with the fit online, they just never got around to returning, which means you don't actually know whether there was a fit problem.

Melanie Cummings:

Exactly. Yeah, it's totally true. I think that's where our model, it's just so much more valuable because we allow customers to come to our retail stores and return stuff that they'd purchased online, they can try new products on. We're actually able to get even more data now because we have so many retail stores, than we did in the past.

Melanie Cummings:

But what's really interesting is what happens a lot for our customers, is when they come in store to make a return, they often buy more than they're returning because they fall in love with the product in a way that they can't fall in love with it online. You're touching it, you're feeling the quality, that builds a passion that it's hard to replicate online.

Christian Beck:

As you've built more stores, has it started to evolve, does it have upward change on the strategy? Saying that, as you're learning oh, people are buying more, does it shift goals on what you're trying to do eComm? Or, does it change the digital, the online, how it factors into anything?

Melanie Cummings:

I think what it does most is it changes how we view the relationship between retail and online. We've always been very agnostic to how the customer wants to shop. We want her to come and shop with us wherever she wants, whatever channel she wants. But as we've opened more stores, we've had this tangibility factor increase which gives us a lot of flexibility. It really gives us motivation to even do more technology-driven initiatives in our retail stores.

Melanie Cummings:

For example, we really recently are introducing a leggings finder in store. On super crazy busy weekends, when our associates are all busy, customers can go up to a little iPad kiosk and answer a couple questions, and basically get returned a recommendation for the perfect legging for them. Those are things that just make the experience way better for our customer.

Christian Beck:

That's really cool. This leggings finder, this iPad, it's tied to the stores so you can go use it in the store, and then they've got it there, the inventory right there for you to get?

Melanie Cummings:

Exactly. Yeah.

Christian Beck:

It seems to me that, and I'm not an eComm expert by any means, but I do know that stores, for several decades, have tried to close this omnichannel loop between purchasing online. It sounds like you all have a really tight loop, that you have the in-store experiences really tightly coupled with online. It's not black box.

Melanie Cummings:

Yeah, 100%.

Melanie Cummings:

One of the best things about just the company and the program is we have a 360 view of your membership. When you buy stuff online, we can pull that order history up in-store. If maybe you favorited something online and thought about buying it later, we can pull that up in the retail store and allow the customer to try it on. Maybe they had been on the fence about buying it. Returns can go both ways, I think that's super meaningful. And then, obviously we have just purchase insight for customers, across the board, so we can see how much customers are buying in-store, how much they're buying online, what the lifetime value difference is between those and how we can just continue to improve the experience for customers who are shopping both.

Christian Beck:

If I were advising a company that's maybe starting, that's an online apparel company right now, is this a simple thing to do? You just start selling online, and then you build stores and just close that loop. Or, did this process really take a long time to hone?

Melanie Cummings:

It's definitely been quite a bit of growth that we've had. When I first started, we started with six retail stores that were essentially six test stores. Each store was a little different demographic, different market, different mall. We really had to learn a lot about where our customers from online were going to come and shop with us. And conversely, what types of markets were more agreeable to our brand in general. I think we've learned a lot in the last couple years. We're pushing 60 stores, which is super exciting.

Melanie Cummings:

It's been a long road, but I think we did it really methodically, which I think is a little different from how other brands may approach going into retail. We took that digital AB testing model and basically applied it to retail, taking different variables, understanding what stores would work, why they worked, and then growing that base from there.

Christian Beck:

It seems like you probably also leveraged the idea that these people are members so you know who they are. I feel like that's the other issue, too. You go into an average retail store, you don't know who they are.

Melanie Cummings:

Yeah, it's super real.

Melanie Cummings:

Another great example within our retail stores is we have the OmniShop technology, which is what actually powers that fitting room experience I mentioned. It's a super little thing, but when we have a customer who's a member, on the outside of the fitting room door, we have her name appear on an iPad so that our associate can call that customer by name. And then, there's even cute, little things. If it's her birthday month, it'll have little balloons and we can give her a little gift in-store. These little, personal touches that I think really make that customers build that connection with a brand, that are totally enabled by technology in a way that we definitely wouldn't have had years ago.

Christian Beck:

I guess I actually have two questions, here. But, the first one I'll start with is, is what you're doing, do you think that's a what's old is new again? So the new future for eCommerce is that, ultimately, they'll all create a brick-and-mortar store. Or, do you think that it's not the right fit for some types of brands?

Melanie Cummings:

My biggest opinion is you need to have a why. I think you can of course create a retail store, but you really need to have a reason for it. For us, one of our biggest motivators, or a great motivator, was we knew certain customers needed a way to really tangibly interact with the product before they really want to go all-in on the membership. The retail stores super allow for that, and then they allow for our existing customers to explore new categories that they might have been hesitant to do online. I think for us, we had a really good underlying why of why we wanted to open retail.

Melanie Cummings:

I think for other digitally native brands, if you can find your similar why, and tailor your story and your experience to that, you can make magical things happen.

Christian Beck:

I don't mean to be funny with this question, but I assume the why has to be bigger than just, "We want to open a store to make more money."

Melanie Cummings:

Yes.

Christian Beck:

It seems like it's got to be something deeper. Yeah.

Christian Beck:

Let me ask the flip question. With your expertise, why is it so hard for other brick-and-mortar stores, I don't really want to call any brands out ... But, I've been buying clothes from some other brick-and-mortar stores that I really have enjoyed, but I've always been disappointed in the growth into the online, or just even the conductivity. Sometimes, I might buy a shirt in a store and use the rewards card for the store, and then I'm still getting a marketing email for the same type of shirt. It just shows its complete disconnect.

Christian Beck:

I'm curious, from your perspective, is it harder do you think, for these companies that have been traditional brick-and-mortar first to move upstream, or into the cloud or online, whatever the right metaphor is?

Melanie Cummings:

Yeah. I think it's definitely more challenging. Again, I'm super biased in saying this answer, but I think it has to do with how they're approaching technology to enable their business.

Melanie Cummings:

Because we knew that we really wanted to own our technology so that we could control our destiny, we're able to tie experiences together far easier than a lot of other companies are. I think there's of course huge advantages to using out-of-the-box point of sale systems, or out-of-the-box eCommerce technologies, but when you have to think about the level of effort to do those integrations to make those talk to each other, that often is prohibitive for a lot of larger companies. And then when they do it, as one evolves, does the integration evolve with it? I think that's where a lot of the challenges come in. I think we've eliminated a lot of that by just saying, "Hey, we're just going to do it ourselves and we're going to have a connectivity between those tools." As I mentioned, our eCommerce technology powers a lot of the point of sale system, so they're natively built together and they're going to communicate.

Christian Beck:

Okay, that's great. You said, "Using technology to control your destiny," I love that phrase.

Christian Beck:

I've one final question, I want to hear from you. Fabletics, you've been around for a while and it's evolved. What are you most excited about when you look out to the next, I don't know, maybe three to five years?

Melanie Cummings:

Yeah. I think I'm really excited by just the growth and I think just some of the category work that we're doing.

Melanie Cummings:

When I first started with the brand, leggings were 100% our bread-and-butter. They were great quality. We offered other product categories, but they were very secondary. I've really been excited to see how, as a brand, we've just focused on really honing in and improving the quality of those other categories. I can just see us continuing to do more of that and just giving customers more options than they've had in the past. And really, bringing that to them at the right price point within our membership program, which makes it great.

Christian Beck:

This has been great. I thank you for taking the time to tell us about Fabletics in your role. This is really exciting for me, because I think the physical product world meeting the digital product world has always been fascinating to me. I think there's very few examples that are as stellar as I think what Fabletics has been able to do, to weave all that together. I appreciate you breaking down how it all works there and thanks for your time.

Melanie Cummings:

It's my pleasure. Thank you again for having me on.

Christian Beck:

Thanks for joining us and if you haven't yet, be sure to join the Better Product community. We've got all sorts of content and resources for you. If you want more audio, don't forget the Business of Product is our latest show to join the Better Product network, and you can find that and more at betterproduct.community.