SUCCESS STORY: 4 Fierce Lessons That Led To The Nasty Gal Phenomenon

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Hey guys,

Last week we published an article with the lessons emerging designers could learn out of Nasty gal’s bankruptcy.  After having briefly analyzed what lead the fashion wunderkind to bankruptcy, I wanted to remember the effervescence of the beginning.

From a simple eBay account to nearly 100 million dollars in sales in six years: in spite of the tragic turn of events, Sophia Amoruso certainly did a few things right.
So what could emerging brands learn out of that?

#1 – Rather than selling what works, sell what you are excellent at

Sophia Amoruso is excellent at one thing: bargain buying hand picked vintage garment. She has a real skill in seeing an old garment’s potential, how it can be revamped and where to get it for an interesting price.

It’s a combination of very specific skills actually.   
By following that formula she did not try to copy other existing fashion stores, she built something out of something she was excellent at.

Think about which fashion skill you are really good at. Maybe it is the way you work on leather, jeans, the way you drape a garment. Or the way you hand paint on fabric or leather?
Really think of what you’re excellent at and think how you can apply it on your own fashion business.

#2 – Three words: Branding, branding. And branding

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When Sophia Amoruso started  Nasty gal, she built a proper fashion branding right from the start. 

She immediately gave a certain vibe to the store. The name she chose to begin with, was inspired by soul singer Betty Davis’s song. The photos all had this vintage rock feeling. It was well thought and cohesive from the beginning.
Some beginner brands I have worked with either are not aware how branding vital is to a fashion line or they struggle a bit to achieve a cohesive image. For example, they want their brand to be about glamour and luxury but in reality when you watch the collection or the visuals, it fails to give the sophisticated look it aims for. 


This free resource explains what you should work on to start a clothing line. The branding concept is the first thing you should start with. Explore the first chapter of our free ebook to shape a proper branding for your own fashion business. 

#3 – Have the humility to learn what is key for the fashion industry

Let’s take an example from another industry. When you buy a smartphone, companies compete by promoting the quality of the photos/videos it takes, the size of the screen, the possibility to unlock it using your fingerprint etc. However none of the phone company has ever promoted the ability for a smartphone to make proper calls. It is a given! when you buy a smartphone, the phone function is expected to be excellent.
In the fashion industry, it is the same. There are a few basics that are expected from the start:

  • a good fit
  • proper finishing
  • professional photos
  • a good looking website

Fashion IS about image. You cannot skip that one. Your visuals have to look no less than STUNNING.
Sophia Amoruso did not have any fashion designer education. However she made Nasty Gal a success and she was willing to learn what it would take to thrive.
She was humble enough to acknowledge she did not know and learn about it. She read books to learn how to run an eBay store. She also learned how to take photos.

Ask yourself what is important in this industry. Figure out what you still need to learn.
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If you take care of your own website and photos, do they reach the expectations of the industry? Or maybe you need to learn basic SEO techniques or how to run a business?
Find out in which key area you need to improve and either hire someone to take care of it or learn about it.

#4 – The power of tribe

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Sophia Amoruso grew her tribe using My Space. She first identified Nylon magazine gave a similar feeling to Nasty Gal. She thought their followers would most relate to her auctions. So she engaged with them. She meticulously answered all their comments.
Which already existing community would be interested in relating with your brand? Go on social media (especially Instagram, Twitter, Facebook). Check the communities and where you feel you find a similar vibe as yours, engage with people.


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CASH & FUNDING: 5 Lessons Emerging Designers Can Learn From Nasty Gal’s Bankruptcy

5 hard lessons emerging designers can learn from nasty gal s bankruptcy

Hi guys,
Probably like you these last few months, my newsfeed has been swamped with articles related to Nasty Gal’s bankruptcy. I do not know if it is because I watched the Girlboss TV show on Netflix:  maybe having the impression to share Sophia Amoruso’s joys and tears on screen made me care but reading all those articles made me really sad. Her bold approach to the fashion industry was a beacon of hope for me.
I adored the fact that she was young and built an empire with nothing more than an Ebay account.
I adored the fact that she made it with a strong edgy vintage point of view, a take on fashion she imposed.
I adored the fact that she extended the concept and had the courage to start her own clothing line.

Unfortunately, whichever the industry, at some point an entrepreneur cannot escape some hard facts.
When I read about the bankruptcy, even if I wrote a book that partly points out the significance of finance, I felt really sorry to conclude that once again, finance won.
So I felt the urge to share a few lessons any emerging fashion designer should take out of her story. I know that for lots of you, finance, funding, cash, figures are just not your thing. However if you are on your own, it is better for the future of your brand to face reality. There will be a time when you will have to negotiate with other professionals.
Show people that you are not another dreamer. Show them you have what it takes to be a reliable businessperson.

#1 – Drop the vanity act

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Once you experience your first financial reward, it can be tempting to use the extra cash to show you are able to play in the big league.
With its first success, Nasty Gal moved its headquarters in beautiful but far too large offices. Besides, the company also opened a 500,000-square-foot fulfillment center in Kentucky to handle its own distribution and logistics although it could have outsourced it to a third company. 
And since we are talking about vanity, I seize the opportunity to go a little bit off topic…Stop using vanity metrics to monitor your business. By vanity metrics I mean the number of followers and likes on social media for example. It is fine (and flattering, admit it…) to see the size of your audience grow. However excuse me in advance for being down to earth: your banker or your fabric supplier will not be impressed that you organized a glamorous fashion show and got 100,000 more likes on your Facebook page.
Keep a cool head. Look at what really matters: business.

#2 – Repeat after me: fashion is a business

It is undeniable. Creativity is vital to fashion. However do not forget that it remains a business. And as any other business, even if design and image is a major part of what you sell, you also need to structure your company on very solid grounds.

What matters is that the system you built generates enough money to sustain your business.
As many pure players did, Nasty Gal opened bricks-and-mortar stores. Once you go into this kind of expenditures, you need to be sure to generate enough revenues to cover the related expenses (rent, sales and administrative staff salary, just to name a few) and make profits. The second store was opened a few months only after the first store.
It would have been safer to stabilize the whole in a profit generating system before opening the second shop.

#3 – Learn to make yourself useless: build processes

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Sophia Amoruso built her own fashion business from scratch. After the years, she still remained essential to her business. When she pursued other personal projects, her company suffered from her absence.

To avoid that and always in the spirit of lesson #2, while your business will grow, you will need to chunk down your success formula in written processes and train other people to be able to replace you.
This enables you to maintain the quality level after scaling your business.

#4 – Prefer customer loyalty to customer acquisition

Nasty Gal is said to have spent substantial money in advertising and marketing to acquire new customers. And yet those customers did not necessarily stay loyal to the brand.
There appears to be several reasons for the absence of a loyal customer base. The more obvious one I observed in this case is the unequal quality of the products and services delivered. You just need to read the reviews on the website before the bankruptcy. Already at that time, customers seemed to be unhappy with the quality of the products.
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Before spending money in acquiring new customers, you need to ensure that your system is reliable enough to deliver the products and services you promised to your existing customers first.

#5 – Understand the difference between sales, profits and cash

Sales is the money you make in exchange of a product or a service you deliver to your customer.
Profit is what is left of that money once you withdraw your expenses, your charges and taxes. To make a business sustainable, you need to generate a profit making machine. A machine means that you have a system and methods in place that enable to generate sales in the long term, maintain a good quality level etc. Do not get involved into fixed costs (like the rent of a brick and mortar in the case of Nasty Gal for example) unless you have a reliable analysis that shows it will enable you to multiply your sales.
Cash is the sum of what is in your bank account and in your cash register. Running out of cash is the reason why companies go bankrupt. The factors that impact your cash are:

  • Your profits. This one is quite obvious. If the amount you invoice is higher than the amount you spend, you should have cash left in the end. When Nasty Gal paid heavy marketing and advertising costs to acquire one-time only customers (who probably spent less than what Nasty Gal spent to acquire them), it killed the business.
  • Payment terms. The ideal situation is to be able to impact your buying payment terms to your customers. In the fashion business, this is a tricky game since fabric suppliers and manufacturers do not know you yet and expect you to pay immediately. On top of that, if part of your business is wholesale or if some of your products are in a consignment stock, you will not be paid immediately. It means that you will have to advance a significant amount of cash before getting some back. However designers are sometimes able to negotiate with suppliers and manufacturers. The rule of thumb: Get paid as early as you can and pay as late as you can, without damaging the relationship with the supplier. Negotiate.

Most of the bankrupt fashion business died because they did not go further than the sales logic and did not take the time to build solid process to generate sustainable profits. Think profit more than sales. 


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