TechStyle keeps costs down by doing everything in house, from designing the products, to shooting them, to filming commercials in their Los Angeles studios. Once this happened, Goldenberg says that 100,000 former members immediately re-joined. Of course, TechStyle reinstated the $39.95 monthly plan, where customers can choose a pair of shoes from their personal showroom or skip the month (customers are billed if they don’t do either within the first five days of the month, and can use that $39.95 fee “like a gift card,” Goldenberg explains). “They had a real challenge with managing their inventory – they bought too much or the wrong styles, which led to inventory obsolescence and styles that were consistently discounted.” According to Goldenberg, the problems they inherited with Shoedazzle went well beyond the disruptions to their subscription model. That platform took seven years and $85 million to develop, he says, and by migrating Shoedazzle they were able to improve their margins by 20 points, from 30% above gross to over 50%. The team that was left after the merger went through was so “passionate and loyal,” he says, and he credits them for using the TechStyle platform to turn the business around. Goldenberg says that he believed in Shoedazzle because of the passion it inspired in customers and employees alike.
“They liked that they were different from a fashion and aesthetic standpoint.” “For Shoedazzle customers when we talked to them, their second choice place to shop was JustFab,” Goldenberg recalls. He doesn’t remember whether he approached Brian Lee about buying Shoedazzle or vice versa, but after making the acquisition, Goldenberg and Ressler decided to keep the two brands separate.
Shoe dazzle Offline#
“We were both willing to take market share from the offline guys, but we should have been less focused on competing with each other,” Goldenberg says. JustFab sold shoes and other accessories by subscription, too and also had the benefit of venture capital money. The pair launched JustFab in 2010, with its own celebrity backer and Creative Director, Kimora Lee Simmons. In 2013, when JustFab (which became a part of the TechStyle Fashion Group this past August) acquired the company for an undisclosed sum, Goldenberg and his founding partner Don Ressler had been competing with Shoedazzle for years. “We felt it could be a $100 million or $200 million dollar brand, but it had lost its way,” he says of his decision to buy it. Goldenberg, however, describes Shoedazzle in entirely different terms. Certainly, that’s how I had viewed it – as a once-faddish site walking in the fading footsteps of Carrie Bradshaw. “The brand is often thought of as a failed startup,” Shoedazzle’s publicist told me. Brian Lee came back on as CEO to stabilize the situation, but when he introduced a modified, less flexible subscription model, it didn’t compel shoppers to start buying things from Shoedazzle again. According to Adam Goldenberg, CEO of TechStyle and Shoedazzle’s parent company as of 2014, these changes alienated core customers and almost immediately, their shopping habits changed.
As the site transitioned to a more traditional e-commerce store, it started carrying third-party brands. Although at the time, Business Insider reported that the move had paid off, with Shoedazzle’s membership spiking by 25%, there was trouble ahead. The company abandoned its original subscription model, where members paid $39.95 a month to select a pair of shoes from a personalized showroom.
Bill Strauss took over for Brian Lee (the man behind Legalzoom and The Honest Company) as Shoedazzle’s CEO.
“We’re going to be very, very happy together,” another intoned, gazing lovingly at a sky-high stiletto. “Some people collect boyfriends,” one actress said coyly in a commercial, standing in front of a closet filled with pair after pair of pumps, boots and sandals.
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