From fashion show to web sales in a day

An article in the New York Times (May 23, 2012) titled “Trying to Click Online”  describes sales of Oscar de la Renta fashion items, immediately after the fashion show, in the website, with five sweaters sold within 24 hours for $ 2490 each, per prior arrangement with the designer. Will such quick sales of items from a show be useful in forecasting product demand ? Will the observed demand be a useful indicator of customer preferences ? Should items be sold at a discount to encourage customers to both buy early and provide an early read of preferences ? Should early sales be satisfied by domestic production to ensure quick delivery ?

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19 Responses to From fashion show to web sales in a day

  1. Randy Coker says:

    Concerning discounting, I would not introduce a discount for customer’s to buy early. Discounting at the beginning showcases to consumers that further discounts will be made (mark downs), and so consumers tend to wait to purchase based upon future mark downs. As well, perception at the beginning of the sale of the item of being an “innovative” purchaser is what pushes sales at the beginning of the life cycle. If you discount the item, it makes it seem more of a commoditized product and less of an innovative item.

  2. Emeka Anyanwu says:

    It makes sense that early sales should be satisfied by domestic production this would enable the industry satisfy initial demand and have more pertinent data to use in forecasting demand during the season.
    Full blown production can then be shifted to locations where they can produce cost effectively.

  3. Patrick Lee says:

    I don’t think quick sales provide an accurate measure of demand. The opposite could occur–nothing sells. The demand would be a limited and semi-useful indicator…more of an outlier, regarding customer preferences and a an issue affecting forecast demand. No I don’t think a discount would appropriate. If the goal is to minimize forecast error, then remain committed to price points and allow the true customer base to emerge, from which actually preferences would evolve. Yes,domestic production allows for demand issues to be resolved by having access to alternate inventory sources.

  4. Sooin Kim says:

    Any sales forecast based on the early samples should be aligned with the culture and the past statistis/trend. Probably there is some statistical relationship in terms of the lineal relationship, which may help to read the future trend. Because of many diverse choices we face today, people tend to follow celebrities’ and would like to reflect themselves there, and that’s what advertisement or early adopter’s trend for. In that sense, an attempt to predict the trend would be better off than without…

  5. It is possible that it will not have that much product demand in future and I agree with most of what Patrick Lee has commented above. But I think discount should be offered as it would interest people to buy such premium products for less and particularly early.

  6. Frank Griffin says:

    Will such quick sales of items from a show be useful in forecasting product demand ?
    I think the quick sales for these expensive items might not be a good forecasting tool. The volume of sales are too small and the exposure initially is too small.
    The longer term observed demand would provide a more useful indicator of customer preference. Therefore selling these items at a discount to reach more of the market would further help to forecast demand.
    Producing domestically would also allow you shorter turnaround times, allowing you more time to read the market demand, so if possible local production would also help forecast market demand.

  7. Mike Flatt says:

    I think the quick feedback is essentially like polling current customers to see what their likely demand would be but better, they have to put their money where their mouths is. Provided there is time before the fashion show I don’t know that it necessarily would indicate where production would need to take place. I would certainly not discount these early orders but let the product life cycle play out. Early adopters don’t require discounting.

  8. Matt Geddie says:

    I think the quick turn around is a great way to bootstrap production and is an inexpensive way to gain data on what will and won’t’ sell. Closing that gap of predicted demand to actual demand can increase a firm’s profitability exponentially. I do not believe selling limited items at discount will bring any real value as you want to know what will actually sell and what quantity at the expected MSRP. I agree with Mr. Flatt in that, “early adopters don’t require discounting”

  9. Dan Skinner says:

    I would be very pleased if anything that expensive sold that quickly, but I’m not sure how much of an indication of future sales it would be. The sample size is so small, and the target market for such a high end product is not going to be the same as the mass produced target market. It may be a good way to sell a few items at an inflated cost, but I struggle to see it as an indication of where the rest of the market will value the items.

  10. M. Moore says:

    Will such quick sales of items from a show be useful in forecasting product demand ?
    The key will be if the buyers are the typical customers or only those who were in attendance of the show. I would believe the initial sales on line were based on those coming from the show. If the new designs were posted and others not attending the show purchased the item I would put more weight behind the interest in that given design. As multiple items would be posted as shown on the runway, I would see this initial interest as a Beta test/ market segment survey indicating which designs are of interest thus the customer has options to differentiate their preferences and indicate how the initial season will go.

    Should items be sold at a discount to encourage customers to both buy early and provide an early read of preferences?
    Lowering the prices early on could erode the customers perceive value for the item, shifting from the target customer. I would encourage review blogs so customers that like the product can select their preferences for designs (Likes or rate me) , and have the opportunity to purchase early. A thank you rebate or future credit could be offered to entice the sale and gathering of future opinions.
    Early sales could be supplied by domestic production in smaller batches, as trends are identified early on, off shore production could be allocated and domestic production can be slated for primary movers with high margins and changes that occur in demand (stock-outs) over the season.

  11. Sandra Aldana says:

    I do not think buying items after the fashion show is just a spike due to the desire of some people to pay more just for having early and be exclusive. Like others, I do not think it is a sign of future sales, at least in the mass market. People will wait for the street line to buy more affordable clothing which might be inspired by the fashion show clothing but more affordable and less exclusive. The fashion show clothing is not for mass selling, IMO. So I think it has little effect on the supply chain.

  12. Courtney Metzger says:

    I believe the quick sales in this case were primary influenced by the event and should not be considered 100% indicative of future demand. However, using the sales and comparing the data against how other designs sold should be considered. As Sandra mentioned, the street line will be important for the mass market. The designer may use the data gathered and decide to produce a certain portion of the mass market line domestically. A limited release of a street line might prove an event in itself and the additional cost to produce domestically could be covered in the sales price.

  13. Ryan Laskey says:

    I agree with Matt and Mike above and am a little surprised that people see it differently. If de la Renta is able to push a short run out with the fashion shows at a high price to offset the short run costs this should provide an early indication of the future demand. It he loses money on the sales of 5-20 sweaters within a week of the fashion show this is a much greater risk than filling a pipeline of undesired inventory. It will take business analytics for the fashion companies to use theses early sales to project them into the seasons inventory levels.

  14. Oswin Joseph says:

    I think if I had orders >1000 units for the sweaters in 24 hours, I would ramp up demand as this would be an indicator of customer preference. 5 is too small a sample size in this case. If the price point of the unit was lower, say$500, I would like to see >10,000 units sold in a short period of time before I commit production runs on inventory. Unless there is sufficient short term demand, the item maybe more a novelty purchase than anything else. If there seems to be demand, then it can be utilized to project longer term demand. At this stage, I don’t think items need to be sold at a discount. Domestic production can be ramped up for quicker delivery but running out of an item is not necessarily a bad thing (new releases of apple phones) but depends on exclusivity of the product and relationships to substitutes and complements.

  15. Meera Gursahaney says:

    Will such quick sales of items from a show be useful in forecasting product demand? It may be a small predictor of overall interest in the product. However, a purchase that quickly after release is probably purchased by a specialized segment of the intended market demographic and not a good predictor of the overall target market.

    Will the observed demand be a useful indicator of customer preferences? The observed demand would be a good indicator of customer preferences as far as style or color but with such a small sample size it may not be completely reliable.

    Should items be sold at a discount to encourage customers to both buy early and provide an early read of preferences? No, if someone is purchasing an item right after a fashion show then they are willing to purchase at any price. Discounting may even remove some of the prestige they feel from being the first to own.

    Should early sales be satisfied by domestic production to ensure quick delivery? Probably not necessary. someone willing to pay $2500 for a sweater is probably willing to pay to expedite shipping if the wait time is too long.

  16. Yana Simanovsky says:

    It is hard to comment on the particular strategy offered as we don’t know intent. I suppose I could see a brand simply trying to draw quick awareness to a particular item so as a result they use discounts to garner attention. This method may be used possibly without regard for sales but maybe to generate word of mouth or water cooler conversations. I also think context for day we live in should be considered. We all know that social media is a major driver in advertisement. There was a 14 year old girl, now 19, being paid by major brands for simply talking/referencing their merchandise in her blogs. If you can put your merchandise in the hands of a far reaching blogger than the value of the discount becomes impossible to measure because that blog may have just generated interest with a million plus people. So, I would want to better understand the intent. Just as a matter of business practice, I don’t think you can make viable forecasting decisions based on a small sample size and after it was discounted. The true market never had the opportunity to react so you are no more the wiser in the end – again, dependent on what your strategy or intent was.

  17. Rodney Williams says:

    I think buyers could greatly benefit from analyzing the quantity and quickness of items sold immediately after fashion shows. Using this information could reduce forecast error because it gives buyers an early look into the demand of items that are presented at fashion shows. However, I do not believe that early discounts should be used for these items. I believe that offering these items at a discount early on will lead to higher forecast error because there are people that would be willing to buy items at a discount who would not buy them at higher prices. This could lead to buyer overestimating purchase quantities.

  18. Emily London says:

    *Will such quick sales of items from a show be useful in forecasting product demand ?

    Yes, I believe it can but only within that demographic of customers-in this case, people with more money than me.

    *Will the observed demand be a useful indicator of customer preferences?

    Yes, the sweater shown in the article seems to be corresponding to how the “baseball tee” look is getting popular. The observed demand, even through website, can indicate customer preferences.

    *Should items be sold at a discount to encourage customers to both buy early and provide an early read of preferences?

    No, items sold at discount will not be a good forecast of preferences. That will only work when the item is already popular and sold out. For example, when Lily Pulitzer sold their limited clothing and merchandise collection at Target for an extremely discounted price last year, the collection throughout the US sold out within hours.

    *Should early sales be satisfied by domestic production to ensure quick delivery ?

    Um, probably not. Sometimes a great suit sounds better and may be perceived better quality if it was made in Italy. It depends on the product. Most of the popular runway fashion is from Europe so it should be made their. I assume customers will be willing to wait for more custom product.

  19. Brianne Keyes says:

    If the early sales are intended to be used as an indicator of customer preference I don’t think the items should be sold at a discount to encourage sales as that would be a false indicator of true customer preference as it is based on a lesser price and we all know that things can be more appealing that way. However, if the products are offered at regular price and the interest and immediate demand is monitored I definitely think that can be a good indicator of future sales. I think designers should remain cautious though knowing that these initial customers may only represent the innovators or early adopters of products and their taste, preferences and willingness/ability to buy may not be fully representative of the majority of consumers they are targeting.

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