ModCloth
Situation
In 2021, ModCloth experienced financial distress. Why did Modcloth stumble? While its hip, vintage-inspired apparel and accessories appealed to a niche audience, Modcloth’s business plan was oriented around scaling up to become a mass-market e-tailer. Walmart had owned Modcloth until 2020 and had spent hundreds of millions of dollars to build a strong customer base as a foundation for profitability. In fact, Tiger’s analytics showed that more than 50 percent of sales were from customers who had been buying from the women’s fashion brand since 2015—an almost unheard-of achievement in customer loyalty.
Tiger’s Vision
In assessing this brand, Tiger Advisory Services observed that its current operator needed to pivot away from spending heavily on customer acquisition at the expense of customer retention. At this developmental stage, Tiger believed, the right move was to sharpen Modcloth’s focus on providing excellent service and product to the existing customer base. Tiger’s investment thesis was simple: Accept that this is a smaller, niche business, and it will turn a profit.
Outcome
Tiger Advisory Services refocused Modcloth’s business plan, with an emphasis on delighting core customers. In May 2021, Tiger helped finance the acquisition of ModCloth by Nogin, a market leader in outsourced e-commerce for major fashion and consumer product companies. The arrangement enabled this smaller e-commerce player to benefit from the economies of scale provided by a larger, more sophisticated platform.