How to apply lean methodology & reduce waste in fashion eCommerce
Published: 4 November 2020
Deadstock fabric, unsold inventory and heavy discounts are every fashion brand’s nightmare — and it’s often a result of wasteful practices. This waste can lead to decreasing your customer experience, increasing cost of goods and reducing your margins.
Adopting a lean methodology and eye for waste in your eCommerce business can prevent this from happening. If you’re running lean, then you’re intensely focused on providing an excellent customer experience, and honing internal processes to achieve this goal.
From a fashion perspective, this doesn’t have to mean holding no stock or reducing service levels — it’s more about ensuring that your business is delivering an excellent customer experience with as little wasted resources as possible.
So how do you strike that balance?
We’re going to discuss how you can do this in your own business by exploring two key concepts:
- Identifying and reducing waste in your day-to-day operations
- Developing a culture for continuous improvement
What do we mean by lean methodology and waste?
The lean methodology is a well-documented framework that focuses on optimising the way you do business. Across industries, lean means to reduce operational costs, improve quality, and increase productivity — which therefore improves the overall customer experience.
Analysing your business with lean principles in mind, you can begin to highlight inefficiencies across your entire supply chain. These inefficiencies are what we refer to as waste.
Reduce or eliminate waste = better customer experience = improved profits
Waste itself as a word is vague, but when you talk about it within the context of eCommerce inefficiencies — it takes on a more tactical meaning. It’s not just doing things twice, it’s spending money twice or having money sit around (in the form of inventory or mis-allocated employee time) that you’re not making profit on.
How to identify and reduce waste in your business
Fashion businesses in particular struggle with waste. The result of the entire supply chain — from design to returns — can leave brands with boxes of unused stock and a cash flow in gridlock.
But beyond inventory management, we help brands put lean strategies in place to help free up employee time to work on projects that grow the business — rather than tasks that simply keep the business running. This includes:
Removing manual and repetitive processes or tasks through automation
Advanced, custom functionality using the Shopify API with things like:
- "Smart" inventory management tool that displays live inventory levels and sales data to help more accurately predict stock turn
- Automatic publishing/unpublishing of products and collections based on specific business logic
- Automatic synchronisation of blog articles across multiple regional sites
- Customised product import/creation tools to remove the need for manual manipulation of product data when exporting from an ERP into Shopify
Leveraging email marketing automation & applying lean principles to digital advertising
You can use tools like Klaviyo to increase customer retention marketing activities without increasing workload. This applies to other marketing channels as well, particularly with digital advertising spend which is one of the highest expenses outside of stock for most businesses. Applying lean principles and identifying waste in this context means ensuring the ads you’re running are returning well and they are hitting your ROAS (return on ad spend), and where possible, using automated ads and bid strategies to reduce the requirement for on-going maintenance.
Utilising the Shopify platform itself, rather than self-hosted legacy platforms that require constant server maintenance and configuration
Businesses migrating to Shopify from legacy self-hosted platforms notice an immediate impact on where their employee resources are spent. Rather than focusing on keeping their site working during busy sales periods, attention can turn to new features and UX improvements that drive higher conversion.
By automating and optimising processes like we’ve mentioned above, a business can get greater impact out of a small team. Once you identify the waste, make a plan to reduce that waste and then execute it, you need to evaluate if it worked, and if not, readjust for the next step.
Adopting a lean mindset within your business isn’t an ad hoc project, rather it needs to be ingrained into the culture of the entire business and part of a continuous optimisation process.
Developing a culture for continuous improvement
It sounds simple, but it can be hard to drive a cultural shift in a business, especially in larger teams and when things have run a particular way for some time.
Also, some people are naturally inclined to get frustrated at repetitive, ‘busy’ work and want to solve it with some form of automation. But for others, they see it as their job and go along with the process.
It’s about finding those 1% gains. Everyone in the business should be empowered to find little things in their day-to-day practice that improves their output and quality of work, which will compound over time into larger gains for the business overall.
Entrepreneur Paul Akers calls himself a lean fanatic and has built a strong culture of lean thinkers and has cultivated a continual improvement process in his US-based business, FastCap. As a company-wide KPI, FastCap employees are asked to make a two second improvement to their workflow every day, which are then celebrated and discussed in their daily morning meeting.
Through these culture-led daily optimisations, they’ve been able to drive down cost, improve quality and create a better customer experience.
What we’ve learned from this example is that it’s not enough to just have one person (even a leader) who is extremely passionate about operating lean, those advocates need to be able to coach and teach others in the business to know how to do it.
We get this isn’t an easy thing to do. So, as a way of steering the business in the right direction and educating stakeholders, we recommend looking at how you can tie the success criteria of operating lean to metrics that are agreed upon by the entire stakeholder group — such as revenue goals.
That way, when these specific metrics are being discussed, you can start to educate others in the business that certain objectives can be met faster or achieved more quickly with the adoption of lean principles and automation, supported with data.
Once you begin introducing lean thinking to stakeholders, this will start pushing this way of thinking through the wider team.
Every business, no matter what industry, is trying to achieve a similar objective — to generate profit by delivering value to their customers. Identifying and reducing waste in eCommerce businesses is about uncovering all the little inefficiencies that get in the way of delivering that value to your customers.
Introducing the lean methodology to your business is part of a continuous process that happens over time. Keep it simple. Start by identifying 1% micro-optimisations in your business, celebrate them when they work, and keep repeating this process. If you get stuck or don’t know how to start, reach out to the team so we can help.