YogaClub’s Success Mantra: Slow Fashion + Technology

Akshara Subramanian

Hey guys. Welcome to a new episode of The Vue Podcast. I'm Akshara and I head Customer Marketing here at Vue.ai. Today's podcast guest is Dave Palmer, COO of Yoga Club. Yoga Club is a subscription box that brings its shoppers branded activewear outfits at half the price. Before he founded the Yoga Club he was also the founder of Stealth Venture Labs and has over two decades of marketing experience in companies like Dedicated Media and Venture Commerce. Welcome Dave! We're very, very excited to have you on our podcast.

Dave Palmer

I'm excited to be here. Thank you very much Akshara.

Akshara Subramanian

Fantastic. So Dave, you say that Yoga Club is more than an apparel brand. You say we're a movement created to empower your active lifestyle. Can you tell us what inspired you to venture into the subscription box business and why did you feel like athleisure and activewear was the right category to explore?

Dave Palmer

Awesome. So back a few years ago now I was running a venture lab with a few friends and we were busy working in the subscription space doing very well scaling companies bringing all of our sort of superpowers to bare. And we'd been very, very successful with a few big names and we started thinking, hey we could be doing this for ourselves. At the same time we witnessed the sort of fundamental change in how women dress. People are shopping for comfort, way more these days and yoga pants and activewear had firmly taken over from denim and was the everyday wear of virtually everyone we could see. So we knew that there was an opportunity there. We wanted to do something very authentic and honest in the athleisure space. So we put together an MVP and we said to ourselves if we do X amount of sales in a month, we'll do this business. And we ended up doing that volume of sales on weekends. So we kind of knew we were on to something.

Akshara Subramanian

Oh wow!

Dave Palmer

Yeah we knew we were onto something and then as is the story with a lot of startups you move fast, you grow fast, you break things and you have to stay agile. So that's that's been the story for the last two years and I've just popped my head up for the first time to speak to you.

Akshara Subramanian

Oh fantastic! I'm really excited that you decided to do this podcast with us. Dave, the number of subscription boxes continues to grow year over year. I recently read somewhere that nearly 47 percent of subscription boxes have entered the market since 2017 itself and this means that there's more than 3500 subscription boxes available today. Not all of them are a small or mid-sized brand but even giants like Amazon, Target and Wal-Mart are getting in on the action. But there's a chance of saturation. So what would you say is kind of your key differentiator in this model?

Dave Palmer

Well let's talk about the subscription space. I don't think the subscription model is going away. It's basically represents a new modality of shopping and it's the overall space which is growing significantly. I mean let's take a food delivery for instance; food delivery was 1 billion dollars the market size for subscription commerce in 2015 and is projected to be 10 billion dollars by 2020. So the overall base is growing massively and when it comes to our differentiator I mean we really try and listen hard. We not only listen, we act, and act all the way up the supply chain. Like, the boxes migrated from just being a curated box to a vertically integrated box where if you come on and vote for the trends that are setting we'll actually put those things into production with our strategic manufacturer. So this is really a democratic brand where unlike traditional fashion space where you've got a buyer all powerful attending catwalks and kind of deciding the trends we actually have our data and our customers decide the trends and we go into manufacture those outfits. So I think that's a key differentiator for us and it's a key differentiator but both as a customer facing aspect of our business but also operationally it helps us eliminate a lot of waste in how we produce because we don't make clothes that we're not sure people are going to absolutely love and consequently much fewer clothes end up in landfills.

Akshara Subramanian

Right. Actually that's fantastic because my next question to you was around sustainability. There's a big focus on sustainability these days and people now want to know where their clothes are made and if they're made responsibly. And I see that you guys have brands like Teeki and Manduka and me on the soul and a few others. So are your shoppers also actively looking for sustainable brands?

Dave Palmer

Absolutely and I think yoga and mindfulness and environmentally consciousness is all sort of intermingled. A lot of our brands take a very forward thinking stance on this not only in the materials but in the quality of the supply. What I mean by this is when they're working with factories they're making sure that they're fair and equitable. And so they take a very very fair stance on that as well. Generally speaking I think there's been a lot of fragmentation in the marketplace. And there's been the Toms effect where people want a brand and body more than just looking cool. They have to they have to stand for something. And increasingly people expect a very high degree of sort of personal connection with the brand not necessarily the sort of mass appeal but much more of an individual appeal - that this brand speaks to me in its outlook. So yeah absolutely. I think this is true of the yoga market it's true of a lot of markets. And increasingly it's true of the way that the younger generation is shopping. I'm putting a lot of focus on attention on this which is awesome.

Akshara Subramanian

Right. You said something interesting about shoppers really being able to connect with the brand. What have you heard from your customers about how they feel about shopping at yoga club.

Dave Palmer

I have to keep reminding myself that we're very very big and we have a lot of customers that love us, because how it is online. Actually one of the responsibilities that I'm in charge of is customer service. And we're very, very active and listening on social media channels, listening on all of our reviews. And there might be a point 001 percent of customers that are unhappy but they speak very loudly and it's super important that we truly hear them and we seek out information good and bad to try and move at the speed of thought and address people's concerns by constantly evolving the business. So I'm appreciative of all my customers. I'm appreciative of all feedback. We try and we try and do a really good job of not only making sure customers know that we've heard them but the most important step which is acting upon that. The brand has been very well received. We have a 4.5ish rating on Facebook. We have embedded feedback into our business model. It's absolutely cool. So we get industry leading feedback on all aspects of the clothes that we put in box from fit, feel, pattern, style and we use that feedback to direct our purchases to make sure that we're never re-buying from manufacturers that don't have phenomenal ratings. And we're also quick to react and to take something out of product, out of the supply chain or to take something out of the curation pool, if the performance isn't there. So I think the best kind of feedback is ongoing feedback where you can especially as a subscription company where you can continually listen and continually change, continually adapt and hopefully build out a very long term relationship with that customer, where they try you and that's the biggest kind of leap of faith at first. Just trust you enough to try you but then continue to grow with you as they share more about what they like and what they don't like and we get better at incorporating that and nailing it every time.

Akshara Subramanian

Absolutely. There's actually something very interesting you said about being able to make better

merchandising decisions and reacting faster to what you see going on. We talked a little bit about product sustainability itself but there's also the business angle. And as a model of the subscription box, it kind of provides you with the ability to curate based on data and profiles of each individual user. So in some sense you're kind of understanding them better possibly reducing returns and basically making better decisions on what to sell and what not to. So how has technology helped in that aspect and has it helped with profitability?

Dave Palmer

Yes, yes it has. So, we're a data and technology company that works in the fashion space rather than the other way around. Right, so we're very data forward. And that's representative of our team. I would say 50 percent of our team are data scientists and technologists. When it comes to the subscription model what you were saying I mean it goes even further than that, right. The fact that the subscription model affords you a stable base of demand unlike e-comm or retail. You can project sales but you never truly know the reality of a subscription model which allows you to personalize all the way up the supply chain. So we're actually moving towards mass customization which is the idea of I'm actually going to go and produce clothing for this particular segment in this particular style. And then that's kind of a virtuous circle that keeps growing because I'm personalizing right at the product level. Well that is a huge differentiator and an insulator to churn because people feel wow not only are they listening to me I can't get this product anywhere else because we're literally working with strategic manufacturers to create it. Yeah. I mean technology is a core aspect of what we do. We really started on the technology side, using technology to help filter all of the choices that we could make to satisfy a customer and then moving from filtering it gets into kind of recommending what would what would work for a given customer and then taking broad strokes. We move from recommending to predicting and automating. So we're a small nimble agile team and using utilizing technology to automate as many processes as possible is a key aspect in which we can help from a profitability perspective, reach scale but still stay nimble, lean, mean but hopefully not to mean.

Akshara Subramanian

Where do you see AI sort of fitting in here, in depth. Like can you tell me a little bit about a direct and sort of tangible impact that AI has had on your business?

Dave Palmer

Okay. We use AI in a lot of different aspects of our business. I kind of see AI as a bit like this. If you had five houses to paint in a street we put a top coat on every single house. And if those houses represent aspects of our business, we try and use AI, in broad ways across many different functions and we aim to get our basecoat down before we then layer on and aim for perfection. So we're at that stage now where we've made a pass across a lot of different aspects of our business, from customer service, to curation, to automated marketing, to logistics is a lot of different aspects of AI. But here's the thing with what we're talking about here fashion, fashion is still a very artistic and highly nuanced field. Right. It's the idea of a robot being able to or an intelligent computer system being able to make an outfit a little bit a ways from that because of the sort of synergy and the nuanced nature of an outfit. There is a certain je ne sais quois to use a french word there is a certain kind of synergy that happens when when when it comes together. And then the computer can't necessarily find that but what the computer can help you do is take in a vast amount of data about a given user. And it can help filter and recommend the field so that the human being picks from a more finite selection of choices in order to get it right. Because there is an awful lot of inferred data as well as supply data, first party data that can be brought to bear on that decision. And the better you want to be at curating, the more data you want to bring in but then consequently the more overwhelming it becomes for a human brain to kind of ingest all that. So it's definitely a partnership between man and machine. And I honestly think that's how we're all going to work increasingly in the future. If you look at what AI and programmatic media has done to the media space and the finance space. I mean we've been moving to this world where half of my brain is gonna be a microchip and the other half is going to be watching TV. I think we're all going to work hand in hand with machines and we're going to let the machines do the things that it's great at. But in areas like fashion and the creative side we're going to be a kind of holdout. There's a there's humanity is going to last the longest. And those kinds of work settings. But yeah we use AI and technology a lot throughout what we call taxonomy against an outfit, that's a very labor intensive process and we're looking at you guys to help us do this visually so that we can get a very rich set of data to work with - to predict from, to personalized from, to filter, to recommend, things like that. So yeah we're excited.

Akshara Subramanian

Fantastic. In today's businesses we're kind of heavily depending on data analytics to predict which of our marketing efforts will give us the highest yield. So tell me a little bit about what you think about product of marketing being the new frontier in businesses.

Dave Palmer

Yeah. I mean it absolutely is. So you've got your analytics which tells you what has happened and then you've got predictive analytics which you're going to tell you what is likely to happen next. Now the more fluent and effective you are at understanding what's likely to happen next means that the more you can anticipate a customer's needs and if you can anticipate their needs you can make their life easier. It’s all about convenience. It's all about saving people time and it's all about. I mean it's all about making people's lives easier. So we use A.I to take our feedback both given and implied feedback, to interpret that so that we can communicate to our customers with the right message at the right time, at all times and committing to convenience means that if you think this customer wants to cancel, well then you let them cancel, you don't try and take the old school approach of standing in the way and making things difficult. In the early days when we're in this business we sought the solution to customer service was armies of customer service people. We have a fairly big customer service team right now. But we also created a Customer Love Center where our customers can go and access anything they need to do on their account - change their frequency, cancel, move from monthly to quarterly etc. Well without human intervention, themselves easily and quickly. And what we actually found by doing that is that ironically our save rates actually went up from a human being because people felt in control and comfortable and consequently had better feelings about the brand if they did cancel. And some of our members cancel and some of our lovely members get pregnant for instance and then can't fit into their yoga pants and don't want to fit in their yoga pants and but then they come back to us. We found our win back rate was a lot higher given the fact that people have this comfort feeling of knowing that it's not a scary subscription that they're going to be locked into it instead there's a lot of flexibility and control in their hands. So I think that hopefully that answers the question.

Akshara Subramanian

Yeah it does. And in fact I'm listening to everything that you just said and that's one part of the customer experience where you're kind of providing that flexibility and everything. But there's also this community aspect yoga club seems to have a huge community on Instagram. There's like 70000 followers. And it's pretty amazing. How have you built this community and has social media played a major role in building this sense of being a part of this big fitness community and is that how you're also listening to what your customers are saying.

Dave Palmer

Yes we do listen through social media. We also asked for feedback on every single item that we send out. We also do things like a trendsetter survey where we will literally get samples from our brands put them together on models ask are customers to vote on them. And before we go into production or any of any of them we look at all that data and make really informed decisions. Again sometimes using AI to identify customer groups and segmentation. But yeah I mean we we co I come from the marketing space, the online marketing space previously run the media. So building audiences and all that stuff is second nature to me. But right from the get go we wanted to build a very authentic brand. We wanted to build a very honest and open and transparent brand. So yeah we do react and listen and work with our customers with our social media presence. We built a pretty robust Facebook group called my yoga journey which is completely free and it's a really amazing place online where women can go and share their yoga journey. We're a big proponent of inclusivity. We were one of the first brands to have extra large items in our store and increasingly beyond that we're moving into plus size. So the community is amazing. It's truly supportive. It meets everybody where they're at on their yoga journey. And it's a place where people can ask questions, get inspired, be wrong vulnerable, be supported and that's the kind of level that's that's the true hope of social media right. It wasn't just getting kind of junk in your News Feed everyday, it was truly about community. And I think that's what we've been able to do. We've been incredibly fortunate that our members are so vocal and caring and supportive and wanting us to succeed at the end of the day we do a very difficult job. We're trying to predict a woman's fashion who we've never met and get it right consistently. And a lot of our customers have been very generous with their feedback, very supportive of our growth and truly thankful for the two way street that we built here with this brand. As far as the listening and the feedback and the community aspects of what we've done I think I think we've succeeded there. And honestly community is a core aspect of brand building these days. I mean people are looking for that connection with their brand be it against their core values like you said earlier environmental values for instance but also about they want brands to speak to them on a very individual and personalized way which is where again coming full circle technology comes into this. It's only really possible to be a personalized mass curated mass customized brand with the use of technology. So yeah. So at the end the subscriptions space especially plays nicely with those things.

Akshara Subramanian

When you were talking a little bit about your Facebook community it was kind of interesting. Off the top of your head do you have like an example of something interesting that happened in your Facebook community or something that you've seen.

Dave Palmer

Yeah I mean I think what we see is we see a lot of not the perfect Instagram supermodel wearing yoga club, yoga clothes for the first time and struggling to do their poses and just being met with so much love and support. It really does fill your heart and actually make you feel that you're doing something great as a brand beyond moving clothes but really connecting with people and supporting people and motivating people to rave and get out there and really go ahead. And I think that's a wonderful thing right because all judgments aside being active is a good healthy thing that you can do for people and what people do for themselves so if we can help people build that base level of self-esteem needed to wanting to take care of yourself. Get out there and do it then amazing amazing, happy to be part of that.

Akshara Subramanian

Yeah absolutely. So we're halfway to 2019. Tell us some of the interesting things that you're seeing in retail, things that you believe are really going to blow up in 2019 and 2020. Things that are going to completely die down. What's your take on all of that?

Dave Palmer

Well we've seen a lot of the big players in the space like Stitch Fix going public Harry’s being sold amazing stuff like that. Which speak to the strength of this vertical. We've seen some amazing digitally native brands get big and become so to get big and get sold like AllBirds for instance. We've seen Amazon take a really strong stance on its Subscribe and Save aspects of its business which will speak to the growing recognition and strength of the sort of sub com modality of purchase. When it comes to future trends I think we're going to see a lot of brands embrace the fact that not everybody is a size extra small. I think we're going to see a lot more exclusivity from brands. You have to recognize that. I think as more technologies come online like IoT then there's going to be a continued drive towards convenience where people want to focus on the things that matter in their lives like their families and hopefully their jobs and not sweat the small stuff so much. And the small stuff they're happy to just put on autopilot and focus on the things that matter. So I think that's that's definitely a trend. The trend for convenience is going to continue to increase. I think Amazon is amazing company. I love that brand. I love what they've done there. They're amazingly agile and they've stayed agile considering how big they are and what they've basically done is raised the level of expectation for everybody. As far as what good service is and what people can expect. So you I think that's going to continue. I think there's going to be more and more faster shipping solutions are going to come out so that the world's going to continue to become faster and easier and more convenient. I think those are the big trends and then of course speaking to people personally. People expect to be listened to and the customers only really know they're being listened to if you're acting on that no good customer and not actually making the right call for business. Yeah. And as a small company that can sometimes be a challenge because I don't have the resources of Amazon and we're already offering the highly discounted products. So we're not like rolling in margins. We have to dole out free this and free that. But we do take a very, very long term perspective to our customers and we are willing to make things right. Right up to the brink of where it doesn't make sense anymore just to take a very long term and an increasingly and are really fair, rather than approach to making customers happy because the name of the game in the subscription space and all businesses is ready but increasingly the subscription spaces is lifetime value. It's all about building relationships. That it's beyond that hit and run relationship that people traditionally have with brands through retail or even e-commerce. We're very much about hopefully being a part of their life indefinitely to make their lives easier and continue to grow. So I think those are the big technology trends I see.

Akshara Subramanian

Fantastic. That was great. So Dave we're going to wrap up this podcast with a really quick rapid fire because we now got to know everything that Yoga Club does but we still don't know enough about you. Here goes - What's your favorite social media to use and why?

Dave Palmer

Facebook because I'm old! Really because I love the look back feature and seeing my kids when they were younger and all the memories.

Akshara Subramanian

That's nice. What's your favorite book to read?

Dave Palmer

Michael Dart's Retail Seismic Shift is a must read for anyone that works in retail or disrupts retail. So that's the business book and the novel. I read anything by McEwan. I'm currently reading machines like me which is a love story, a love triangle between a robot and a couple.

Akshara Subramanian

Oh wow fantastic! What's the one brand we should all aspire to or a brand that you think has always been so cutting edge and done stuff out of the ordinary?

Dave Palmer

So here's an interesting one I really love Porche right and I love Porche because it leads by product. And it was agile before agile had a name right. It was all about iterating and optimizing a design. You look at the 9/11 how it hasn't really changed that much. Instead it's got a tiny bit better and a tiny bit better every month or every year or every release rather. So you I think that's a brand that's amazing. Sticking with cars. I think Tesla is amazing and they deserve to succeed. I drove here in one today. I just think it's amazing how they've sort of set product and R&D is my marketing budget. I've never seen a Tesla ad but they outsold Mercedes Benz for the first time.

Akshara Subramanian

Right. Awesome. And what's the one thing you ensure to do as a leader for your teams?

Dave Palmer

I see one thing isn't fair but there's a few things an hour a day is something that I promote and that's an hour of reading or learning day. The learning is absolutely fundamental and it's what I look for when hiring. Someone that's got an eagerness and a willingness to learn because we live in very, very fast environment and learning helps keep it fun and fresh and you basically need people to be able to learn if you want your teams to grow. Hiring right, I spend a lot of energy on hiring. I think the average is about 280 resumes per position. But we take it super seriously. I'm looking for people that know themselves, that can look inwardly at their weaknesses and address them and change and grow. I mean I think once you've got a talented person that can do that, then their potential is unlimited. And then the people that know me know I like to have fun. I like to have adventure and fun even in the workplace. We're a remote team that meets once a week to lunch together and happy hour together and potentially go to the Casino at two o'clock in the morning together on a Wednesday night. So having fun is super important. Getting stuff done. I don't really care what order we do those things as long as we do both of those things in spades.

Akshara Subramanian

Right. Okay last question. Give us some entrepreneurial advice for people who are starting out in retail.

Dave Palmer

I would say keep learning, stay agile, keep leaning on technology to differentiate yourselves. Build the most robust war chest of data and personalization tools that you can for your customers because that's what's going to separate you from the from the giants out there. Prepare for a lot of coming changes. I believe that you read the book from Michael Dart. You'll get a sense of sort of the seismic shifts that are at play here with retail and one way you can insulate yourself against those shifts is by staying current with all the new technologies like you guys are, learning a lot. And being an end and testing of course right testing things so that you can adapt to the changes. I think there's that that's that's what I would say. I would say stay nimble and small. Don't build anything that doesn't add exact value to your business. Try and leverage existing platforms that exist out there rather than reinventing the bicycle. But when you do have to build technology make sure that you do it with a really solid team and your future proofing it as much as possible.

Akshara Subramanian

That was some excellent advice. Thank you so much Dave for joining this podcast and for doing your first ever interview with us in fact. I really had a great time chatting and I do hope we can connect soon.

Dave Palmer

It was a pleasure. Thank you Akshara. I really appreciate it and really enjoyed it.

Akshara Subramanian

To get your monthly dose of retail. Follow the Vue Podcast and Vue.ai/blog/podcast. Thank you so much for joining us and we'll see you soon. Bye.