Why are we often sold out?

Hello everyone,

Today, I am going to share with you a very complex subject among fashion brands: that of stock shortages and sales forecasts. .

And behind the subject of stocks, I am going to tell you about a nasty monster that is just waiting for a gap to bite into the brands and swallow them whole: the BFR .

It's a subject never addressed by brands, perhaps due to a lack of transparency or fear of talking about its weaknesses, but also because it can seem difficult to explain.

But I think that everyone will be able to understand our issues at the end of the video and the article, and that this will allow me to dispel some preconceived ideas!

“Why do your products go out of stock so quickly?”

BonneGueule is growing, and more and more of you are placing a first order with us, and more and more are ordering again. Between 2017 and 2018, this represents 65% of orders.

As a result, we also produce 65% more clothing, in order to meet your expectations.

I know that it's sometimes annoying not to find your size on a piece of clothing that you have a crush on, but it's not something that's systematic for us either!

For example, some products sell very quickly, while others arouse less desire and can take 1 year to completely sell out. And it's impossible to know which ones in advance ...

For the oldest among you, we must also remember a time when collaborations were sold out within 24 hours on the majority of launches!

This is why we raised funds in 2015 from business angels with the promise of limiting the phenomenon, and we have largely kept our promise. Some quick sellouts still annoy some readers, but it's still much rarer than in the past .

But unfortunately for you as for us, this is something that will continue to happen from time to time, because as I said, it is impossible to precisely predict the success of a product, whether at BonneGueule or any brand...

“It’s 2018, there are many tools or analyzes to forecast demand, right?”

Honestly, I would love to tell you that there is a foolproof method: it would make our lives a lot easier. Unfortunately, in practice...

Seen from the outside, it seems possible to predict the success of a product: " I was sure that this one would work better" , " It's obvious that a color that changes a little would work better ", “ It’s logical that this item of clothing is a hit, it’s a basic in any wardrobe .” And in general, we're not too wrong. We carry out major statistical analyses, we interact with you continuously, we use our intuition.

But often there are also unexpected results. Causes that we take less into account and which turn out to have big impacts (as in the black swan theory ). Or too many factors, with sometimes positive and sometimes negative correlations . Or quite simply big statistical differences, which mean that all the S shirts suddenly disappear! And in the end, these events are impossible to predict!

Take for example the case of leather jackets: two colors, beige (classic) and pine green (daring): boom, the most classic color is a hit.

1 year ago, superfine merino sweaters. A blue (classic) and a burgundy red (daring). And there, bam, it’s the most marked color that wins hands down .

The examples are numerous, and we are talking about double the demand, sometimes more. How do we know what quantity to request from our workshops in these conditions?

All brands encounter these problems. Whoever invents a reliable method to anticipate people's sizes and desires would earn millions by offering their solution to brands...

This does not prevent us from carrying out very in-depth sales analyses, particularly for the distribution of sizes (we call them Gaussian functions in mathematics) and the approximation of quantities, and that already helps us enormously. We even have an in-house data analyst (Simon) who helps us with studies.

And I can also tell you about the external causes! Did you know that we have three times more visits to the store on a launch Saturday with sunshine and 25°C than when it's raining or it's 35°C? Do you know that when a production delay forces us to release the parts at the end of the month, we sell fewer of them? ? Or that a football World Cup where France is a success turns people away from clothes for 15 days ? And all these different effects, and many others, combine with the first, and can have notable impacts on a launch.

Without being fatalistic, we want and can improve further, but we will never be able to reliably predict the success of the next 20 garments (and therefore order the right quantities for the big day)...

“Why do you produce so little?”

I won't say that we produce "so little". We produce the right quantity, since despite a few sold outs , we generally still have sizes on the new products a few days after launch.

If we take the example of the last launch, we still have all the sizes left on the sailor sweater and the new addition to jeans!

• Henley (€150): 214 pieces produced, 213 sold, 1 in stock
• Linen-cotton sailor sweater (€140): 299 pieces produced, 185 sold, 114 in stock
• Berto stretch jeans (€95): 585 pieces produced, 183 sold, 402 in stock

Compared to our first Henley with Fleur de Bagne, it is simply too risky to plan large quantities on pieces that we have never produced, and which we have never talked about on the media!

I know it's gone in a few hours, but it's always easier to give the lotto result after the draw.

Because it's really a piece that we considered risky, in the same way as very seasonal products (Bermuda shorts, linen shirts, very warm coats), products with a very strong design (raspberry-colored double-breasted blazer, white pants ), or our other very first times (bleach jeans, sneakers).

And to finish with a last counter-example, we still have almost all the sizes on other strong pieces:

Yes, it also happens to order too much stock on a few pieces during the year!

“Why not produce more? There is no risk since you sell everything!”

First of all, as I just explained, you should not believe that "we sell everything" .

But then, you may be wondering why not discount the best pieces?

Well, if we wanted to offer customers some sort of insurance against any sold out , we would have to increase orders (and therefore stocks) of all parts .

We would go from this:

to that :

A stock that is impossible to finance

The first problem is that we would have to finance all this stock. That would be a lot of money “tied up” in the form of clothing waiting to be sold.

And this is where the Working Capital comes in. Basically, this is the company's tied-up money:

• money paid to weavers and workshops to order fabric or reserve production slots
• stocks already produced, in transit , or already delivered
• the part of the payments in 3x that we will only receive next month and the following

And this Working Capital only grows as growth continues.

Worse than that, it grows even before growth generates a cash surplus, because the company will anticipate this growth: more inventory, but also more efficient IT systems, larger team, larger premises, etc. .

Which brings us to a paradoxical situation: even profitable, the more BonneGueule grows, the less cash flow we have.

WCR is truly the sworn enemy of growing businesses.

Coins on my hands for 5 years

Let us still assume that we decide to further increase the WCR to finance additional stock. On the least demanded products, we would find ourselves with stocks on our hands for several years.

Moreover, this is already the case on certain pieces, where we have 30 sizes XS or 25 sizes XL that we would like to part with. .

So much cash tied up in stock, when we could have produced new products with this money.

This is not our philosophy

Finally, BonneGueule means consuming less but better.

Even with unlimited cash flow, what would be the point of overproducing, with the assurance of having 3 or 4 years of stock on the products where we make a mistake?

And then we burn everything for accounting reasons and “preserving the desirability of the brand”?

Is this really what our customers expect from us? Is this how we want to grow? How can we then justify ourselves when we want to show the market that another path is possible?

An expert's opinion

Valentin, another reader who is a production supervisor in a factory , explains it very well to disappointed commentators:

“Why not raise lots of money to finance a bigger BFR?”

Because it would be disproportionate to over-finance BonneGueule just to avoid certain stock shortages. Knowing that for those who really don't want to miss an item of clothing, 99% of the time it is enough to log in at the time the email is sent .

In fact, each fundraising represents a progressive loss of independence for the company. Today we are only surrounded by business angels, minority shareholders. Benoît and I still hold the vast majority of BonneGueule's share capital (more than 4/5th), in addition to a significant share which is held by members of the team: it is important for us to maintain power important decision to achieve our business vision.

As for the banks, they finance investments, if possible tangible, but are very cautious about the idea of ​​financing stocks: it is generally impossible.

“You don’t mind frustrating people?”

Well yes, absolutely.

I also already missed some products from other brands , or some Kickstarter, and I understand what it feels like to not be able to order something you really like.

Which doesn't mean we don't do anything.

But as you have understood, each company has its constraints. Fashion remains a sector of intuition, creation and human relations. This is why sometimes we can fail. And besides, everyone screws up from time to time, including algorithms and the enormous mammoths of fast fashion.

This does not prevent us from taking risks when they are measured.

“Why don’t you do some restocking?”

On the contrary, we make them regularly: most of our clothes are treated as permanent, which we re-produce as soon as the stock drops too much.

As long as we don't end up with a large stock of sweaters in the middle of August, and shorts as October approaches.

In fact, having the materials woven, transporting them , then have them assembled by workshops that are sometimes quite confidential, and carry out a quality control worthy of the name, it does not take 15 days but 4 months.

Some brands may choose to skip steps, but this does not meet our quality standards. In 2018, it has become commonplace to order a book on the Internet and have it delivered the next day, but when we talk about quasi-artisanal products, we must understand that time is one of the ingredients of quality.

That said, we still tried to restock summer pieces, notably the striped cotton and linen t-shirt from June (despite significant production minimums on knitted clothing) because Julien had planned a possible restocking in advance. :

“Why don’t you set up pre-orders?”

This is a good question, which many have asked us, with the appearance of brands that only work by pre-order or on Kickstart, like Gustin or Benjamin Jezequel.

We find that this is an interesting way of doing things, but it comes with another set of constraints and problems: availability of stock outside of pre-order periods , difficulty in making exchanges, impossibility of making advanced products because sales cycles are too short and pre-orders are often out of season, delivery delays and customer service problems, etc.

The other problem is that in terms of quality, pre-orders are not always that good either.

Our way of doing things allows us to work, work and work on each product, sometimes with as many as 10 prototypes. And the absence of rush allows us to test the clothes well, and then order special productions of fabric, often more interesting and of better quality than by drawing from what we call the "stock service", which are the basic products from fabric houses (acceptable, but more industrial, and with less originality).

We would ultimately end up with less elaborate products, with a greater risk of defects, and again this does not meet our standards. It’s an assumed choice based on what really matters to us.

That said, we will perhaps try pre-orders on "simple" and "entry-level" products in 2019, but we do not want to make the task even more complex today, and risk doing poorly by wanting to doing too many things at once.

In conclusion...

First of all, thank you for trusting us and asking these questions, because that means that BonneGueule matters to you. And it always makes me happy to answer them!

And if I finally had to summarize this article in a few lines, I would say that we are pioneering new economic models with BonneGueule . Every day, we continue to refine them, knowing well that we are not perfect, and that we will never be able to meet 100% of the expectations of tens of thousands of customers.

But on a daily basis, we do the best we can with our little arms, like everyone else. We must therefore accept not having everything (which is the case everywhere ), even if we listen to you and try as hard as possible to find solutions when problems arise.

And missing a piece of time is also a kind of assurance that we are really doing the job from A to Z, over time. We don't want to dilute ourselves by doing everything at once, and nothing really good. Multiplying distribution channels, production methods, clothing lines would not make sense.

In the meantime, we have to trust ourselves a little to do the best we can, and continue to grow healthily.

Thanks again to everyone who has followed us for a long time, encouraged us and trusted us with their style.

All that remains is for us to wish you a wonderful summer!

See you soon on the other side,
Geoffrey & Benoît