Trunk Club

» see trunkclub.com as it lived, on the wayback machine

~ the last words ~

A box of clothes turns up at your door. You keep two shirts and send the rest back, and the return leg costs you nothing. That arrangement only holds in a place where a courier will carry the same parcel twice at a price a retailer can absorb, which is why the styling was never the hard part of Trunk Club. The hard part was the freight.

The idea came from Joanna Van Vleck, who worked it up as a business school project, and the company started in Bend, Oregon in 2009 before moving to Chicago. Brian Spaly took over as chief executive in 2010, arriving from Bonobos, where he had already established that men will buy clothes online if somebody takes every decision away from them. There was no subscription. You paid a $25 styling fee and it came off anything you kept, with the clothes priced at ordinary retail. U.S. Venture Partners led an $11 million round in 2011.

Nordstrom bought the company in July 2014 for $350 million, which at the time read as a department store buying its own future. Womenswear followed in 2015. Physical clubhouses opened in a handful of American cities, part showroom and part bar, where a stylist would work a rack with you in person over a drink. Then in November 2016, twenty eight months after the purchase, Nordstrom took a $197 million goodwill impairment on it. The filing did not say the business was shrinking, because it was not. It said the profit was never going to arrive at the size the company had modeled.

The unwinding took another six years and came in pieces. March 2020 brought the announcement that the clubhouses would be folded into nearby full-price stores. On 24 May 2022 Nordstrom said the service itself was ending, the last trunk went out on 7 June, and customers had until 15 August to send back whatever they were still holding.

None of this was ever within reach here, and the reason is not that Nordstrom overlooked Turkey. It is that the model is a bet on a particular postal economy. Ordering clothes in this country through the 2010s usually meant paying the courier at the door, and sending something back was a cost you carried yourself. Trunk Club was really selling an absence of friction, and friction is local.

~ the record ~

~ the box was the product ~

Picking clothes for a stranger is cheap. A stylist can do it from a screen in minutes, and after a few rounds the guesses get good. Everything downstream of that is a warehouse: pulling six items off shelves in six different departments, packing them into one carton, shipping it, taking four of them back, checking their condition and returning each one to where it came from. Nordstrom already had the stores and the people. What it paid $350 million for was the carton.

The comparison that mattered was never Stitch Fix, which ran on cheap own-label goods and could make the freight work at that margin. It was the Nordstrom two miles down the road, where the same stylist service was free and the customer carried the bag home.

~ what the writedown said ~

A $197 million impairment on a $350 million purchase is an unusually direct piece of writing for an accounting document. It cut the goodwill carried against Trunk Club from $261 million to $64 million in a single quarter. Nordstrom kept the business running for another five and a half years after that, which suggests nobody was sure what else to do with it.

That number is the one to keep. Trunk Club was still growing when it was written down and still growing when it closed, so the failure was structural rather than a matter of demand. Enough people wanted a box of clothes chosen for them. Not enough of them wanted it at a price that covered sending it in both directions.

~ what nordstrom kept ~

The stylists stayed. Nordstrom's styling service is still free and still runs out of stores, and it will put a selection together and hold it for you to try on. The part of Trunk Club that customers actually liked, which was having somebody competent do the choosing, cost nothing to keep. The part that cost $350 million was the delivery.

@}-->--

              )
             (_)
            .-'-.
            |   |
            |   |
            |   |
            |   |
          __|   |__   .-.
       .-'  |   |  `-:   :
      :     `---'     :-'
       `-._       _.-'
           '""""""

« previous  ·  random  ·  next »