Festival Clothing Brand Raves About Sales Boost After Cutting Stock Holding By Two-Thirds
- One of the fastest-growing e-commerce retailers in the USA
- Cut inventory two-thirds – from $300k to $100k using Inventory Planner
- Saw 100% growth on a third of inventory
- Aiming to hit $3M in revenue next year
“Inventory Planner allowed us to see early on, there’s huge value in making winning picks – whether you’re putting in a purchase order, or in our case, going to the production team. If you buy the wrong items and they don’t sell, that could end up being a six-month long mistake.” – Mike Hodgen, Co-Founder of Freedom Rave Wear
Mike Hodgen, festival enthusiast and Co-Founder of San Diego-based apparel retailer Freedom Rave Wear, is fueled by his interests in both life and business. Alongside his wife, Alyssa, with whom he shares a combined love of outdoor music events and entrepreneurship, Mike has built an online retail business that both sells and manufactures its popular line of custom-designed ravewear – chain-hemmed two-pieces and holographic leotards and so on – to dance-lovers and festival-heads across the globe.
Freedom Rave Wear has seen astonishing growth over the last year – in large part due to its investment in a smart tech stack, including Inventory Planner by Sage.
While throngs of online apparel retailers use off-site manufacturing companies, leaving them somewhat at the mercy of supply chain issues and delays, Freedom Rave Wear has the unique advantage of doing all of its production in-house, with many of its items being made to order. Though this has presented its own set of challenges, Mike believes it gives the brand a competitive edge as well as informs the way it plans inventory.
“We’ve integrated as much as possible with the limited resources we have available,” he says. “What separates us from our direct competitors is we design, cut, print, sew and manufacture everything at our facility.
“Insight into inventory is hugely important, but I can’t relate to the struggle of having an unseen inventory – because we make exactly what people want. Our whole business model is built on responding to demand.
“This way it doesn’t matter if demand goes up or down 50%, we have the flexibility to adjust how much we’re making. It has always been intentional for us to create something that wasn’t going to be a ball and chain as a business, but a dynamic, real-time response to what our customers wanted.”
After integrating Inventory Planner into its tech stack in 2018, Freedom Rave Wear has seen huge benefits from implementing its reliable purchasing recommendations into its existing workflows. The purchasing recommendations the team receives are informed by an Inventory Planner’s industry-leading forecasting method, based on historical sales information, microtrends, seasonality and market shifts.
Essentially, when Freedom Rave Wear receives insight on which items are likely to be in demand, the production team uses it as a blueprint for what items should be manufactured with priority.
“We use the replenishment report almost as a daily recipe for our production team,” Mike explains. “With it, we know we’ll need 24 small, high-waisted Brazilian bottoms in 30 days or we’ll lose $1,200 dollars, for example – so we make them.
“Alongside Inventory Planner we’ll use some kind of ABC analysis, as well as some intuition – like if we’re expecting a specific festival or an event we know is coming, we can adjust the forecast settings accordingly. Usually we’ll take Inventory Planner’s advice as a base and only adjust if needed.”
As Freedom Rave Wear implemented Inventory Planner just before the turbulent pandemic period, the team has seen how difficult accurate forecasting can be in fluctuating market conditions.
“We were steady, then during Covid we flatlined, of course. Now we’re back to triple-digit growth. That also brings challenges though – it’s hard to predict what inventory you will need based on last year’s sales when you are growing at triple digits.
“Forecasting was tricky during those years, but now we can look at 2021 vs 2022 more reliably. It pays to be prudent when forecasting sales over periods of fast growth – otherwise you could end up with a ton of inventory that is no longer moving.”
Mike hit the nail on the head when it comes to the fatal risk of overstocking – over 2021-22, big-name retailers such as homeware brand Made.com ran into fatal blockers to cash flow when they ordered masses of inventory based on pandemic levels of sales.
With a data-led inventory planning tool such as Inventory Planner, sales forecasts can be set over custom time periods for added accuracy, while users are warned of the risk of overstock, and told how much cash they stand to block due to non-selling items.
In a true success story, Freedom Rave Wear has used Inventory Planner to slim their inventory considerably. Their profitability doubled as a result.
“Our business was holding around $300k in inventory and we used Inventory Planner forecasting to only make items in high demand. At its lowest, our inventory held around $100k – and at this stage our business doubled. This was because items were being made, then immediately sold – or perhaps sitting on the shelf for 7-14 days. Inventory Planner enabled us to see early on, there’s huge value in making winning picks – whether you’re putting in a purchase order, or in our case, going to the production team. If you buy the wrong items and they don’t sell, that could end up being a six-month long mistake.”
Though Mike is a keen believer in following his nose when it comes to business, he knows that instincts will only take you so far as order volume increases.
“When Inventory Planner helps confirm our own intuition, that’s when we have the most success. Be dialled into your market and know what your customers want, and Inventory Planner will validate that for you. It collaborates with you.
“If you weren’t going to use an intelligent forecasting tool like Inventory Planner, then you might get lucky for two or three years, but eventually your process will fail. Creativity and instincts is what you need to get started – but businesses need to be able to refer to accurate, intuitive reports, take the insights and transform it into a business plan. If you decide to ignore those numbers and go purely off instincts, then time is ticking before you make a huge mistake. Besides, there’s such a buzz that comes from really seeing the truth rather than guessing it.”
THE RAVE IS SAVED
Though it’s been a rough period for festival and events-based businesses, dancing in crowds is back on the menu – and Freedom Rave Wear is optimistic about the future with new technology on its side.
“We’re particularly excited about the potential for AI tools, from a marketing and advertising perspective,” Mike explains. “We’re going to be using it a lot and looking to integrate it into our business plan in a way that drives tangible results. I see AI becoming a big part of the e-commerce tech stack in future. Aside from that, we’re looking to become a $3M business by next year, and a lot of that is going to come from insights. Tracking our efficiencies; knowing what our costs are across the order and manufacturing flow, with less and less reliance on guesswork. Inventory Planner has a huge part to play in that. With the insights and accuracy we receive across each individual item, we can keep making our inventory profitability better and better.”
Contributed by: Inventory Planner. To see what Inventory Planner’s data-led forecasting and insights can do for your inventory planning processes, book a demo today.