Lululemon Athletica Inc.’s problem isn’t just that a batch of its black yoga pants were made too sheer and had to be recalled – the popular retailer is now downgrading its financial predictions and watching its stock do a downward dog.
Inside a Lululemon store (Click Image To Enlarge)
The Vancouver, B.C., company said late Monday that it pulled the women’s pants from its stores and e-commerce sites over the weekend after learning that the material was too revealing. The Luon fabric is produced in Vietnam and Taiwan and made with a mix of nylon and Lycra spandex fibers.
In a lengthy FAQ posted on its website, the chain said it was still investigating how a batch of too-skimpy pants was allowed to reach stores in early March. Lululemon hasn’t changed its manufacturers or ingredient quality since 2004, it said.
Celebrities wearing Lululemon yoga pants provide a lot of PR for the company (Click Image To Enlarge)
Or, in the company’s words:
“The ingredients, weight and longevity qualities of the women’s black Luon bottoms remain the same but the coverage does not, resulting in a level of sheerness in some of our women’s black Luon bottoms that fall short of our very high standards.”
Lululemon is now offering affected customers full refunds or exchanges while also warning of an impending shortage of black yoga pants. The recalled apparel makes up 17% of the women’s pants and crop pants Lululemon sells in stores.
Classic black Lululemon yoga pants (Click Image To Enlarge)
But it’s more than practitioners' poses being affected – Lululemon said the “issue will have a significant impact” on its financials.
The company lowered its expectations for an 11% increase in same-store sales and revenue between $350 million and $355 million for its first fiscal quarter. Now, Lululemon is projecting a 5% to 8% same-store sales range and revenue between $333 million and $343 million.
The company will unveil its fourth quarter and full-year earnings on Thursday. But already, analyst Sam Poser of Sterne, Agee & Leach downgraded Lululemon’s shares to a neutral rating from buy, telling investors to back off until quality-control concerns are alleviated.
Lululemon's problem are $20 million worth of black see-through see-through yoga pants like these (Click Image To Enlarge)
Lululemon had been riding a recent surge in demand for women’s athletic wear, along with competitors such as Gap Inc.’s Athleta, Under Armour Inc. and even mass-market retailers such as Forever 21 and Victoria’s Secret.
In early morning trading, Lululemon stock fell as much as 5.9%; as of 9:15 PDT, it was down $3.60, or 5.5%, to $62.30.
COMMENTARY: Could Lululemon spark a new fashion trend: See-through black yoga pants? I have a feeling that we will be seeing a few of these see-through yoga pants somewhere, some place. The ladies look sexy in them, they know it too, and why not show off the goods underneath? It's probably a bad business for Lululemon judging from the recall, but I will be looking out for the see-throughs with apprehension. LOL
Lululemon Sales Strategy: Scarcity and Eavesdropping
In a series of interviews, Lululemon's executives explained the chain's strategy for stoking demand for Wunder Under pants, Scuba hoodies and racerback tanks. Unlike most retailers, Lululemon doesn't use software to gather customer data, doesn't build lots of new stores, doesn't offer generous discounts and purposely stocks less inventory than it can keep on its shelves.
Instead, the Vancouver company stays in close contact with its customers and cultivates a sense of scarcity, and during a time when most retailers have used discounting to drive sales, it uses pricing power to its advantage to keep items flying off the shelves.
The moves are largely the idea of Chief Executive Christine Day, who took the top job in June 2008, and so far they have paid off.
The Lululemon See-Through Yoga Pants Scandal Continues
After customers complained that a batch of the company's signature yoga pants were too transparent, Lululemon tried to make a scapegoat out of the Taiwanese company that manufactures the pants. Bad idea. Said supplier now says the pants were no different than any other batch. The Eclat Textile Company, whose clients include everyone from Gap to Under Armour, said Tuesday that Lululemon had signed off on the shipment, suggesting that Lululemon made the whole thing up. Eclat's chief executive Roger Lo told The Wall Street Journal.
"All shipments to Lululemon went through a certification process which Lululemon had approved. All the pants were manufactured according to the requirements set out in the contract with Lululemon."
Ladies and gentlemen, we have a yoga pants scandal on our hands.
So which one is it? Did Eclat make a bad batch of $100 yoga pants, or did Lululemon just design transparent $100 yoga pants and milk the market for as long as it could? It's really hard to say. When Lo talked to the press, he said that Lululemon hadn't contacted his company about the recall — which is kind of weird since Lululemoneffectively blamed Eclat for screwing up the "level of sheerness" during the manufacturing process. (It's worth pointing out that Lululemon also said it was working closely with the manufacturer "to understand what happened during the period this fabric was made.") It's possible that there's a third party, some company that supplied Eclat with the fabric for the pants, clearing it somewhat from the blame. But at this point, this particular incident really is a frustrating finger-pointing match that's left Lululemon out about $20 million in lost sales and a whole lot yogis out of high-priced pants.
Let's get real about this stretchy trousers tale, though. It's pretty obvious that the supplier gains nothing by saddling the blame, however the perhaps unexpected media circus that gathered around this see-through yoga pants scandal highlighted a number of questionable incidents in recent Lululemon history. As a Credit Suisse analyst pointed out in a note to clients that this is Lululemon's "fourth quality control issue in the last year." Not counting this latest debacle, two out of the other three issues involved the sheerness of its fabrics. Clearly, something is up.
Along these lines, other analysts suggested that Lululemon needs to spend more time in Taiwan to make sure the manufacturers' work is up to snuff. No matter whose at fault in the growing list Lululemon's quality control issues, it can't hurt to get to the root of the problem. Then maybe next time, someone will spot the bad batch, before they ship $20 million worth of transparent yoga pants around the world.
Lululemon Does Not Inform Customers Using Social Media
I checked Lululemon's Facebook and Twitter accounts to see if there was any mention of the see-through yoga pants recall, and was very surprised that there was not a single newsfeed post about the recall or how customers were to be compensated for returning any yoga pants covered under the recall. I am not saying that Lululemon is negligent in not posting something about the recall, but it appears to me that they are treating the whole affair as if it never happened.
The Financial Impact Of The Recall
$20 million worth of recalled yoga pants is not a huge amount, considering that it only represents 1.42% of Lululemon's gross revenues ($1.4 billion just reported today) for the fiscal year ending January 31, 2013. However, it's still a public relations disaster, because the company charges premium prices for its yoga pants, and customers expect much better quality and better manufacturing controls to prevent this sort of thing from happening.
The financial fallout of that $20 million yoga pants recall will be felt on Lululemon's bottomline. Lululemon generated estimated net income of $237 million in the fiscal year ending January 31, 2013, so the amount represents 8.4% of net income, and that is very material. No wonder the company's stock declined by 5% on the day that the recall was announced.
Over the past few years there have been tantalizing reports that scientific progress was on the cusp of creating a real life invisibility cloak. But upon a closer reading, these experimental technologies didn’t amount to much beyond reminding us just how far off we are from the fictional universe of Harry Potter.
University of California researchers announced last year that they had developed a metamaterial fully capable of hiding objects from the naked eye. The breakthrough does, though, lose much of its luster considering that they’d still have to figure out a way to scale up the technology to mask objects beyond the size of a red blood cell.
Duke University just last month announced a diamond-shaped design that bent light around an object so perfectly, it even concealed shadows. Too bad the illusion only worked when looking straight and in one direction.
HyperStealth Biotechnology Corp. created the following mock-up photos to show the public what they claim their 'invisibility fabric' (Click Image To Enlarge)
Now, a little-known Canadian defense firm called HyperStealth Corp claims to be closing in on a breakthrough technology that should soon lead to a true, in every sense of the term, invisibility cloak. And to allay skeptics, company CEO Guy Cramer told CNN in an interview that they’ve even garnered strong interest from the U.S. military after demonstrating to officials how the fabric’s light-bending properties prevent the wearer from being detected entirely.
Development of the material codenamed “Quantum Stealth” has been kept shrouded in secrecy. The project’s web site reveals very few details about how the technology actually works, except that it’s lightweight, inexpensive and reduces 95 percent of an object’s shadow. The page also includes a few mock-up photos that illustrate what the material’s remarkable camouflaging effect would look like, along with an explanation from Cramer as to why they’ve decided to at least go public with their design.
Click Image To Enlarge
According to the site, Cramer started to receive a lot of attention from the media after giving a talk at a military trade show about the company’s development of an inexpensive and lightweight “light-bending material.” He said.
“After enough press had been written on the subject, the U.S. Military Command finally asked to see the real material to verify that it worked. Those meetings took place with very limited ‘Need to Know’ access and the technology is now moving forward.”
Click Image To Enlarge
If substantiated, the implications are tremendous. Snipers would be able to position themselves covertly with very little risk of being spotted, while troops could use the cloak to elude capture or to carry out surprise raids against enemies. On a more ambitious front, the invisibility-inducing material may even someday enable aircraft and ships to take the notion of “stealth” to a whole new level.
However, Cramer says that, once available, it’s likely that only the military will have access to the Quantum Stealth’s special effects, at which point, it’ll be hard to hide the collective excitement.
COMMENTARY: Guy Cramer, President and CEO of HyperStealth, said that there have been similar inventions over the years but his is the only one with a 360-degree view.
He said he isn’t able to discuss details or do demonstrations of Quantum Stealth for security reasons, but claims several military groups in Canada and the U.S. have expressed interest.
Cramer said.
“We’ve also got a countermeasure for the device to be able to detect it. It [costs] about $100 to $200 per soldier which is about what their uniforms are costing them right now.”
Only mockup photos are currently available to the general public.
Colin Worth, a recently retired RCMP officer, said he went to Ottawa with Cramer to demonstrate Quantum Stealth in front of the Canadian Armed Forces.
Worth said.
“I don’t have a vested interest in the company or the technology, but I’ve seen it work. The stumbling block last time I talked to Guy was how does he make it big enough and how does he make it portable enough to work in a real life situation?”
Worth said that he signed a secrecy and confidentiality agreement so he isn’t able to give any details, but said “stuff just seems to disappear. It’s weird the way it works but it does work.”
Bill Jarvis, a retired Navy Seal, also said he has seen the fabric work at U.S. Military Command meetings.
Cramer said that he would consider marketing Quantum Stealth to the general public only if the military allowed him to do so.
He hasn’t been approached by any Harry Potter fans yet.
On October 19, 2012, Guy Cramer, President/CEO of Hyperstealth Biotechnology Corp. announced its new cloaking technology called "Quantum Stealth." Here's a copy of that press release.
From its aerie in sylvan Finland, Rovio gave us Angry Birds. Now it wants to be the Disney of the Internet age.
For more than 200 million people every month, Angry Birds land is a state of mind: a digital immersion in addictively cheerful destruction, a refuge from the boredom of subway commutes and doctors' waiting rooms, where the fine art of sling-shotting tiny, brightly hued birds at wooden fortresses to vanquish pigs taking shelter inside makes eminent sense and is incredibly gratifying.
Over the past three years, this not-so-peaceful pastime has amassed legions of followers, incited fierce battles between parents and their tablet-weaned children, and won professions of love from the likes of Justin Bieber via Twitter and Dick Cheney on the Today show.
Rovio CEO Mikael Hed, and his cousin Niklas Hed play with some of their merchandise menagerie at company headquarters in Espoo. | Photographs by Markus Henttonen (Click Image To Enlarge)
But what I'm experiencing now is not just a state of mind. I am being hoisted 50 feet up into the clean air of Tampere, Finland, and as I rise, I gaze upon the physical manifestation of Angry Birds mania: a carousel ride with the familiar red fowl as mounts, bouncing up and down as if in flight; a soaring, wooden-framed play area with winding tubes, slides, and monkey bars; giant, spherical green hogs with bulging eyes, perched above replicas of small towns with attractions like the Pig Popper, which lets visitors shoot swine with plastic balls for prizes. And then, as I'm suspended over the real Angry Birds Land here at Säerkäenniemi Amusement Park, the upward trajectory of my drop-tower ride stops with a jerk--at which point, like many a phenomenon that has reached its zenith, we plummet to the ground.
Espoo, about 100 miles south of Tampere, Sweden doesn't feel like the kind of place that would spawn the next major entertainment franchise. It is a supremely peaceful city and, though only about a half-hour drive from the Finnish capital of Helsinki, surrounded by a vast pine forest. Yet Espoo is home to Rovio, the creator of Angry Birds, which, since its debut in the Apple App Store in December 2009, has set the standard of success for mobile apps. The game notched 50 million downloads in its first year and sat atop the paid app charts for 275 days. Angry Birds Space, a follow-up that features pig-popping birds amid distant planets and galaxies, rocketed to the No. 1 spot in the App Store in 116 countries after its release in March and recorded the fastest launch of any mobile game, with 50 million downloads in 35 days. Along with two other sequels, Rio and Seasons, the Angry Birds menagerie has been downloaded more than 1 billion times.
Angry Birds Merchandise By Steve Heisler These lovable if not emotionally unstable fowls have shot from iOS purgatory into the marketing utopia of band-aids, doggy toys, and Cheese Nips. We sought out to test the old maxim: Is an Angry Bird in the hand(held device) worth two pairs of children’s underpants in the bush? The culprits, stars earned for brand ambassadorship:
Angry Birds Merchandise (Click Image To Enlarge)
Now Rovio wants to build on its App Store superstardom. In August, when I meet with its management team--Mikael Hed, the company's CEO; Niklas Hed, its founder; and Peter Vesterbacka, its chief marketing officer--the company is working on several app projects: Angry
Birds Toons - A weekly series of animated shorts spun off from the promotional trailers Rovio posts on its wildly popular YouTube channel (which boasts more than 750 million views).
3-D Animated Movie - Secheduled for release in 2015 or 2016 (to be executive-produced by David Maisel, the guy who sold Marvel Entertainment to Disney, in 2009, for $4.3 billion).
Rovio is solidifying its status as a merchandising giant, with nearly 40% of its roughly $200 million in revenues coming from its licensing operations.
To support these plans, it has ramped up employment from 28 last year to more than 450 today, staffing a growing number of departments with names like books and learning, animation, and consumer products. Besides Tampere, the company has opened offices in Shanghai; Stockholm; Tokyo; Seoul, South Korea; and Santa Monica, California. Tellingly, Rovio has changed its name from Rovio Mobile to Rovio Entertainment. Some analysts have reportedly valued the company at $9 billion, sparking rumors of an IPO soon.
Angry Birds stuffed toys include the famous Angry Bird characters and the Pigs (Click Image To Enlarge)
If that sounds like a fledgling version of that Magic Kingdom across the sea (Disney's market cap: $93.4 billion; revenue: $41 billion), you're not far off the mark. Rather than merely licensing toys, Rovio is looking to create a universe that spans mediums, with each realm supporting the others. Several members of the Rovio flock, including Vesterbacka, have publicly acknowledged the company's ambitions to be a 21st-generation Disney. Mikael is only a little more circumspect. He says.
"From our starting point to right now, we've always thought, What is the biggest business we can build out of this? And I sincerely believe we can build this into a very major entertainment company."
In his polite Finnish way, he is telling Disney CEO Bob Iger, I'm coming for you.
Angry Birds includes kids apparel like these T-shirts in several sizes and colors, and printed with the Angry Bird characters (Click Image To Enlarge)
The vaulting ambitions have engendered a good deal of skepticism. Disney has created hundreds of properties that have put it at the forefront of movies, television, merchandise, and tourism for decades. Rovio has yet to replicate the success of its single-game franchise, which features animals that can't even talk; its big hope for the summer, a new game called Amazing Alex about a boy and his Rube Goldberg-like machines, did well initially but quickly fizzled. So to many, the Rovio boys seem like the App Store equivalents of a Mega Millions lottery winner, guys who got lucky and struck it rich overnight. In fact, the gestation period of Angry Birds was just a little bit longer.
Angry Birds also includes a broad selection of bags of all types printed with the Angry Bird characters (Click Image To Enlarge)
Mikael Hed, 36, Rovio's CEO, in many ways embodies Scandinavian modesty. A slender, looming figure, he pours me a cup of coffee before we sit down on the sectional couch in his large corner office. On his desk, I notice a Walt Disney World baseball cap covering one of Rovio's products--an iPod speaker in the shape of a villainous pig from the Angry Birdsgame. When I point out the irony, he takes a deep breath and stares pensively out the window at the bay behind the building. (He will do so many times during the course of our interview.) Hhe says.
"All that we've built on the back of Angry Birds has been a very deliberate thing,"
If his attitude sounds sober for a one-hit wonder, I should point out that Angry Birds was the company's 52nd release.
While it's the enterprising Helsinki-bred Mikael who has driven Rovio's rapid expansion from gaming to everything else, it is his small-town 32-year-old first cousin, Niklas--a gamer's gamer who doesn't hesitate to proclaim his distaste for the business side of the enterprise--who started things off. Blond, blue-eyed, and sprightly, almost childlike, he'd much rather roam the office, reviewing game demos and products, than manage schedules and negotiate with partners. When I first interviewed Niklas in 2011, he seemed ambivalent about the various extensions of the Angry Birds brand. And at the Rovio offices, during what seems to be a serious meeting with Mikael and a couple of other executives, I can see through the room's glass walls that Niklas is flipping a bottle of water in the air. "When you're having back-to-back meetings, you don't feel that creative anymore," he tells me later.
Niklas founded Relude, as Rovio was originally called, in 2003, with two classmates at Helsinki University of Technology after they won a game-development competition sponsored by Nokia and HP, which netted them a suite of mobile devices and software-development tools. They caught the attention of Peter Vesterbacka, the founder of the competition, who encouraged them to use their winnings to launch their own game-development studio. Niklas says.
"It was the kick-start to everything. I just wanted to make the best games in the world."
They worked out of their dorm rooms till Mikael, who had an MBA from Tulane, in New Orleans, joined the company and helped the team set up an actual office. His entrepreneur father, Kaj, invested 1 million euros in the startup and became chairman. Kaj also renamed the company Rovio, which is Finnish for "bonfire."
Rovio marketing chief Peter Vesterbacka has his sights set on Disney. | Photograph by Markus Henttonen (Click Image To Enlarge)
The company did well in work-for-hire jobs, developing games for Electronic Arts, Nokia, and Real Networks. But Rovio struggled when it tried to create its own games. It attempted to carve out a niche in the hard-core horror and shoot-'em-up genres. The games consistently flopped, and Rovio foundered. After clashes over the direction of the company, Mikael left in frustration, and in 2008, Rovio slashed employment from 50 to 12. Niklas says.
"It was the worst time of my life."
Then Apple introduced the iPhone and the App Store, and everything changed. Niklas saw the App Store as the perfect way to sell a game. He would no longer have to haggle with manufacturers and mobile carriers or modify games to be compatible with different devices. If the company could get just one good game into the App Store, it would instantly have millions of potential customers. Niklas persuaded Mikael to return and set Rovio's developers to work on small-format games.
They struck pay dirt with their first idea. Rovio's lead designer, Jaakko Isalo, showed the team an image he created of a group of round, frowning, multicolored birds walking toward a pile of like-colored blocks. A player would tap a block, and a bird of the corresponding color would jump on the block and destroy it. The team added a slingshot so the birds could fling themselves at the structures, heightening the fun factor and taking advantage of the iPhone's touch screen. Pretty soon, everyone in the Rovio office was addicted; employees started keeping score of their intramural games on spreadsheets. No one at Rovio knew anyone at Apple, so the company brought in Chillingo, a U.K.-based games publisher, to negotiate a deal and market the game.
When Angry Birds was released, in December 2009, a few hundred downloads were enough to make it No. 1 in Finland, Sweden, and Norway. The following February, after Chillingo finally persuaded Apple to feature it as the game of the week on the App Store's front page, Angry Birds shot to No. 1 in the United Kingdom. Five months later, it rose to the top of the U.S. charts as well. The free Android version launched in October 2010; it racked up 2 million downloads in three days, crashing the servers of GetJar, an app market for independent developers. The game, which took only $100,000 to develop, was a global hit.
Winning fans is one matter; holding on to them is another. Rather than pour money into sequels, Rovio's strategy has been to keep the game fresh by adding levels to it. Angry Birdshad 63 levels when it was released; it now has more than 360. The upgrades are free, but they pay off by keeping the users engaged; the game remains the Apple Store's all-time best-selling app. Mikael says.
"Now we have real fans who live and breathe the thing that we created."
That loyalist army has let Rovio push beyond games.
Branded Merchandise - In the fall of 2010, Angry Birds soft plush toys and T-shirts reached U.S. shelves. Within a week, about 40% of the inventory had been sold. Besides keeping the birds top of mind, Rovio's update strategy also generates new characters to sell against. The company adds levels pegged to holidays, too, supporting sales of greeting cards, costumes, and other real-world products. Rovio now has more than 400 partners, from Coca-Cola to Intel to Kraft; collectively, they have developed 20,000 products on sale just about everywhere except Africa. Lisa Shamus, executive vice president at Commonwealth Toy & Novelty, a New York manufacturer that makes Angry Birds plush toys, magnets, snow globes, and key chains says. "The guys at Rovio have a true category killer."Shamus projects that retail sales of its Angry Birds merchandise will double to $400 million worldwide this year.
Food and Candy - To that lode, according to Chicago market research firm SymphonyIRIGroup, you can add $6 million of Angry Birds fruit snacks and gummy candy from Healthy Food Brands.
Consumer Electronics - A $100Angry Birds video-streaming box that also lets you play the game on your TV, now Roku's most popular product.
Kids Toys - $15 million of Angry Birds squishy toys and night-lights by Tech 4 Kids.
Kids Apparel - Angry Bird underwear by Fruit of the Loom is the highest-selling item at Kohl's and Walmart.
Licensed Branded Merchandise - Angry Birds is now the locomotive pulling Mattel. Lutz Muller, a toy industry analyst and founder of Klosters Trading Corp., estimates that the company's Rovio license bumped up its market share in board games from 4% to 12%. Rovio receives royalties for all of it, ranging from 5% to 20%, suggesting that total sales of Angry Birds merchandise might approach $650 million or so.
But wealth, like beauty, has a price. Sorting out hits and misses has become a major time commitment. I bear witness to the travails on the consumer-licensing floor in Espoo, where I visit what Rovio affectionately calls the chamber of horrors--several tables spilling over with product prototypes, including a pair of boxers that asks for "angry kisses." A team of six employees sifts through the backlog of 10,000 submissions.
Niklas admits,
"We have so many initiatives, and some of those are complete shit. But it doesn't matter, because we will learn from them, and we're willing to take the risk."
When we meet on his first day back from his four-week summer vacation, mandated for all Finns. (The day is also his first as "founder"; he stepped down as chief operating officer because the job became overwhelming and exacerbated his compulsion to inspect and perfect.)
While in Espoo, I visit a playground that looks much like any other in any country in the world. Located between an apartment complex and the site of a future elementary school, it contains slides, tire swings, and a wooden rope bridge. The difference is that this one is adorned with Angry Birds characters and panels that make it look like a pig fortress from the video game. When I arrive, only a few kids are scattered about, climbing and jumping. But within 20 minutes, the place is buzzing with the laughter and screams of nearly 50 children; school has just let out. Kate Sevelius of her 4- and 5-year-old granddaughters, Linnea and Stella says.
"They play the game and heard about the park, and they've been so excited for me to pick them up from day care."
Stella tells me, in Finnish, that she loves playing Angry Birds on her father's iPad, before dashing back to the tire swing.
Candy, toys, and books are the fodder of traditional licensing programs, but Rovio's newest brand-spreading mission is to make Angry Birds part of daily life. The playgrounds, or activity parks, as Rovio calls them, are essential to this exercise. The park I visited is one of 11 Angry Birds-branded playgrounds that the company has developed with the Finnish company Lappset. The playgrounds are financed by cities or apartment complexes--Lappset builds them and makes the equipment; Rovio gets a licensing fee. In all, Rovio and Lappset have lined up deals expected to yield several hundred playgrounds within a year.
In May 2012, Angry Birds Land opened inside Sarkanniemi Amusement Park in Tampere, Finland (Click Image To Enlarge)
Aerial view of Angry Birds Land inside Sarkanniemi Amusement Park in Tampere, Finland (Click Image To Enlarge)
The playground gambit is a clear break from Disney's centralized, collectivist road map. Disney started local; in the early 1930s, Disney built community with the Mickey Mouse Clubs, in which hordes of kids would gather on a Saturday afternoon in a movie theater to recite the Mickey Mouse pledge, sing with the Mickey Mouse band, and watch Mickey Mouse cartoons. But in the mid-'30s, when nationwide membership surpassed a million, Disney began phasing out the clubs because of the trouble of administering them. Instead, the company pulled in. By the 1950s, it had brought the club to TV and opened Disneyland.
Rovio intends to keep the action close to the customer's home. Vesterbacka, 44, the Rovio marketing chief, who joined the company in 2010 says.
"We want to create a distributed model. Instead of fans visiting a theme park every three or four years, the brand is right here where people live."
This model might have been the one Walt had followed if he had lived in 21st-century Finland. The distributed plan fits well with the Internet age, when little things matter as much as the big ones. Not unlike creating links on the web, Rovio aims to support its real-world push by connecting the physical and digital realms and blurring the boundaries between them. A line of Angry Birds toys from Hasbro will come with an alphanumeric code that will unlock additional levels of the game, as do new toys from Mattel when swiped over the surface of an iPad. The toys are a follow-up to a scavenger hunt that Rovio and Walmart ran earlier this year, pegged to the launch of Angry Birds Space, in which customers went through the store and scanned product bar codes that revealed clues within the game.
The apotheosis of the digital-real world connection will be Angry Birds Magic Places, a game feature that will use the GPS or near-field-communications technology on players' phones to reward them with power-ups and hidden levels when they visit certain physical landmarks, including the Angry Birds activity parks. Rovio piloted Magic at Barnes & Noble last year. The bookseller wouldn't reveal how many customers the trial brought into the stores, but Rovio has lined up other commercial partners to participate, including 1,500 McDonald's in China.
Rovio is embedding Angry Birds in everyday devices, too. Earlier this year, Rovio teamed up with Samsung to include a motion-controlled Angry Birds game on its smart TVs. In November, the company will launch the Rovio Channel, letting users of the Samsung sets download games as well as the coming Angry Birds Toons show and a comic-book series. (The channel is independent of cable service.) The potential audience is big; Samsung is on track to sell 25 million of the TVs by the end of the year. Vesterbacka says.
"Every smart TV will get the Angry Birds update. It gives us massive distribution."
The channel will also launch on Mac, PC, iOS, and Android devices, but the TV is an object that millions of families use together every day.
The company is also taking a wider view of the world than Disney did at its inception. When I meet Vesterbacka, he's hours away from hopping a plane to China--his third trip there in a month--where Rovio has been expanding aggressively since the 2011 launch of its Shanghai office. Over the summer, the company opened three retail stores in Beijing and Shanghai to sell its merchandise, with 200 more planned within the next year. It will have three playgrounds in the country by the end of 2012, too. Vesterbacka says.
"Over time, China will be our biggest market. It's important for us to be very local. We want to be more Chinese than the Chinese companies."
China is far from Finland; then again, so is just about every country in the world, psychically if not geographically, and some wonder whether Rovio might have trouble judging overseas opportunities from its Nordic aerie. It sometimes seems to latch onto partners mainly because they are famous, without a clear understanding of how the project would advance Rovio's franchise. It has formed partnerships with Lucasfilm (for Angry Birds Star Wars, which merely swaps bird avatars for the familiar characters in reenactments of the films), the Philadelphia Eagles (presumably birds of a feather, for an Angry Birds game set at the Eagles' stadium), and even with the punk-rock group Green Day (in which the band members appear as green pigs).
Fans and critics swiftly declared that Rovio had jumped the shark with the cobranded web games. "The Philadelphia Eagles-Branded Version of Angry Birds Looks Terrible," read one headline from Deadspin. "Cute mobile game now suffers from overexposure," went another pan from IT World. Of the Star Wars game, Petri Jaervilehto, Rovio's executive vice president of games, says:
"The basic concept is that we take two of the biggest brands on the planet and create something unique."
The partnership could deliver big merchandise sales, but though the game is fun, even some of his colleagues find it a little corny, including Rovio's director of development, Kalle Kaivola, with whom I battle Sith lords. he laughs as he calls down a Millennium Falcon to clear out all the pigs.
"This is one of those moments where you're like, Okay, guys, Jesus."
A lot is at stake, for all the plush toys and playgrounds and foreign incursions in the world will be forgotten if Rovio can't fashion another hit game to keep the franchise fresh. And finally, it has a contender: Bad Piggies.
This time around, the pigs get the spotlight, with nary a bird or slingshot in sight. They are stranded on a desert island, and after they spot a stash of eggs--the ones they notoriously pilfer in Angry Birds--they plot a route to reach them. Their map gets shredded, though, and the player must help the pigs build vehicles from random items and tools like balloons, crates, and soda bottles to retrieve the scattered map fragments and make their way to the eggs. The most appealing aspect of the game is the fun-loving, goofy personality of the pigs. As endearing as the angry birds, they give Rovio a new set of franchise characters. Fans seem to agree: Within three hours of its September launch, Bad Piggies was No. 1 in Apple's U.S. App Store, beating the record set by Angry Birds Space.
However long Bad Piggies stays aloft (it was still in first place in October), Rovio has colonized new territory. It is the first company ever to build a major entertainment franchise from an app. And the competition is paying attention. Two years ago, Disney declared that it needed to start looking beyond princesses in order to find the next great character. It then adopted Rovio's template, creating a mobile game, Where's My Water, featuring Swampy the Alligator, soon to star in his own cartoon series. In one small instance, the student has become the master.
Before I leave Finland, I ask Mikael about a critical blog post that was getting a lot of attention, called "The Fall of Angry Birds."
"I know the article that you refer to."
Mikael says flatly, then swiftly jumps from his desk to a dry-erase board and draws, in green marker, two arcs--the first, a narrow curve with a pronounced fall-off from its peak; the second, a much broader curve triple the height of the first. He says, drawing an arrow to the crest of the first figure.
'A lot of our competitors have an equally myopic view. They've found this hill, and say, here's the maximum amount of money you can make with a mobile game. But what we're building (he moves to the other arc) is about the lifetime value of a fan. That picture is much more interesting."
COMMENTARY: I am not a game player, either online or via mobile app. However, in June 2011, Google launched its Google+ social network, and the newly-launched social network included about a dozen free games for its users. One of those games was Angry Birds. I have to admit that I got hooked for about a day. Was actually able to get to level 9 before those mean spirited Angry Birds beat me. I decided right there and then, that I would not play Angry Birds ever again for fear I would become inescapably addicted, and thereby contributing to the huge "time suck" that Angry Birds has unleashed on society and businesses in general. I wrote about Angry Birds in a blog post dated January 15, 2012, which reported how Angry Birds had become the No 1 most downloaded mobile app of 2011.
In May 2012, Rovio reported 1 billion in combined downloads of Angry Birds across all platforms (iOS and Android dominate) including both regular and special editions, the game has been called "one of the most mainstream games out right now","one of the great runaway hits of 2010",and "the largest mobile app success the world has seen so far". At $0.99 per download, this translates to $1 billion in revenues since Angry Birds was first introduced in December 2009.
As you can clearly see, the Angry Birds franchise is not just about games starring those Angry Birds and the Pigs, but a strategy built on brand extension. It's similar to what Tylenol has done with its pain-killer pills or what Disney has done with its kids animated characters, to name a few. Rovio is developing products built around the Angry Birds brand that will get the biggest pop and reach the largest number of young children. That they have been able to do this in such a haphazard manner is a miracle in itself. Rovio has been able to do this because Angry Birds has become an iconic brand that is universal appeal and brand recognition by munchkins throughtout the world. Even the parents and milions of other grownups have gotten in on those Angry Bird thing. I almost got hooked myself. So what if it has some losers along the way, the guys at Rovio are having a lot of fun building a small empire. And, when you love what you are doing, and it all seems to work, its not so much about the strategy, but about the tremendous pulling power of the Angry Birds brand name. This is a billion dollar brand, people. Mark my words.
Courtesy of an article dated November 26, 2012 appearing in Fast Company and an article dated May 9, 2012 appearing in TheNextWeb
FitBot revolutionizes clothing retail by conforming to consumer measurements
Professor Maarja Kruusmaa working alongside Fits.me COO Diana Saarva created the Fits.me virtual fitting room, an online changing room where you simply enter your sizing statistics and a robotic mannequin models how various sizes will look on your torso - all from the comfort of your own home.
The female FitBot manequin (Click Image To Enlarge)
Among a host of advantages, the virtual fitting room saves time - the one commodity destined to always be in short supply and solves the single biggest problem for online fashion retail - the lack of a fitting room. When it was introduced for men last year, sales to new customers increased by 57%, and sales to international customers doubled. Now it's available for women too.
The Fits.me virtual fitting room is an online changing room where you simply enter your sizing statistics and a robotic mannequin models how various sizes will look on your torso (Click Image To Enlarge)
All told, the robot is capable of replicating 2,000 body shapes. When a retailer signs up with Fits.me, they first send in their clothes. Each size is placed on the robot, which then cycles through all the body shapes it knows.
While that's going on, a camera is taking pictures of each permutation. This photographic log is then stored in an online database. Once you go online and type your measurements into the retailer's site, it calls up the photo corresponding to your precise body type and clothing size.
Using proprietary FitBot technology, robots can conform to over 85 percent of the female individuals that shop online today (Click Image To Enlarge)
Dr. Kruusmaa says.
"Fits.me has already collected information from well over 100,000 male end users, and the data confirms what many intrinsically observe; over half of the customers chose a size that is different than the traditional size chart would recommend."
The consumer-driven robot concept is also invaluable to retailers. One German test-run showed that the robots increased sales 300 percent, while reducing returns percent.
The FitBot virtual fitting room can't guarantee a perfect fit all of the time, but 85 percent of the time is pretty damn good (Click Image To Enlarge)
COMMENTARY: Now that's what I call a truly nifty idea whose time has come. Women or men can now order clothing online and actually see how particular items of apparel will fit or appear on you.
Courtesy of an article dated June 27, 2012 appearing in Robotic Trends and an article appearing in GizMag
“MOST OF THE BAGGU IDEAS COME FROM SOMEONE AT BAGGU GOING, ‘YOU KNOW WHAT I REALLY NEED?’ AND THEN JUST MAKING IT."
This spring, Emily Sugihara, the founder of the chic reusable bag company Baggu, took up surfing and bought a longboard, only to encounter a problem--how to get the thing from her car to the water? She says,
“My hand literally doesn’t go around the bottom of the board, and sometimes you have like a half mile to walk. If I carried it on my head, it hurt, and my arms fell asleep from trying to carry it.”
Emily Sugihara (left) founder of Baggu with Ellen van der Laan (right) who joined Baggu as creative director in 2008
So Sugihara did what she often does when faced with a logistical challenge: She took to her sewing machine, creating a canvas sling that lets her carry the board over one shoulder. This month, Baggu will begin selling the surf sling--which can also be used to lug boxes, canvases, pictures, and a number of other hard-to-contain objects. Sugihara says.
“Most of the Baggu ideas come from someone at Baggu going, ‘You know what I really need?’ And then just making it.”
In August, the boutique bag company Baggu will begin selling a surf sling (see above) that can also be used to lug boxes, canvases, pictures, and a number of other hard-to-contain objects. It was developed like many of Baggu’s products: “from someone at Baggu going, ‘You know what I really need?’ And then just making it,” founder Emily Sugihara says.
The personal process that led to the surf sling’s design is emblematic of how Baggu develops many of its products. It is this DIY creative spirit--combined with standard business skills--that shaped Baggu’s success. Since the company’s founding in 2007, Sugihara has prioritized aesthetics, utility, and sustainability in designing her bags, all while keeping an attentive eye on Baggu’s long-term growth. That focus has led to sacrifices, including Sugihara’s early decision to manufacture most Baggu bags in China, allowing the company to reach its desired price point. But her strategy has paid off; with the exception of 2009, the company has approximately doubled its sales and its staff each year.
Sugihara designed the first Baggu not just for aesthetics and functionality, but also for manufacturing. The bag’s simple design, a knockoff of the standard plastic bag, contains just one seam along the bottom and gussets that allow it to stand up when full.
Like the surf sling, the first Baggu bag began with a dilemma. In the winter of 2006, Sugihara, then a designer at J. Crew in New York, wanted to give some reusable shopping bags to her eco-conscious mother, Joan, who lives in Emily’s hometown of San Diego, as a Christmas present, but she couldn’t find any that were cute, well-made, and affordable. So she bought some fabric and took it home to her mother, a talented seamstress who taught her daughter to sew when she was girl. The pair began creating the bag they wanted but couldn’t find. As the design evolved, Sugihara and her mother mailed prototypes--about 100 in total--coast-to-coast through the spring of 2007.
The original story behind Baggu began in late 2006, when Sugihara, then still working as a designer at J. Crew, started making bags with her crafty mom Joan, who lived across the country. They mailed each other some 100 prototypes.
The bags were more than just a sewing project for Sugihara, a born entrepreneur who once sold watermelon-shaped erasers from the Oriental Trading catalog to her fourth-grade classmates, keeping track of her profits on Excel spreadsheets. As an undergraduate at the University of Michigan, she and her roommate, Yu Wang, started a company that sold white American Apparel T-shirts printed with any single word of the customer’s choosing. The shirts were a must-have item on campus through 2004, when Sugihara and Wang graduated and disbanded the company. The experience taught Sugihara the importance of building labor costs into pricing. She says,
“Once we got to the point where we had more demand for T-shirts than we could make ourselves, we couldn’t outsource it, because we couldn’t find anyone who would do it as cheap as we would.”
With that experience in mind, Sugihara designed the first Baggu not just for aesthetics and functionality, but also for manufacturing. The bag’s exceedingly simple design, a knockoff of the standard plastic bag, contains just one seam along the bottom and gussets that allow it to stand up when full. Another priority for Sugihara was to minimize waste, which is why each bag is made from a single piece of fabric and sold in a pouch cut from between the bag’s handles. The material she used--ripstop nylon, the stuff hot air balloons are made from--is infinitely recyclable, meaning it can be reprocessed again and again without breaking down. It’s also strong--the bags can hold up to 25 pounds.
Sugihara initially wanted to make the bags in the United States and explored several factory options around San Diego. She quickly realized that manufacturing locally would mean selling the nylon bags for upwards of $30, which did not fit into her vision of affordability. Sugihara says,
“It was very important to us to make it realistic to buy six [or more] of our bags, because that’s how many you need if you’re grocery shopping for a family. At the same time, we didn’t want to make a bag that was so cheap that it wasn’t valued and became trash quickly.”
Sugihara initially wanted to make the bags in the United States, but she soon realized that she would have to sell them for upwards of $30, so she settled on manufacturing the bags in China. The grocery bags now sell for $8 apiece.
She eventually settled on mass producing the bags in China, which allowed Baggu to sell the grocery bags for $8 apiece. The lower price, she reasoned, would mean Baggu could have a greater impact on people’s lifestyles and replace more plastic bag use. To ensure Baggu factories comply with ethical and environmental standards, Baggu has worked with several companies, including SGS, that monitor their conditions. Though she has received some criticism for basing most of Baggu’s production in China, Sugihara stands by the decision. She says,
“This system of manufacturing in China is already in place. Hopefully we’re actually improving the situation there by keeping our factories to an ethical mode of production.”
Baggu’s first shipment sold out quickly, thanks in part to a feature that ran in Teen Vogue before the bags were even available. Over the next few years, the company introduced new colors and styles, including cotton canvas back packs, tote bags, and pouches, as well as smaller and larger versions of the original bag--products that ranged in price between $7 and $34. It took some time before Sugihara, who initially viewed her bags chiefly as grocery store products, embraced them as fashion accessories. Sugihara says.
“At some point we were just banging our heads against the wall trying to get it into grocery stores while all this design and fashion interest was just falling into our laps. Marketing the bags as a fashion object came a lot more naturally for us and seemed like a lot more fun.”
Baggu has collaborated with designers and stores--such as Caitlin Mociun, Shabd Aledander, and No. 6 Store--to create unique prints and materials.
Baggu’s first shipment sold out quickly, thanks in part to a feature that ran in Teen Vogue before the bags were even available.
In late 2011, Baggu released a line of higher-end leather products after it became clear that people were using the nylon and canvas bags as purses anyway. These were Baggu’s first products to be made in the States; the bags, which retail between $140 and $160, are manufactured in New York City from leather milled in Argentina. Sugihara plans to make the surf sling and future surf products in the United States too. The fact that Baggu orders these products in smaller quantities than its other bags makes local production cost effective.
Baggu is totally self-funded, which has helped pace its growth. Sugihara says.
“When I was staying up all night shipping orders, I was like, ‘Oh, we need a warehouse.’ And then again, I was staying up all night writing customer emails, and I was like, ‘We need someone to help with customer service.’”
Sugihara’s childhood friend Ellen Van Der Laan designed Baggu’s logo and officially became creative director in 2008, when the company could afford to pay her. Today, Baggu consists of 11 employees in its office in Williamsburg, Brooklyn, plus Sugihara’s mom, who still designs for Baggu from California.
Sugihara has plans to release more surf and beach items in the future, but beyond that, the direction of new products really depends on the lives of the people at Baggu. She says,
“As we all grow up and our lives change and we take on new interests, we’ll definitely come up with new ideas.”
COMMENTARY: What Emily Sugihara has been able to accomplished should be commended. I love profiling startups that started with very little other than an experienced and creative founder and a simple idea. Sometimes the most simple ideas become the most successful. Sugihara's use of recyclable materials like nylon used in hot air balloons and natural materials (100% cotton canvas) is a definite point of differentiation. Although Baggu offers a limited number of individual items, each item comes in a broad range of bright regular and neon colors and interesting patterns. Baggu offers tot bags, backbacks, daypacks, handbags, grocery bags, iPad pouches, and two new leather bags. Canvas and nylon items are washable. Prices are very affordable. Baggu products are available at wholesale prices for those wishing to carry Baggu's products, and can be customized with corporate logos. I absolutely love what Emily Sugiharu has done. Simplicity works.
Here are a few of her products:
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Steve Jobs, former Apple CEO and co-founder, once said that it was a waste of time to ask customers what they want, because they don't know what they want. Thank goodness that Emily did not heed his advice, but listened to her customers and designed products accordingly.
Emily launched Baggu in 2007, just before the Great Recession hit. Having consult6ed for clients during the Great Recession and after the banking and financial meltdown, this was a tough time for anyone to launch a business. Emily appears to have weathered the stone, and proven that it can be done, if you have what the customer wants, offer well designed and functional products, and at great prices.
In October 2011, Anthem Magazine interviewed Emily Sugihara of Baggu and her creative director Ellen van der Laan. You can read the interview by clicking the above link.
Courtesy of an article dated August 22, 2012 appearing in Fast Company Design
Saks Direct 500,000-sq.-ft. distribution center in Aberdeen, MD (Click Image To Enlarge)
R etailers always seem to be fighting through notoriously tight operating margins, so any competitive advantage that accrues to the bottom line is welcome.
Saks Direct, the high-flying e-commerce division of Saks and companion of the high-end Saks Fifth Avenue retail stores, is certain it has found a nice fulfillment advantage over some of its rivals for consumers’ online shopping dollars.
The humdrum world of order fulfillment and product distribution hardly matches the luxurious and legendary Saks brand. But an ambitious decision two years ago to revamp the company’s fulfillment processes allowed Saks Direct to meet equally ambitious 2011 holiday shopping season delivery opportunities.
Casting aside its fixed warehouse automation systems for moving product, Saks took a capital-intensive leap of faith and began implementing a mobile-robotic approach to picking and packing for Saks Direct at its 500,000-sq.-ft. distribution center in Aberdeen, Md. Michael Rodgers, executive vice president and CIO for Saks, says the new fulfillment system allowed Saks Direct to promise Christmas Eve delivery for customers ordering as late as the day before.It seemed to make a difference: Saks Direct reported a 21 percent increase in fourth quarter sales from the same period in 2010.
Rodgers says.
“That’s a competitive advantage. I don’t know how many of our competitors were able to do that and how many weren’t. I just know that we were, and we didn’t break a sweat doing it.”
Efficiencies created
Breaking a sweat in the Aberdeen DC isn’t for humans anymore. With the Kiva Mobile-robotic Fulfillment System, hundreds of “robots” do the grunt work, automatically moving products of different shapes and sizes on mobile, modular shelving units across the DC floor. The robotic-drive shelving units are guided to workstations where associates await — a process Kiva markets as “Goods-to-Man Order Picking.”
Peter Blair, Kiva senior director of marketing, says the system reduces cycle time through efficiencies of scale as associates can pick, pack and ship orders more quickly without having to move around the warehouse floor to locate products.
Blair says.
“Say Mrs. Smith orders a pair of shoes, a dress and some earrings. In most cases, you have two options. Either one person goes out with the cart and walks miles around the warehouse … [or you] take three people and send one over to get the dress, one over to get the shoes and one over to get the earrings.”
The heart of the Kiva Systems' mobile-robotic fulfillment are the bright orange mobile robotic units which move inventory shelves from their warehouse floor locations to the worker stations where a human picker pulls the items ordered. This eliminates warehouse people from having to walk all over the warehouse to pull inventory items off the shelves (Click Image To Enlarge)
Kiva Systems stations include a stock picker who pulls stock items, mobile inventory pods attached to shelves and mobile packaging pods which bring empty boxes for packing (Click Image To Enlarge)
Blair explains that efficiencies are created because all the robotic drives do is ferry products to workstations. Associates use hand-held barcode scanners to point to the shelf to verify the product. A light on the shelf activates indicating the location of the item, accommodating product elements like size and color. Once done, the robotic drive moves to the next workstation, leaving another pod ready in the queue to deliver product.
The scanning system leaves little to chance, while enabling associates to pick multiple orders simultaneously and completely. Blair says.
“It’s very nice for the worker because it is very accurate. They don’t have to think too much about what they are doing. It’s very clear.”
Increased space & flexibility
The Kiva system covers inventory control, forward replenishment, picking, packing, shipping sortation, finishing and quality assurance. With shipping sortation, for instance, orders can be picked depending on their destination. If the delivery is going from the East Coast to the West Coast, the order might get picked and packaged earlier in the workday to accommodate air travel schedules.
Rodgers says going to robotic fulfillment from a manual operation was a strategic decision to create leverage from expanding consumer interest in online shopping. Online spending during the 2011 holiday season (November 1 through December 31) reached $35.3 billion, according to digital research firm comScore – a 15 percent increase from 2010.
Rodgers says.
“This was a big bet Saks made ... during the throes of the recession. We asked, ‘What are some of the big bets we can make that are going to make a difference when we come out of this recession?’”
Rodgers says mobile-robotic fulfillment worked so well for Saks that the company implemented the system at Aberdeen much sooner than anticipated. Saks Direct initially converted four departments to Kiva, completing that phase by September 2010. The company waited to complete the remainder of the conversion so as to not interfere with the impending 2010 holiday shopping season, though executives already were convinced of its benefits, Rodgers says. Saks completed the makeover by June 2011, well ahead of the 30 months planned.
Rodgers says.
“It is a relatively new technology, bu5t from the day it started to today we haven’t had problem one. The biggest thing was how fast we could get the rest of it converted.”
Rodgers says two other benefits of the robotic system are space and flexibility. As online shopping is expanding rapidly among consumers, so is the need for retailers to keep more inventory in warehouses to satisfy service requirements for shipping and delivery. With dynamic shelving, Saks could create 30 percent more space at Aberdeen.
He says.
“It maximizes the issue of shelving [because] it’s a non-human environment. People don’t have to walk up and down aisles, and you can pack items in more closely.”
Rapid product delivery
As it expands its omni-channel marketing efforts, Saks is seeking to grow its distribution footprint – possibly to new facilities. Since the Kiva system is based on a mobile principle. Rogers says.
“I can pick it up and move it to other locations."
Blair says that in today’s e-commerce consumer environment, superior customer service demands super-fast product delivery.
He says.
“It used to be that [retailers] could take a week to get you something. That has changed. Everyone now expects that shipping is going to be quick and that it may even be free. Consumers also expect to have value-added services like gift wrapping and all those other things. Expectations have gone way up.”
Rodgers says the benefits from robotic fulfillment have been like a rallying cry for Saks.
He says.
“We’ve done things our competition hasn’t done. Everybody feels really happy about it. It is one of the things we hold up as a strategic investment that is paying big dividends for the company, not only from a return on investment standpoint but also from a service standpoint. That’s probably the most important thing in the dot-com arena.”
COMMENTARY: Kiva Systems delivers accuracy, productivity and flexibility across a wide range of products, processes and industries. Kiva distribution operations handle products from aspirin to audio components, books to bath towels, crutches to candles, diapers to dishes, elbow pads to earrings, fan belts to folders, golf balls to ball gowns, hair gel to hand bags…well, you get the picture. If a product is picked as eaches or cases to satisfy orders, a Kiva system will handle it more accurately, productively and cost-effectively than any traditional automation approach.
Kiva automates eCommerce and catalog direct-to-consumer fulfillment, business-to-business order fulfillment, retail store re-stocking operations, industrial MRO and parts distribution, work-in-process parts supply functions, medical and hospital restocking programs and other order processing operations across a diverse spectrum of vertical markets. Kiva Systems has implemented its mobile-robotic order fulfillment system in these markets.
eCommerce - Kiva is widely recognized as THE solution for eCommerce fulfillment. For internet retailers the fulfillment center is the store and customer satisfaction is the top priority. Kiva makes it possible to pick eaches and cases as productively as full pallets. Kiva builds accuracy into the solution and enables just-in-time order fulfillment. Light directed picking, put-away and order consolidation combined with barcode scanning and multiple methods for confirming quantity ensure that inventory and orders are 99.9% accurate. Kiva does not require batching and waving of orders so any online order can be processed in as little as 15 minutes from the time a consumer submits an order to when a picked, packed and labeled package is sitting on a delivery truck. Additionally, Internet retailing often involves large assortments and strategies for offering the 'long tail' of goods selection that's impractical in brick-and-mortar stores. This imposes both storage and productivity challenges on eCommerce fulfillment operations tasked with handling high volumes of individually slow-moving goods.
Retail - The Kiva solution allows retail distribution centers to improve service and lower inventory levels for the enterprise while improving distribution productivity. Kiva makes it possible to pick eaches and cases as productively as full pallets. Kiva delivers just-in-time store replenishment. By integrating store front-end systems with Kiva's back-end order processing system, retailers are capable of selling an item at store level and picking a replacement item in the distribution center within minutes. It is even viable to ship the store replenishment order on the same day.
Medical Devices & Supplies - The Kiva solution simultaneously delivers speed, accuracy, productivity, and flexibility while meeting the challenges imposed on distribution operations by the inherent quality concerns of the medical supply chain. With Kiva it is possible to pick eaches and cases as productively as full pallets. Kiva builds accuracy into the solution and enables just-in-time order fulfillment. Light-directed picking, put-away and order consolidation, combined with barcode scanning and multiple methods for confirming quantity, ensure that inventory and orders are 99.9% accurate. The Kiva warehouse automation system was designed to meet medical device order fulfillment challenges while delivering operational efficiency and labor savings for distribution center operators.
Apparel & Footwear - The Kiva solution enables apparel and footwear distribution centers to improve service and lower inventory levels for the enterprise while actually improving distribution productivity. Kiva makes it possible to pick eaches and cases as productively as full pallets. Kiva delivers just-in-time order processing. Kiva customers use the system to store and process single garment picks, cut-case picking, full case picking, garment-on-hanger selection, lay-flat handling, bagged goods, boxed goods and shoes of all size, shape and type. If your company is involved with distributing apparel and footwear products, Kiva has a solution that works for you.
Health & Beauty - Operations that deal with health and beauty care (HBC) products are excellent candidates for automating with a Kiva solution. Cosmetics, skin care, hair products, vitamins, supplements and similar goods are often picked in each and case quantities to replenish retail stores and salons or to ship directly to consumers. High SKU counts are normal. There are a multitude of packaging configurations to deal with - inner packs, outer packs, cases, clamshells, peg-and-hook-friendly hanging packages, tubes, vials, bottles, and boxes of various shapes and sizes. Additionally, due to formulations and color choices many different products look almost identical which makes it a challenge to pick them accurately. The average warehouse worker would be hard pressed to tell the difference between tubes of red, ruby, scarlet and passion sunset lipstick without some systematic aid in the picking process.
Other - Kiva automation solutions deliver accuracy, productivity and flexibility across a wide range of products, processes and industries. As opposed to traditional systems where many items are considered "non-conveyable," most items will work with Kiva. Kiva is flexible enough to handle just about any product that a single human can pick alone. Every new customer challenges us to handle at least one item we haven't seen before.
Kiva Systems' major customers include:
Acumen Brands - ecommerce retailer
Boston Scientific - medical device manufacturer
Crate & Barrell - Housewares retailer
Dansko - Footwear, socks and healthcare apparel manufacturer
Diapers.com - ecommerce retailer
Dillard's - Fashion apparel, cosmetics and home furnishings retailer
Drugstore.com - Drug internet retailer
Gap - Apparel, footwear and accessories retailer
Gilt Group - Designer fashions retailer
Office Depot - Office supplies and equipment retailer
Saks Fifth Avenue - Apparel, footwear and accessories retailer
Staples - Office supplies and equipment retailer
Timberland - Footwear manufacturer and retailer
Toys R Us - Toys retailer
Walgreens - Drug retailer
UPDATE: On March 19, 2012, Amazon.com announced that it has agreed to acquire Kiva Systems for about $775 million in cash. It is considered the latest bid by the online retailer to streamline its growing distribution network.
Courtesy of an article appearing in the April 2012 issue of Stores Magazine
Nike will now supply the National Football league with all of its team uniforms and accessories
NIKE’S LATEST MARKETING WIN: A CONTRACT TO DESIGN THE NFL’S OFFICIAL UNIFORMS. HERE’S A TASTE OF WHAT’S TO COME.
Nike’s ascendancy to mega-brand status began with basketball, on the feet of Michael Jordan. But, on April 5, 2012, the company finally unveiled a dramatic new branding strategy: Nike has now replaced Reebok as the official uniform sponsor of the National Football League, and will be charged with designing uniforms for all 32 NFL teams.
Click Images To Enlarge
It’s the crown jewel of a push that Nike has been making into football for years, through college football, and their Bowl-season designs for the University of Oregon have become a mini event. None of the designs rolled out yesterday have that same crazy visual flair. But they did reserve a bit of extra sauce for the NFL team closest to home: The Seattle Seahawks. The flourishes there display nods to Native American art. Otherwise, the other teams got only minimal refreshes, though you can bet that we’ll soon see redesigns rolling out in force--especially given all the positive buzz that’s surfaced from players such as Jermichael Finley saying that the Seahawks unis are the "best in the league."
Click Image To Enlarge
Tech-wise, the uniforms are something Nike calls the Elite 51, a “body-led” design that utilized heat mapping, sweat mapping, and motion capture “to understand exactly what the athlete needs and where they exactly need it,” according to Todd Van Horne, Nike’s creative director of football and baseball.
Click Images To Enlarge
The uniforms are made out of super lightweight fabric that’s woven to stretch equally well in any direction, while stretching as tight as possible over padding, to reduce grab-points for opponents. Nike Pro Combat, the uniform’s base layer system, is outfitted with a raised honeycomb construction, which likewise is meant to conform to a opposing player’s hit. In addition, the pads themselves are placed a bit more intelligently, so that the base layer doesn’t constrain airflow to places that give off the most heat, "so you get airflow from underneath and around the torso and exiting out the lumbar area,” Van Horne tells Co.Design.
Last come the hands and feet. Players will get new cleats; gloves display the team logos (a move that first appeared in the Oregon Ducks uniforms), and the socks have padding for arch support and texturing at the heel, to lock them in place once a player’s cleats are on.
Its all clever stuff. But clearly, the real news is yet to come--Reebok was never able to make a uniform redesign into a major event, but Nike probably can. We’re hoping to see a design war as teams begin trying to outdo each other, backed by Nike’s design might.
COMMENTARY: The Seattle Seahawks uniforms are really, really ugly, and their fans have a very, very bad team. The San Francisco 49ers beat them twice in 2011, and the Niner uniforms are the best in the NFC West.
While we are on the subject. Here's a great video of the exciting S.F. 49er 36-32 win over the New Orleans Saints in the NFC playoffs. Who Dat? Enjoy.
It really pisses me off that the New Orleans Saints coaching staff paid out bounty rewards to its players if they hurt or knocked certain 49er players out of the game during the 2011 season NFC playoffs.
The NFL came down hard on the New Orleans Saints on Wednesday, March 20, for their pay-for-pain bounty system. Football Insider’s Mark Maske has a comprehensive breakdown of the Saints punishment according a knowledgeable NFL insider:
New Orleans Saints Coach Sean Payton was suspended for one year.
General Manager Mickey Loomis was suspended for eight months.
Defensive coordinator Gregg Williams was suspended indefinitely for a bounty systemthat provided the team’s players payments for hits that injured opponents.
The Saints were fined $500,000.
The Saints lose two second-round draft choices, one in this year’s draft and one in 2013.
If the start-up world had fairy tales, Jennifer (Jenny) Fleiss and Jennifer (Jenn) Hyman would be the main characters. Once upon a time, the Harvard Business School classmates—Fleiss from the finance world and Hyman from sales and marketing—met casually for lunch every week to brainstorm entrepreneurial ventures.
Rent The Runway co-founders Jennifer (Jenny) Fleiss and Jennifer (Jenn) Hyman
The idea that stuck came over Thanksgiving break, when Hyman’s sister, Becky, wanted something gorgeous to wear to an upcoming wedding, but didn’t want to drop an obscene amount of money on a dress she’d only wear once. From that moment on, Fleiss and Hyman had their concept: Rent the Runway, a “Netflix for dresses” that allowed women to rent designer gowns for a fraction of the retail price.
Now, just over three years later, Fleiss and Hyman oversee the rapidly growing, 125-person, multi-million dollar enterprise with a cultish following of customers who get their own Cinderella experience—a new, gorgeous dress for every special occasion.
We got to chat with the incredible duo to hear more about how they turned an “I have nothing to wear” dilemma into an opportunity that looks like it’s headed for happily ever after. Read on for the story of how they got started, and the advice they’d give to every aspiring entrepreneur.
Why was Rent the Runway the right idea—and what made you move forward with it?
Jennifer Hyman, Rent the Runway Co-Founder and CEO
JH: Actually, I never said, “oh this is a brilliant idea, this is going to be a billion dollar company, we have to do this.” My reaction was: I had an idea, I thought it was interesting, Jenny thought it was interesting, we thought it was fun, and we thought, let’s figure out if this is a great idea.
JF: When Jenn came to me with this idea, we decided to do it as a course credit. But we also decided to spend the rest of the year figuring out if this was something we could do full time, instead of getting a job. We gave ourselves a fixed deadline—by the time we graduated, we’d see if this would actually work. And if it didn’t, we had other jobs that we were going to accept.
You didn’t write a business plan—you just got started! Why?
Jennifer Fleiss, Rent the Runway Co-Founder and President
JH: I think people waste so much time strategizing about what they should do, rather than just going and doing something, making mistakes, and then pivoting. The goal of a start-up should be: Launch as many things as possible, fail as quickly as possible, and then figure out how to move forward from there.
JF: We started by purchasing dresses at retail in our own sizes—we figured if the concept didn’t work, at least we’d have a great wardrobe! We just went to different undergraduate campus and started renting dresses to women.
We went to Harvard on a weekend we knew they had an event. Then we went to Yale, and we rented the dresses, but didn’t let women try them on. For the third trial, we sent a PDF out to students that said “call us if you want to rent this dress.” So, each time we were iterating a little bit closer to what our actual concept was—an internet dress rental site—to prove that it was really going to work.
Obviously, it did work! After you saw that the customers loved it, what was the reaction you got from designers and investors?
JH: The designers were initially skeptical—this is something that’s never been done before. But honestly, I appreciated their skepticism, because it made us dig deeper and figure out what we really wanted our brand to be, and who we wanted to market to and target.
JF: It was tough to prove to the investors that this concept was really going to work. It’s really hard for the 60-year-old men we were pitching to understand the emotional connection that women have with fashion. So we would take them to the trials, or we would take videos, and we would show them the experience that women were having—and that was huge.
JH: They loved our approach of just learning by doing, and running different experiments and seeing what traction we got—could we send something through the mail? Would a girl ruin a dress if she wore it to a party? I think we were able to eliminate investor skepticism by actually going out and doing stuff.
Here's the Rent The Runway website homepage:
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The following video provides an excellent review of Rent A Runway's website, the services the company provides, designer brands, styles, sizes, colors, etc.
What’s been your biggest challenge along the way?
JF: One is technology—Jenn and I came to Rent the Runway with no technology background. The other is around the fashion industry. We started a fashion technology company with no fashion or technology experience!
What’s been most surprising about the experience of growing your company to what it is today?
JH: That we’ve been able to do it! We were two women without any experience in leading companies. I had led teams before, but nothing like this. I don’t even think I dreamed as big for myself as this company already is, in just the first few years. It’s surprising when you don’t put blockades in front of yourself, and you just allow yourself to run, how far you can go.
JF: Literally every day I walk in the office, and it’s amazing to see all of these people working towards the same mission and goal!
Also, the reception that consumers have had from the product. We get photos, and hand-written thank-you notes, and gifts sent to the office from people who say “thank you, you’ve changed my life!” People feel like they’re getting this awesome Cinderella experience. In a small way, we feel like we’re changing people’s lives in a great and really fun way.
What advice do you have for entrepreneurs who’d like to follow in your footsteps?
JF: I’d say—go for it! But I mean that in a couple of ways. One, do it—there are not as many risks as you feel like there are. People think it’s this scary thing that’s going to make or break your career, and it’s not. If it doesn’t work out, you’ll get another job, and you’ll definitely learn more than you ever would otherwise.
But also, go for it in the sense that you need to test the concept out, and you need to be brutally honest with yourself if it’s not working. Going for it means don’t just sit there with your ideas—figure out a way to see if it’s going to work.
JH: Number one is to figure out how you are going to assess whether you have a good idea or not. So, go do something, learn from it, and be able to have an unbiased view as to whether your idea works.
Also, be very aware of what your strengths and weaknesses are, not just what your skills are. How successful you’re going to be as an entrepreneur is really a story of how compelling a leader you are.
Finally—you know we had to ask. What’s your favorite Rent the Runway dress you’ve ever worn?
JF: You know, it’s not only the dress—it’s also the memory associated with the dress. I actually wore a really great Catherine Malandrino dress when I was about eight months pregnant, and it looked awesome! It’s not a maternity dress, but it just happened to work and fit and fall really well. So that’s a great example of something I needed to wear for one day, but wouldn’t necessarily want to buy.
JH: That is a ridiculously hard question! I think my favorite dress is this incredibly sophisticated Nina Ricci sheath that I wore to the most important presentation I’ve ever delivered in my life. I felt more confident wearing that dress than I’ve ever felt before, and I think that I nailed the presentation because of it—I give 100% credit to the dress!
COMMENTARY: Rent the Runway’s slogan might as well be: Friends don’t let friends wear H&M to the most important events in their lives. The company solves the perennial “closet full of clothes and yet nothing to wear” problem that most women face, by allowing them to rent designer clothes for a big event for about 10% of the price.
It’s clearly a problem women have. The question– like most rental businesses like Zipcar– is how many women want to rent clothes as the solution.
So far, there’s at least one million active users, spanning a wide demographic of women, from 15 years old to 45, says Jennifer Hyman, Rent the Runway CEO and cofounder. She says.
“That was a surprise. Initially we thought it would be only young women in their 20s.”
There’s a lot of heavy lifting behind the scenes in this business. A warehouse in New York dry cleans, repairs and re-rents thousands of designer pieces. An algorithm helps women pick age-appropriate, body-appropriate pieces. A social layer allows them get advice from a small circle of trusted friends and family.
The company had raised $16 million to date from Highland Capital and Bain Capital, bringing the total amount raised so far to more than $30 million. And, surprisingly given the costs to a business like this, the company was profitable before this round.
Hyman says the money will be used to build out its underlying technology, physical distribution hubs all over the country, a sophisticated inventory management system and the micro-social network aspect of the site. Kleiner’s Aileen Lee will join the board.
I like Rent The Runway's business concept very much, but my main concern as a renter would be renting something via the internet and making sure that the garment fits properly when I receive it. When you are renting or purchasing apparel online and on short notice, the worst thing that could happen is to receive the garment, but it doesn't fit well.
I do like that Rent The Runway is getting on the "celebrity bandwagon," by renting some of the designer dresses worn by celebrities at various events like the Academy Awards, Golden Globes, and so forth. When you are renting designer dresses to a market consisting predominantly of Millennials (18-34 year olds), connecting a particular designer dress with a celebrity is very important.
I reviewed Rent The Runway's pages on both Twitter and Facebook, and its my opinion that they need to do more in the social media area. Rent The Runway only has 25,730 followers, but only follows back 419. What the hell is that? They should be using Twitter more smartly by following back everybody, and using Twitter to get immediate feedback on events where designer dresses are worn. This could tip them off to which designers and dresses are "hot." They are doing a bit better job on Facebook where they have 88,000 fans, but if they should have ten times more fans and followers on both Facebook and Twitter.
Rent The Runway should seriously consider developing their own iPhone and Android app. Most Millennials are highly mobile and use their smartphones and tablets to log into their social networks and surf the Internet. An app will allow Rent The Runway to "glue" right into every fan or follower, and they could provide them with real-time posts of events, new designers, new dresses, promotions, polls, and so forth. App users should also be able to rent a garment right through the app, no matter where they are, 24/7, 365 days a year.
Rent The Runway claims to be profitable, but there is always the danger of copycats, especially from the designers themselves or major garmet makers eager to capitalize on a growing trend and new market opportunity. I can easily see this happening.
Courtesy of an article dated February 29, 2012 appearing in The Daily Museand an article dated May 23, 2011 appearing in TechCrunch
"They are in late prototype stages of wearable glasses that look similar to thick-rimmed glasses that 'normal people' wear. However, these provide a display with a heads up computer interface. There are a few buttons on the arms of the glasses, but otherwise, they could be mistaken for normal glasses. Additionally, we are not sure of the technology being employed here, but it is likely a transparent LCD or AMOLED display such as the one demonstrated below:"
"In addition, we have heard that this device is not an 'Android peripheral' as the NYT stated. According to our source, it communicates directly with the Cloud over IP. Although, the 'Google Goggles' could use a phone’s Internet connection, through Wi-Fi or a low power Bluetooth 4.0."
"The use-case is augmented reality that would tie into Google’s location services. A user can walk around with information popping up and into display -Terminator-style- based on preferences, location and Google’s information."
"Therefore, these things likely connect to the Internet and have GPS. They also likely run a version of Android."
This movie clip from the film "Termintor 2-Judgment Day," shows the 'Terminator' character wearing HUD glasses
Since then, we have learned much more regarding Google’s glasses…
Our tipster has now seen a prototype and said it looks something like Oakley Thumps (below). These glasses, we heard, have a front-facing camera used to gather information and could aid in augmented reality apps. It will also take pictures. The spied prototype has a flash —perhaps for help at night, or maybe it is just a way to take better photos. The camera is extremely small and likely only a few megapixels.
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The heads up display (HUD) is only for one eye and on the side. It is not transparent nor does it have dual 3D configurations, as previously speculated.
One really cool bit: The navigation system currently used is a head tilting-to scroll and click. We are told it is very quick to learn and once the user is adept at navigation, it becomes second nature and almost indistinguishable to outside users.
I/O on the glasses will also include voice input and output, and we are told the CPU/RAM/storage hardware is near the equivalent of a generation-old Android smartphone. As a guess, we would speculate something like 1GHz ARM A8, 256MB RAM and 8GB of storage? In any case, it will also function as a smartphone.
Perhaps most interesting is that Google is currently deciding on how it wants to release these glasses, even though the product is still a very long way from being finished. It is currently a secret with only a few geeky types knowing about it, and Google is apparently unsure if it will have mass-market appeal. Therefore, the company is considering making this a pilot program, somewhat like the Cr-48 Chromebooks last year.
Yes, Google might actually release this product as beta-pilot program to people outside of Google—and soon.
FYI Motorola’s got something cool in this area brewing as well (thanks commenter!).
The Motorola Kopin Golden-i is being showcased at the Verizon booth at CES 2012, demonstrating Industrial uses such as Construction, Medical, Public safety, Utilities and more.
COMMENTARY: The technology for headsup display or HUD eyewear has been around for sometime now, as several startups have introduced HUD glasses that incorporate virtual reality technology, although they are still in the laboratory. I do shutter at the thought that with today's face recognition technology, especially Facebook's tagged photos, that people will be able to instantly recognize who you are just by looking at you through these new HUD glasses. How much will Google's HUD glasses cost? Hard to say, but the ones that I have seen are expensive, well over a thousand. With those hefty price tags, I can certainly understand Google's concerns that they may not have large market appeal.
Courtesy of an article dated February 6, 2012 appearing in 9to5Google.com
When you have become so famous that there is no more famous to become, what do you do next? Found a social network devoted entirely to yourself, naturally.
That’s the word from Lady Gaga, the world’s most unsettling pop diva, who is preparing to launch littlemonsters.com, an online home for her millions of fans, in collaboration with Backplane, a social media start-up that counts Gaga as one of its investors with a 20% stake. The network is still being set up, but visitors to the Web address can register for an invitation by submitting their email addresses.
The social network is a key step for the pop superstar, allowing fans to find each other and fuse their energies into a great Gaga vortex, perhaps as a preamble to some kind of cosmic pop event (I’m thinking the star-baby from 2001). After all, successful pop stardom is all about the mystical rapport between the celebrity and her fans, but also between the fans themselves, as they join together in a cult-like, communal appreciation of the celebrity, egging each other on in a mutually reinforcing cycle of teenage tweakedness. This naturally also includes lots of extra-crazy fan-generated content.
It’s not clear how, or whether, Gaga intends the new site to integrate with her many other social media platforms, especially Twitter, which has until now enjoyed something of a symbiotic relationship with Gaga, growing along with her fame. However, if all of Gaga’s 18 million Twitter followers join her new social network and visit at least once a month, it would put littlemonsters.com ahead of sites including Pinterest (with 7.5 million unique visitors in December 2011, per comScore), Barnes & Noble (14 million), and the U.S. Postal Service (15.5 million).
COMMENTARY: I must confess that I used to follow Lady Gaga on Twitter, but she never followed me back, so I decided right there and then, to dump her. No pop Diva, no matter how many fans she has, is entitled to call me a her "little monster,". I looked it up, and Lady Gaga now 18.9 million followers on Twitter 47.6 million fans on Facebook.
Lady Gaga is without any doubt very talented and a great entertainer, but she is also one of the best self-promoters and marketers around. She is not just a celebrity, but a brand. The famous "Meat Dress" that she wore to the 2010 MTV Video Music Awards is legendary and is ranked as one of the top marketing coops of all time. Checkout any of Lady Gaga's YouTube videos, and there isn't a single one that has been viewed less than 10 million times. On May 20, 2011, she partnered with Starbucks to promote her album "Born This Way," and offered free downloads for her hit song "The Edge of Glory."
Lady Gaga is unique among entertainers. She is totally over-the-top and never willing to be upstaged. Below is her famous "Egg Capsule" she used to make her grand entrance at the 2011 Grammy Music Awards.
Lady Gaga appeared at the 2010 Brit Awards wearing a see-through costume and towering hairpiece designed by the late fashion designer Alexander McQueen.
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Make no mistake, LadyGaga is quite an entrepreneur, and having her own social network will be a seamless way to drive more traffic to her LadyGaga.com site where she spreads the latest news about her upcoming events and appearances, provides the lyrics to her songs, has a chat room for her fans and has an online shop where she sells her branded merchandise, from jewelry to outerwear, and in five different languages. Her Lady Gaga Helvetica Monster Sunglasses sell for $25.o0. You can also purchase music CD's of all her albums from $6.98 to $29.95.
Here just a few of her Twitter Tweets:
"Really wanna get a new tattoo. Can't decide where. Was thinking on inside of my forearm under the peace sign. Whatcha think."
"Screw it. I had too much wine."
"Can't believe I have 18,000,000 TwitterMonsters, really rad, was just a few years ago I had barely any."
"Merry X-mas Little Monsters! Listen Here to my UNRELEASED SONG "Stuck On Fuckin' You": bit.ly/t2MVBl
"@LadyGaga's hot-selling album Born This Way has moved over 8 million copies around the world, Billboard magazine reports."
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