How LuLaRoe Disrupted The Fashion Retail Industry

September 1, 2018

 

Mark Stidham is the CEO of LuLaRoe, a direct to consumer clothing company that he and his wife DeAnne started in 2013. Since it’s inception it has been transforming the fashion.

 

 I grew up with my Dad being a contractor. So I knew that that was what I wanted to do. I enjoyed construction I enjoyed building things. I enjoyed the reality of seeing fast results, the physicality of the work and being outdoors. So I thoroughly enjoyed it and so I was a contractor for most of my adult life

Alan: So when you started out in the cement industry, whatever caused you to switch over and become the CEO of this new company?

 

Mark: It started with my wife and she had been doing in home parties with little girls clothing. She would do that twice a year. It was very seasonal; she would sell little girls dresses before Easter and the Christmas holiday. She would mostly sell them in the Mormon communities in Arizona, Nevada and Utah because they tend to wear fancy dresses for church and every little girl wants to wear fancy dresses in the holidays. She had an avenue in LA where she could get the dresses and take and do those sales twice a year. That business started to fall off a little bit because the people that she was working with got the contracts with Costco. All the sudden what used to be high-end boutique dresses became a commodity. So she was looking for something else to do when our daughter approached her and said, “hey mom can you make me a maxi skirt?” And DeAnns response to that was “why don’t you go buy one I don’t have time to be making skirts” and Nicole said “no mom I’m tall and I need it to be long and it needs to dust the floor” and so she described the skirt she wanted and so DeAnne went ahead and cut out a skirt on the kitchen table and sewed it on her little home machine for Nicole. So Nicole started wearing the skirt, and her friends started saying “oh my gosh I love that skirt, where did you get that skirt” and she said “well my mom made it”, and they said “do you think she would make me one?” All the sudden she had orders for like 45-50 skirts and she started on the kitchen table and said this is ridiculous and so we looked around and we found a little sewing shop that said that they could do it. And that was the start of it. She started going out and doing in-home parties with the skirt, just the skirt, the “maxi skirt” and between August to December of 2012 she sold over 20,000 Maxi skirts at home parties. By that time I looked at it and said “honey there is something here”. Her business had always been a real blessing in our lives because it had always provided the extra cash money for doing the fun things. For example if we were at a family reunion and we were staying in a motor home instead of a tent, it was most likely her money that paid for that motor home. So we sat down and said “this has been such a blessing to have this business of yours in our lives, there has to be other people that would enjoy that same blessing.” So she sat down and began to talk with some of the hostesses of her parties, and her customers, and ask them if they would be interested and of course several of them were. And that’s where it started where we figured out that is what we can do for them to sell the product and this is what we could sell it to them for and did some quick math. She actually called me the first time and she was at a party and there was a girl that wanted to sell for her and she asked me “what should I do”. I was on a job site and I took a lumber crayon and a concrete form and did some quick math and said “this is what we can sell it to her for and we will be ok and this is what she can sell it for she’ll be ok. She will be able to make some money and we will make money. And that was the start of this whole LuLaRoe thing.

 

Alan: You know it’s interesting, how many years has this been around for now?

 

Mark: We actually incorporated, opened our bank account on May 1st of 2013 so just over 3 years now.

Alan: Over 3 years…and for the growth you’ve had tremendous growth. Units shipped a month, or units shipped a day is what?

 

Mark: Right now we are shipping at around 350,000 units a day.

Alan: And growing…

 

Mark: And growing.

 

Alan: So that kind of gives perspective at what has happened from the kitchen table to today. I’m visiting today with Mark Stidham. He is the CEO of LuLaRoe. Mark I need to take a quick break, and we will be right back after these messages.

 

Alan: Welcome back I’m visiting here today with Mark Stidham, he is the CEO of LuLaRoe and before the break we ended with how many units you have grown to in a little over 3 years. 350,000 a day but I got to roll back. How did this thing start? So you were at the kitchen table, do you have family? Are you trying to balance this thing in the house?

 

Mark: Yeah, you know it’s interesting because what actually started happening is DeAnne would call me and I was working in West LA as a contractor, and she would say I need more fabric when you get home. Could you go through LA and pick me up some more fabric? So there I am with my utility bed pickup with the lumber rack on, down in the fabric distract filling it up with rolls of fabric and taking them down to our sewer. In the beginning we just shipped out of the house. In fact I remember the first boxes that we took to the UPS store and shipped them out. Then it got to the point where UPS would pick up for us. We started out and put some of the product out in the garage, we kicked the cars out and put some shelves out there and we though that was pretty amazing. The next thing you know were were in one of the bedrooms upstairs and then we were in two of the bedrooms up stairs and then the next thing you know we were in the living room and we pushed the furniture up against the wall. We got to the place where the only rooms in the house were our bedroom and the kitchen that weren’t full of product, and about the time we needed a warehouse, our HOA also suggested that we needed a warehouse. So we moved out into about 4,200 square feet and we though that was a big deal and then a few months later we moved into 6,700 square feet and we made that last about a year. From there we moved into o 37,000 square feet and as we went into that warehouse we talked about “we’ll put a basketball hoop over here, and a play area for kids over here, that didn’t happen, we filled that warehouse up very quickly. And we were there for about 8months and we still operate out of that building, some of our packaging comes from there. From there we moved into 120,000 square feet that was in January of this year and we are busting at the seams there and we are looking into moving into o a bigger building. So the growth itself has pressed us every time to look for that bigger space. I wish I was bold enough to look for the space that we need. I always pull back a little bit and think “that’s crazy”. So when I walked into the space that’s 120,000 square feet, that’s over 3 acres under a roof and you think, “how will we ever fill that thing up?” Well we did.

 

Alan: You know it’s amazing the exponential growth being what it is, and the fact that primarily you and your wife are still running this business. You know I have a friend that became a consultant and it took her 3 months to become a consultant. I’m just curious how many consultants do you have our there?

Mark: You know right now we have about and it’s changing every day and so this is a rough guess but it’s between 23,000-24,000 people right now. But we also have a queue of people waiting to get in of about 16,000-18,000 in the queue. We are moving as fast as we can to bring them in.

 

Alan: Welcome back I’m visiting here today with Mark Stidham and he is the CEO of LuLaRoe. Exponential growth. You started at your kitchen table and you have a 3-acre warehouse right now and you are still busting at the seams. You have 24,000 consultants. Mark I want to swing this back, roll this back right now, because Mark a lot of entrepreneurs have this dream of going from little to big, they have a vision that they want to see through. But in the process of doing this, did you have a vision that you wanted to see through?

 

Mark: You know I live numbers and I would do math early on and that math would scare me. And I’d think “that’s crazy talk to think that it would be that” and those numbers were a lot more conservative than what we’ve done. So I sat down in the beginning with one of my consultants, and we put some spreadsheets together and some projections together, and I’d hoped that we would do $100 million in what would be our third year of business, which would be 2016, this year. We are on track to do more than 10 times that, and when I put those projections on paper I thought that we were being wildly optimistic and I certainly didn’t tell everyone in the world, hey this is what we are going to do. The growth is a surprise to me quite honestly.

 

Alan: As you work through, and this must be a challenge, ten times what you projected. How much is the technology playing into this and the business processes and I imagine that you have to be redefining this very quickly.

 

Mark: We joke about our month being most other businesses year in terms of growth. Because we have actually seen 25% growth month over month for the past 24 months. Not exactly that but if you add them all up and take the average it is 25% month over month. Having come from business I understand that most companies would kill to have that growth year over year. So business processes have been a challenge because things we used to be able to do easily at a smaller scale have become more complicated. When we were small and we would go to work every day and everyone would just grab a hat and go to work. Now as it gets bigger you need people that are more specialized and you need people that understand their lane better. The processes and the structure become more important as compared to when it was a small family business we all just rolled p our sleeves and did what needed to be done.

 

Alan: When you’re looking at everything, you’re looking back; your wife is still extremely involved with what goes on. How do you envision the next 3-5 years? How big do you want this thing to go?

Mark: I’m an absolute realist and I don’t like hyperbole. I really feel that we have the potential to become one of the largest direct sales companies in the world. We have a product that people, love, want, and a product that they need. The price point is very affordable. We have comfortable, affordable, fashionable clothing and I don’t see that going away any time soon. Our challenge is to continue to refine the supply chain and the delivery process and help the people that have come in and that are consultants for us, to help them to understand business and be successful in it.

Alan: You hit on something very important, because as you’re putting it, it’s about the other people coming in and helping them to make money. As those consultants come through is there a process that you put them through to help them to make money and be successful in their businesses?

Mark: We have ongoing training processes and we use the people that have come before them that are in the business to do that training. But that’s always a challenge as a company grows. How do you make sure that that water reaches the end of the row is a conversation that we often have. How do we make sure that that last person in feels as important and as loved as the first person in, is a conversation that we are consistently having.

 

Alan: And typically for a home consultant, is it a one-time deal or are they doing repetitive orders with you?

 

Mark: We have an incredible retention rate in our business. Last month 90% of everyone who had ever ordered product from us ordered from us last month. And so our goal is to develop small businesses. If you ask me what our goal is as a business, it is to be the best small business incubator in the world. We want to help people who haven’t had experience as entrepreneurs or haven’t had the experience of owning their own business to have a safe place where they can begin to develop that skill set, and if they take that skill set and go out and do something even bigger or better I’m all for it, I’m a fan of that. We want to give them that comfort level and that confidence to say “hey I can do things bigger and better than I thought that I could do last week. I know more about myself, I know who I am and I know what I can accomplish.” I believe that biggest source of untapped potential in the world is in people and when you leverage that undeveloped potential there is great things that can happen.

Alan: I’m sure that the listeners are thinking “how can I get onboard” and you’re thinking “wait a minute, we already have so many coming in” but if people want to be a consultant, how would they go about reaching you? Mark: So you can go on our website and we have a consultant map on our website and you can see who is close to you and reach out and talk to that consultant and see if you’re a good fit and see if that is something that you would really be interested in and that you’d be comfortable doing. And if so we would love to have you.

 

Alan: You know Mark; it’s been a pleasure having you today. For the listeners your website is where?

 

Mark: It’s LuLaRoe.com

 

Interview Filming Date: July 2016

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