E-Commerce Service Shoedazzle Leaves Subscription Model, Regrets Move

By Aarthi Rayapura December 5, 2012

Brianby Brian Bell, CMO

 

In her post titled “Subscription e-commerce starts to go out of style” Upstart Business Journal writer Amora McDaniel suggests that with Shoedazzle’s decline, the strength of the entire e-commerce model is now in question. But Ms. McDaniel’s post is lacking in context– both of the greater e-commerce world and the story of Shoedazzle.

 

The fact of the matter is that e-commerce subscription businesses are on the rise, not on the decline, as more and more companies are entering the market. There are now subscription nutrition supplements, condoms, razors, diapers, and heck, even Walmart has entered the fray.

 

The collapse of Shoedazzle– a business so well-respected that it sparked a dozen copy-cats– can be attributed in part to former CEO Bill Strauss’s decision to end the subscription service earlier this year.

 

Earlier this year, the Kim Kardashian-backed venture changed from providing a monthly curated subscription shoe service for $40 a package changed over to a single-purchase transaction model at the behest of now former CEO Bill Strauss.

 

As early as April, smoke was beginning to rise from Shoedazzle and warning bells were ringing. In a post on her blog, Denise Lee Yohn asked the question Has Shoedazzle lost its dazzle? She argued that the company, which had pioneered the shoes-as-a-subscription service, was making the fatal mistake of changing its business model and becoming a plain vanilla e-commerce player that sold shoes.

 

Without the built-in relationship that subscriptions provide, Shoedazzle languished in the single-transaction market. Customers could (and did) walk away. Then in September, GigaOm announced that Strauss had been replaced as CEO. Now founder Brian Lee has returned to Shoedazzle, hoping to right the ship. But perhaps the most damning aspect of the GigaOm piece was an angry customer’s complaint with the move: “Effectively, I was saying: Please! Keep taking my money every month forever! And Strauss was saying, ‘No thanks, I’m going to stop auto-charging you and focus on these people who might want to give us money once or twice.’”

 

The obvious question on everyone’s mind is: why did they move away from the subscription model to begin with? The company has essentially lost what made it unique, and now has to compete with other online shoe retailers– like Amazon, Zappos, Spartoo, etc. The online retail word is especially competitive. Now as Shoedazzle wrestles with its soul (sole?), perhaps the best option is to offer the best of both worlds– a curated subscription service and an online retailer. That way, customers who want the convenience of subscription shoes can have that, and those who just want a $40 pair of shoes without a long-term relationship can do that as well.

 

Customers like these, who want the convenience and curation of a subscription e-commerce business, are growing in number. And unless Shoedazzle can repair the frayed relationships with these customers, they’ll go to one of many competing (and successful) subscription e-commerce companies.