Yahoo Finance Larroudé Shakes Up Retail Model With New Direct-to-Demand Strategy
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Looking to disrupt the industry, Larroudé is shifting its logistics strategy to prioritize efficiency, lessen its environmental impact and reduce cost.
After opening its own factory in Brazil last April, the company has been able to to facilitate faster production for its own direct-to-consumer channel (24 days from order to warehouse to be exact) as well as with its wholesale business. With that vertically integrated system in place, co-founder and CEO Ricardo Larroudé realized that the zig-zagging of products through multiple warehouses for its online wholesale partners was inefficient and environmentally harmful.
To combat that, the company is switching to what Larroudé is calling “direct-to-demand,” a new strategy where the company manages the whole supply chain themselves by concentrating all its stock in house. Similar to drop ship, Larroudé will now ship directly to customers as soon as an order is placed with their online wholesale accounts.
“Because [retailers] feel they can return or they can run discounts later on, they are addicted to overbuying. We want to sell everything that we produce. Now, the whole supply chain is connected. The idea is to have it all centralized, see what’s selling and then keep distributing,” explained Larroudé.
He added that internally, the company replenishes its own website 12 times a season, whereas their partners do it six times less.
“Now, this will be 30% less movement of goods. So a [partner’s] environmental impact will be [reduced],” noted Larroudé. “And they won’t have an inventory issue. They won’t be overstocked at the end of a season.”
With this marketplace-only model, Larroudé will continue to sell to stores for physical inventory but in a reduced amount.
“We don’t do a business that we send thousands of units somewhere and then they run a sale out of it,” added Marina Larroudé, the label’s chief creative officer and cofounder. “But for online, that’s where we’re going to do 100% of the fulfillment, and we will be checking their data and will be feeding the beast.”
For this transition to be complete, Larroudé needs to clear its current stock from wholesalers, allowing for a one-time-only sale across its partners on June 27. The brand is offering 50% off for the first time.
“We want to be a better brand,” said Larroudé. “You shouldn’t be overdoing something in one direction than trying to cut back. We’re willing to try to solve that problem.”
The company has racked up $30 million in sales in 2023, less than three years since launching. The goal is to reach half-a-million pairs in annual sales by 2025 and to “ramp up” to a million pairs sold a year within five years.
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