Why Nasty Gals Do It Better: An E-commerce Success Story

Sophia Amoruso of Nasty GalNasty Gal had a humble beginning. Sophia Amoruso founded it at the age of 22, after dropping out of a community college where she was studying photography. Nasty Gal carries clothing of an edgy, vintage aesthetic in the $50-100 price range. Arguably it competes with Urban Outfitters but sets itself apart with a sexier, more glamorous appeal. The most notable thing about the business’ growth spurt is that it didn’t employ flash sale, subscription service or celebrity endorsement like many other fashion startups.

Part of Nasty Gal’s success must have been Amoruso’s impeccable taste and talent for curation and styling. She started out re-selling vintage finds on eBay and promoting the store on MySpace. She was able to make the clothes look cute and desirable on “approachable-looking” models, whom she hired out of necessity. Anecdotally, Amoruso turned an $8 Chanel leather jacket from Salvation Army and sold it for over $1000.

Nasty Gal's sexy, retro aesthetic
When demand outgrew supply, she purchased her own domain and began approaching labels with vintage-inspired clothing. Amoruso was also intelligent to have a sustainable business model, growing it without incurring debt. “I put every drop of profit from this business back into it. That’s why it’s successful,” she said.

Nasty Gal didn’t need investors’ help to expand until 2012. Amoruso took $50 million funding from Danny Rimer of Index Ventures, an early investor of other e-commerce successes like Asos, Etsy and Net-A-Porter. That year, Nasty Gal made $100 million in sales. By 2013, it was valued at $240 million.

Nasty Gal’s focus on highly curated clothes and avoidance of discount actually helped to keep its margin high. The company sells 93% of its stock at full price in an industry where a third of merchandise is marked down. The company keeps its stock low, which reduced the need for slashing off prices and expensive warehouse square foot. In early stages of the business, there was no advertising. Nasty Gal relied on social media word-of-mouth and listening to customers’ feedback on these channels. “I’ve probably spent more time than any other brand reading every last comment. To listen to people the way you’re able to online is very powerful. I think other companies are just starting to figure that out,” Amoruso said.

Nasty Gal original labelThe social media approach works especially for Nasty Gal because of its youthful, social savvy target market – women 18-24. To date, the brand has amassed over one million followers on both Facebook and Instagram. With the slogan “Nasty Gals do it better,” the company also solicits user-generated content and features it on its blog and Pinterest.

More than that, Amoruso knew how to capitalize on the Pareto principle (or the 80-20 rule) through online traffic tracking. In this case, the top 20 percent customers generate more than half of Nasty Gal’s sales. The top 10% visit the site more than 100 times a month. Identifying this core client is extremely helpful in forming its marketing tactics and expanding the business, one of which was to develop its original label in 2012.

Like Sarah Lacey of Pando Daily pointed out, Nasty Gal is relatable to so many girls because its aesthetic is badass, effortlessly cool and not trying to be perfect. “This is what so many women who try to build apsirational brands — the would-be Martha Stewarts for the Internet generation — just miss. They try to be about perfection. Perfect job in a perfect city with the perfect hair and a perfect man. And that’s why they don’t catch on. No girl can relate to perfect,” Lacey wrote.

Like many Internet entrepreneurs, Amoruso attributed her education and success to the vast universe of free information online: “Google is responsible for this business… When I wanted to know what kind of warehouse shelving to buy, I looked online. I could watch Stanford Business School videos on YouTube. I don’t go to conferences. I didn’t talk to anyone. I didn’t have to. I grew up on the Internet.”