ShoeDazzle Inc. is trying to regain its foothold in the online fashion world after a rough stretch. Its chief executive has resigned, layoffs have been reported and criticism has mounted over the retailer’s move to abandon its pioneering business model.
Bill Strauss stepped down as the Santa Monica company’s chief executive Sept. 24 and was replaced by ShoeDazzle founder and nonexecutive Chairman Brian Lee.
Strauss, who had only assumed the CEO post from Lee in September 2011, was the driver behind the company’s move in April to drop its longtime membership model, which required members to pay a monthly fee of $39.95 in exchange for a pair of shoes or accessories based on personalized fashion recommendations.
In its place, Strauss installed a more traditional e-commerce model in which members only bought shoes, handbags and other accessories they desired, paying varying prices. They also continued to receive the site’s style recommendations.
While it’s unclear how the change has affected sales, multiple media reports late last week said there were layoffs at the company. The Wall Street Journal’s All Things Digital website reported that “a low double-digit percentage” of workers was losing their jobs, citing an unnamed source at the company.
When the business model was changed earlier this year, critics jumped on the change, which was followed by a first wave of executive turnover in the summer when ShoeDazzle’s president and its chief operating officer left.
Independent brand analyst Denise Lee Yohn wrote a blog post in April that argued dropping the monthly fee would hurt both ShoeDazzle’s bottom line as well as its relationship with customers. She said last week she was not surprised by the more recent exit of Strauss.
“There is a constant pull to take companies away from core ideas. I think this is a cautionary tale for everyone,” she said.
Lee and other ShoeDazzle executives did not return calls for comment.
Lee began ShoeDazzle in 2009 – along with celebrity Kim Kardashian, who is an investor and spokeswoman – pioneering the monthly subscription concept for online fashion sites; it’s essentially a book-of-the-month club with an ecommerce and footwear spin.
The company became a leader in L.A.’s burgeoning tech scene, spawning an array of imitators. Among them are Beachmint Inc. in Santa Monica, which has a mini-empire of sites that sell jewelry and home goods, and JustFabulous Inc. in El Segundo, which sells urban apparel designed by Kimora Lee Simmons. Other nonfashion companies followed, including Santa Monica’s Dollar Shave Club Inc., which gives subscribers a set of new razors every month.
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