Fedasz was nursing her son one day, surrounded by stacks of barely used clothes that he’d already outgrown after just six months, when it hit her: There had to be a better, more sustainable way to purchase children’s clothing, and break free of what felt like an endless cycle of needless consumption.
After conducting a significant amount of research, she uncovered an untapped market opportunity: A website that allows parents to purchase new clothing from select high-quality boutique brands, and then sell them back in exchange for cash or store credits. This, in turn, would create a growing inventory of “gently used” items, allowing a broader audience of consumers to purchase high-end brands at prices that are competitive with the likes of Wal-Mart and Target, and extending the life cycle of each item to reduce overall waste.
Fedasz decided to call it Little Bean Sprout “because babies grow fast,” and target parents with children under the age of six. Soon thereafter, she partnered with Stephanie Arnold, the company’s Chief Product Officer (and mother of two), and they began building the business – leveraging their collective experience in user interface design, strategy, operations, and business development. They conducted alpha testing in December of 2012, transitioned to public beta in April of 2013, and are averaging a monthly growth rate of 64%.
The idea for the business model was pulled from the video game industry – Fedasz was previously the CFO of Machinima, helping the company raise more than $20 million in funding and overseeing compound annual revenue growth of 308% in just two-and-a-half years. During this time she observed GameStop’s success by selling both new and used games, and offering store credit or cash back for previously purchased items. So, in some ways, she’s simply applying that model to a new category that shares a similarly rapid purchase cycle.
But GameStop has physical stores, and Little Bean Sprout is completely online, making it a bit more like Netflix – where orders are placed through their website, shipped from their Los Angeles-based distribution center, and the packages include an appropriately-sized return envelope. Once the items sold back are received, they’re thoroughly screened to ensure quality and cleanliness standards are met – particularly important to this category, and integral to establishing consumer trust.
Little Bean Sprout recently hosted a trunk show in Santa Monica and it was such a success that the two founders are contemplating doing more, a la Stella & Dot, where the hosts would receive a percentage of sales generated. Granted, some of the success may have been due to timing – it is the gift-giving season, after all, and with Little Bean Sprout you’re not just giving clothes but also the option to sell back those clothes for cash or credits that they can either use towards their next purchase, gift to a friend, or donate to charity. It’s the kind of gift that keeps on giving, while working to simultaneously grow the company’s customer base and reduce textile waste.
Fedasz isn’t inherently against parents buying new clothes; she’s just trying to decrease how much of it ends up in landfills. Says Fedasz, “The economic life of something doesn’t end just because you’re finished using it.” Indeed, the two founders anticipate each new item purchased through Little Bean Sprout will have up to four different owners prior to being donated to charity. Hollywood is already working on the baby version of The Sisterhood of the Traveling Pants. I kid, but people are excited by what they’re doing.
Daily Candy recently featured Little Bean Sprout in their popular e-newsletter, giving the company increased visibility and a nice sales boost shortly after beta release (along with a chance to show-off some ridiculously cute pictures of babies wearing their clothes). When asked what Fedasz’s current mindset is, she half-jokingly references a scene from Finding Nemo, when the Dory character sings, “just keep swimming, just keep swimming” as a way of encouraging Nemo on. But in all seriousness, it’s the right attitude to have when growing a business because the day-to-day can be difficult and gaining traction often takes longer than originally estimated, particularly prior to raising an angel round of investment. “That’s been the hardest part so far,” says Fedasz, “managing our desire to push further faster without spending beyond our limits – we have so many ideas we’re excited to implement.”
One of them is to work with more up-and-coming designers who are equally passionate about making quality items, and who treat their people (i.e., employees & laborers) and the planet with respect (i.e., using recycled or upcycled materials & organics). An example is Homespun Vintage, a small Los Angeles-based line started by two thrift-store-loving moms that sells both new, and reworked vintage kids’ clothes.
Bringing such brands onto their platform makes total strategic sense, for both the buyers and the sellers. Also on the horizon is expanding beyond the United States. Right now the platform is currently only available for use domestically, but their rollout plans include Canada, Europe and Australia – all places that index high on consumers who are conscious about their consumption patterns. Little Bean Sprout isn't going for world dominance, however. Says Fedasz, “We’re focused on building a strong brand. If we begin seeing other companies start to embrace our model, that would be success in my mind.”
