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How Missguided Founder Nitin Passi Created an $80 Million Business in Five Years

Nitin Passi founded Missguided, the U.K. based fast fashion retailer, at the height of the 2008 recession -- an awfully good time to launch a value-focused retail venture online. (Gilt Groupe and the Outnet took off the same year.) Now, five years after launch, Missguided has grown into an $80 million dollar business rapidly expanding beyond its Brit borders, first to the U.S., with plans for France, Germany and Sweden to follow in 2015.

Yet Passi had very little business experience when he launched the site on his own. So how did he do it? We hopped on the phone with Passi to get the full story, learning about his early mistakes in marketing and how he developed one of the fastest supply chains in the business.

I was hoping you could start by talking about your previous business experience.

Before Missguided, I didn't necessarily have that much business experience. I graduated from university in 2005, and my father has a business which ran in the U.S. and the UK -- basically an importer, designing and selling to all the high street chains and department stores in the U.S. I was based in New York, I lived there for two years, and got kind of a grounding in the fashion business -- everything from design, traveling the world with designers, to production, spending a lot of time out in China and selling as well. But note that their business is completely different from what we do at Missguided; it was going off a customer that was 35-40 plus, and it was 150,000 units minimum of basic lines. 

So I came back from New York to London, worked in that business for another year and decided I wanted to set something up for myself. I didn't really have a set role working with my father, I was just thrown in it to soak up some experience, so it was worthwhile to me. But nothing I learnt there is similar to what we do at Missguided, because we're very fast fashion and their business is working three seasons in advance with product lead times of six months, it's completely different way of running. Missguided was the first business I set up. I started out really innocently.

Why did you want to start Missguided in the first place?

It was around 2008, so just when the recession hit, and the only headline you'd see in the media about any growth was online, so that made me start looking online. I didn't want to do the age demographic that I was doing when I was working with my father because it was a little bit older, and I didn't really get it. Younger fashion, I thought there was a bigger demand for it and fewer people were doing it. Asos was doing it at that time and they were having great results, so I thought I'd give it a go. I also had better contacts with the younger fashion world. So I got a loan off my father for 50,000 pounds back in 2008, and in March 2009 we launched the website.

How did you get it off the ground?

I took that loan, and before launching and in the first six months of Missguided I was the only employee of the company, so I literally did absolutely everything. I got the website build for about 3,000 pounds, I got all the photos taken, I did all the website banners, I wrote all the product descriptions, uploaded the product, handled customer care -- I had to do everything. It wasn't until after six months that I employed one of our first people. 

In the early days, it was a big learning curve. I didn't know much about e-commerce so I just had to jump into the deep end and just test everything. I used to go to wholesale, because in the early days of the website we didn't design anything; nowadays we design over 95 percent of what's on the site. I would buy one or two pieces of stock from our suppliers, go and take pictures of the stock, not actually hold any units of it, and if we got an order for it I'd run out and pick it up. I was posting on my Facebook page that I'd opened up a website, and I started to do a bit of offline advertising; we got some PR and it started to grow, and by November of 2009 we turned over 100,000 pounds and I thought, 'Maybe we're onto something here.' 

And actually, for the first three and a half years or so, it was very nontraditional, the way we ran the company. The first person I took on as an employee was someone who worked in customer care. The second employee was someone who had packed our parcels, and rather than pick up anyone who was experienced what I used to do was outsource a lot of the functions in the early days. It's completely different from what we do now, because we do everything in-house. I did have big goals but I didn't know how I was going to achieve them, it was just kind of try and if it didn't work, try something else, and that's how we found our feet with Missguided.

Did you have any particular things that you tried and didn't work out that stand out to you?

The biggest thing was probably after about 12 months, I wanted to go international as a brand and I put quite a lot of money into advertising in German magazines which did not pay off. I think that was the biggest wastage I did back in those days, because I didn't do any research into the market, I just thought it worked for us in the UK, so I thought sticking a few more adverts in a German magazine where it cost a load more money would pay off, but it didn't.

Were there ever any concerns that the fast fashion market was becoming too saturated?

Not really, because let's say the customer has $100 to spend each month -- they want a variation. We focus very hard on our products, and I think as long as the product and our prices are right, I don't think the market is saturated. The customer always wants choice, we just have to be better than our competition.

How do you feel that Missguided makes a difference in the retail space?

I don't know if making a difference is too big a statement -- I think we do a lot of things better than our competitors. I think Inditex and the Zara group got fast fashion to the masses, they're launching a collection once a week; we launch collections every day. We've got this great stat that here in the UK, 30 percent of our customers come to our website every single day to see what's new. So we're landing at between 150 to 200 new products on the website every week, and I really think we're not fast fashion, we're rapid fashion. The way we built the business up, I'd say we're very agile, and very active, and within our customer database, things change very quickly. What might be hot today, next week it's not hot, and we've got to be able to react to that. 

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We've got a vertical supply chain so we can test products very easy and also react and get that product to sell as well. We do a lot of our production in the UK -- we also do some in the Far East -- but we can produce something as quickly as three days in the UK. That's not the average time -- the average lead time in the U.K. is 14 days -- but we can be as quick as that, and in China we can be as quick as 10 days. Everything we do is about speed and reacting to the customers needs. We can put something on the site today and within four hours we can get a read on whether it's going to be a hit or not, and react accordingly. It's about using data and being quick with how we react to stuff. Our customer's very perceptible to what a celebrity is wearing, so if there's an awards ceremony and we see a great dress on Beyonce or something, we can be inspired by that and have a similar dress on our site within two or three weeks. We're quicker than most of the high street.

How do you manage such a quick turnaround?

Vertical supply chain and our product chain within the business. We've got about 15 designers working here, and behind our team of designers and merchandisers we've got about 60 people. We have all our suppliers at our doorstep, we're producing a couple of miles from the offices in some cases, so we have delivery from our suppliers coming in all day every day. We don't own any of the factories, but space is reserved for us, and we're able to turn around that product that quickly. From China, we half freight everything, and in the UK there's a truck coming into our warehouse every few hours.

What has the process been like getting your business to the U.S.?

Globalizing the brand is a key mission to me. I think our 16 to 34-year-old customer is pretty similar in terms of what she buys globally. We haven't done a massive amount of offline marketing in the U.S. In the UK, it's worth noting that we actually did no online advertising at all, it was all offline. That's changed now, I think online takes probably 70 percent of our marketing expense. In the UK we do a lot of offline advertising, outdoor marketing, but in the U.S. it's too expensive, so we've had to take a different approach. We just started working with Think PR and a lot of what we're focusing on is getting celebrity placement. It's a completely different approach in the U.S. A lot of our visitation is word of mouth now, so that's something we encourage more.

Is there any celebrity in the UK or the U.S. that you think could really move the needle for you?

I mean, I can't speak particularly for the U.S., but we did a collaboration with Nicole Scherzinger, and she's one of the first celebrities that we've seen have a big impact. Celebrities always had some kind of impact, but with Nicole she wore three of our items and the reaction was immediate. One of the items was a slow-to-medium moving item and the first day she was wearing it we ran out of it, so that lead us to do a collaboration with her. Not that easy, it was quite a lot of work to get to it, but she's been the most powerful celebrity we've had.

How have you seen so much growth since 2008?

If I'm totally honest, because at the time I launched the website, the online space wasn't that mature, so I was able to find my feet. If someone tried to do that now, I think it would be a bit more difficult. It's a completely different landscape, so in that sense timing was right. And I won't profess to having our products right and our branding right from day one, but I think by about 2010 we were really clear on who we wanted to be as a brand, and that's why we started to bring designers in house, because I thought, we can't rely on other people or wholesalers to get the right handwriting for us, we need to own that ourselves. I think from year two, we had a strong idea of what was the right product and what was the right price. We were very, very competitive in the UK at least in terms of our price offering, that coupled with having the right product and being able to land a lot of product and being able to test it has been the biggest driver in our success.

What do you think you're doing best that sets yourself apart from your competitors?

Again, I can't say that we're doing stuff better, but we're doing stuff faster, and I think we're more reactive and more agile than 99 percent of our competitors. Our product is very strong and something that we're continuously improving. We know what our customer wants, and by having this reactivity and using this data to make our next design decision, it means we're giving the customer exactly what they want, and that's key in retail, that you're listening to your customer and we do that pretty well.

Where are the areas that you think you could improve upon or tweak things?

I think for three to four years, we relied on our product to grow the business, and it worked well, but we've got to become smarter about what we're doing [with e-commerce]. Over the last year, we've started to build an e-commerce team in-house that's really looking at the functionality of our website and at the technology on our website, and making sure that we're, a) giving the customer what they want and a) getting the most value of these customers, whether that be retargeting or personalization, looking at what people are dropping off the website and how we can re-engage them. We can definitely do more with the technology, it's something that we've been investing in over the last 12 months and we're continuing to do so.

What is your ultimate goal for the company?

I get asked this quite a lot, because there's quite a lot of similarly sized companies to us in the UK who have just gone onto the stock market, so a lot of people are asking if that's in our cards. No, it's not really. I think what I want to do is build a truly global brand. Right now, 80 percent of our business is in the UK, and we're seeing really strong growth figures internationally and demand for our brand internationally. I want to make Missguided a global, household name -- whether that's online or whether that's in stores, I'm not set on that. What I've got is a brand and I want to get that around the world, that's the number one goal now.

Would you ever want to open a Missguided brand store?

What I don't have is a set strategy. I keep a very open mind, and whatever the market dictates, we'll react to. So I don't want to say "yes" or "no" because nothing's been set at the moment. If we feel there is demand for us to set up a store or to do a partnership with Nordstrom or Bloomingdale's in the U.S., for example, then it's something we will consider.