Featured case: The Grommet: Managing
Operations at a Fast-Paced Start-Up

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The case

Who – the protagonistgrommet

Ray Hallare, recently promoted Director of Operations at The Grommet.

What?

The Grommet is an online platform that champions and sells unique products made by ‘little guy’ companies with few opportunities to widely promote their innovative creations. A ‘grommet’ can be many different things, from household products and office equipment to pet accessories and beauty products.

Why?grommet2.jpg

The founders, Jules Pieri and Joanne Domeniconi, wanted to empower creators and enable purchasers to make a difference with their purchasing decisions. Key company values include sustainability, doing business ethically, environmentally-friendly practices, job creation, preservation of traditional skills, and the invention of new technology. Supporting under-represented entrepreneurs, such as the young, old and women, was also key.

When?

The Grommet was set up in 2008 to connect consumers with creators of unique products who had no other platform to sell. The aim was to launch undiscovered products and help them succeed. By 2012, shipments were three times those of 2011, and the Japanese e-commerce company Rakuten had agreed to invest in the company. By 2013, the company was handling 400-500 products on a rolling basis at various stages from initial selection to post-launch.

grommet4Where?

The Grommet’s HQ is in Somerville, Massachusetts, US.

Key quote

‘I could fill our pipeline with ordinary products all day long, but our mandate is to discover truly brilliant innovation, the best of the best.’ – Joanne Domeniconi, The Grommet’s co-founder and Chief Discovery Officer

What next?

Ray Hallare was sweating in the New England summer heat, but his mind had fast-forwarded to December. How could he ensure sufficient inventory for the main holiday season, the time when The Grommet made half its revenue? How could he avoid ordering too much while at the same time satisfying demand? Orders had to be placed with suppliers in the next few weeks. Against the backdrop of further expansion and development fuelled by the Rakuten investment, Ray’s decisions would be critical for the future of the business.

 
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The authors

grommetSebastian Fixson and Paul Mulligan

Sebastian Fixson and Paul Mulligan explain why millennial generation students find this case so appealing.

Empowering customers

The underlying idea for The Grommet concept originated with CEO Jules Pieri, who as a designer felt that many of today’s products cheapen the experience of purchase and ownership. In other words, she felt that simple consumption as traditional capitalism made users unappreciative of the work that product makers put in their creations.  Based on this insight, Jules (and her co-founder Joanne, Chief Discovery Officer) were trying to find a way to empower customers to shape commerce collectively through the sum of their individual purchases (hence, their term ‘citizens commerce’).  The term ‘The Grommet’ is a reference to the high level of quality that well-made products exhibit.

Fascinating approachgrommet

Interestingly, we met the protagonist originally through Babson alumni. We teach innovation and operations courses at a business school that is famous for its focus on entrepreneurship, so on some level, the company was right up our alley. But beyond that essential fit, the company’s attempt to improve on capitalism as a whole is a fascinating approach.

Business model

While the business model that The Grommet has built reflects the underlying philosophy of its founders, several of its features are typical for any B2C (business-to-consumer) business in that it tries to find and select products that it thinks the customers want, and then tries to match the anticipated demand for these products with sufficient supply.

Positive student response

In the current environment in which the interest in entrepreneurship has risen sharply over the last decade, and in which the millennial generation in particular is looking for ways to make the world a better place, the case of The Grommet is a very interesting example that lies right at the intersection of these two trends.  Our students respond to that very positively.

The Grommet's Jules, Joanne and Ray added: 'It has been a pleasure to see the excitement on the faces of the Babson students who have experienced the case. When we meet one of them they have great enthusiasm coupled with incisive questions.'

grommetSubstantial inventory challenge

Growing a business that sells a large number of different products means dealing with a substantial inventory challenge. Especially during a growth phase, the demand for working capital rises significantly. But the Rakuten investment not only provided direct access to resources, it also suggests that in the long run a tie to established retail companies might be advantageous, perhaps even necessary.

About the authors

Sebastian Fixson is Associate Professor of Technology and Operations Management at Babson College, US.
e sfixson@babson.edu

Paul Mulligan is Associate Professor of Technology and Operations at Management at Babson College, US.
e mulligan@babson.edu

 

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