99dresses doing things that don't scale

In the competitive landscape of fashion marketplaces, one startup took an unconventional approach to solving the classic chicken-and-egg problem that plagues two-sided marketplaces. 99dresses, founded by Australian entrepreneur Nikki Durkin, employed a creative and decidedly unscalable strategy to populate their platform with inventory: buying clothes from Nordstrom Rack and returning them after they had served their purpose.

This is the story of how a young founder’s determination led to an innovative growth hack that helped launch a promising startup, the challenges they faced along the way, and the valuable lessons their journey offers to entrepreneurs today.

The Genesis of 99dresses

Nikki Durkin was just 18 years old when she founded 99dresses in 2010 in Australia. The concept was elegantly simple: create an online platform where women could trade fashion items they no longer wore. Users would upload photos of their unwanted clothing, assign them a value in a virtual currency called “buttons,” and then use those buttons to acquire other users’ items.

The idea was born from Durkin’s personal frustration. Like many young women, she had a closet full of clothes but often felt she had “nothing to wear.” She couldn’t afford to constantly buy new clothes, yet she was tired of her existing wardrobe. She realized this was a common problem among her peers—they all had closets full of perfectly good items they no longer wanted, while simultaneously desiring new pieces.

Durkin envisioned 99dresses as the solution: a platform that would allow women to refresh their wardrobes without spending money on new clothes. Users would only pay for shipping and a small transaction fee, making fashion more accessible and sustainable.

The concept resonated with many. After launching in Australia, 99dresses quickly gained traction, attracting thousands of users and positive press coverage. This early success caught the attention of Y Combinator, the prestigious Silicon Valley startup accelerator, which accepted 99dresses into its program in 2012.

With Y Combinator’s backing, Durkin relocated to the United States to expand 99dresses into the American market. This move presented both tremendous opportunity and significant challenges.

The Marketplace Dilemma

Upon arriving in the U.S., Durkin faced the classic cold-start problem that haunts all marketplace businesses: how do you attract buyers to a platform with no sellers, and how do you attract sellers to a platform with no buyers?

For 99dresses, this challenge was particularly acute. The entire value proposition of the platform depended on having a diverse and appealing selection of clothing available for users to browse and acquire. Without inventory, there was nothing to keep potential users engaged.

Durkin understood that for 99dresses to succeed in the U.S. market, she needed to quickly populate the platform with desirable fashion items. But waiting for organic user growth would take too long, and the platform might never reach the critical mass necessary to become self-sustaining.

This is where Durkin’s resourcefulness and willingness to do things that didn’t scale came into play.

The Nordstrom Hack: Doing Things That Don’t Scale

Faced with the need to rapidly stock her marketplace with inventory, Durkin devised an ingenious, if unsustainable, solution: she would temporarily “borrow” inventory from retail stores.

The strategy was straightforward but labor-intensive. Durkin and her team would visit Nordstrom Rack stores, which offered designer clothes at discounted prices and, crucially, had a generous 30-day return policy. They would spend approximately $10,000 at a time, purchasing a wide variety of fashionable items in different sizes and styles.

Once they had the clothes, they would photograph each item professionally, create detailed listings on the 99dresses platform, and make them available for users to purchase with buttons. When orders came in, they would ship the items to buyers, collecting the transaction fees and shipping costs.

The genius of this approach was that it allowed 99dresses to present itself as a fully-stocked marketplace right from the start. New users visiting the platform would find hundreds of attractive items available, creating the impression of a thriving community. This helped overcome the initial hesitation many potential users might have had about joining a new, unproven platform.

Of course, this strategy was never meant to be permanent. The plan was to use the Nordstrom clothes as temporary inventory while building up a base of real users who would contribute their own items to the marketplace. As the platform grew, the need for artificially sourced inventory would diminish, and eventually disappear entirely.

And what about the clothes purchased from Nordstrom? Within the 30-day return window, any items that hadn’t been sold would be returned to the store for a full refund. This allowed 99dresses to maintain the appearance of a well-stocked marketplace without the massive capital investment that would normally be required to purchase inventory outright.

The Ethics and Risks of the Strategy

The Nordstrom strategy existed in an ethical gray area. On one hand, Durkin wasn’t technically doing anything against Nordstrom’s policies—the store offered a 30-day return window, and she was returning items within that timeframe. On the other hand, she was using the return policy in a way that Nordstrom likely never intended.

There were also significant practical risks to this approach:

1. Financial exposure: At any given time, 99dresses had thousands of dollars tied up in inventory that might need to be returned. If they missed the return window for any reason, they would be stuck with the cost of those items.
2. Logistics complexity: Keeping track of which items needed to be returned by which date, while simultaneously managing the shipping of sold items to customers, created a logistical challenge.
3. Quality control issues: If customers damaged items before returning them, 99dresses might not be able to return those items to Nordstrom, resulting in financial losses.
4. Reputation risk: If Nordstrom became aware of the strategy and objected, it could have resulted in negative publicity for 99dresses.

Despite these risks, the strategy served its purpose: it helped 99dresses overcome the initial inventory hurdle and begin building a user base in the U.S. market.

Beyond the Hack: Building a Real Business

While the Nordstrom strategy helped 99dresses get off the ground, Durkin knew that building a sustainable business required moving beyond such unscalable tactics. The goal was always to create a self-sustaining marketplace where users would provide the inventory by listing their own unwanted clothing.

To this end, 99dresses focused on creating a seamless user experience. They developed a mobile app that made it easy for users to photograph and list their items. They implemented the button currency system to facilitate trades without actual money changing hands between users. And they worked to build a community around the platform, encouraging users to engage with each other and share their fashion finds.

These efforts bore fruit. By 2013, 99dresses had thousands of active users in the U.S., and the platform was processing numerous transactions daily. The company had raised $1.2 million in seed funding and was featured in major publications like TechCrunch, Business Insider, and Fast Company.

Durkin herself became something of a startup celebrity, particularly noted for her youth and for being one of the relatively few female founders in the Y Combinator program. She was often asked to speak at events and share her experiences as a young entrepreneur.

Challenges and Ultimate Fate

Despite its promising start and innovative growth strategies, 99dresses faced significant challenges as it sought to scale beyond its initial user base.

One major issue was the button currency system. While the concept was innovative, it created complications in terms of valuing items and ensuring fair trades. Some users accumulated large numbers of buttons but found limited inventory they wanted to purchase, leading to dissatisfaction.

The company also struggled with the economics of its business model. The small transaction fees weren’t generating enough revenue to cover operational costs, and the logistics of shipping individual clothing items between users proved more complex and expensive than anticipated.

Additionally, 99dresses faced increasing competition from other fashion marketplaces and resale platforms like Poshmark, ThredUp, and Depop, many of which had raised significantly more capital and could afford more extensive marketing campaigns.

These challenges ultimately proved insurmountable. In 2014, despite having attracted thousands of users and processed numerous transactions, 99dresses shut down. In a heartfelt Medium post titled “My startup failed, and this is what it feels like,” Durkin shared the emotional journey of building and ultimately closing her company.

Lessons from the 99dresses Story

The story of 99dresses and its Nordstrom strategy offers several valuable lessons for entrepreneurs:

1. Embrace Unscalable Solutions for Early Traction

The Nordstrom hack exemplifies Paul Graham’s advice to “do things that don’t scale.” By temporarily sourcing inventory through an unsustainable but effective method, 99dresses was able to overcome the cold-start problem that plagues marketplaces. This allowed them to build initial traction that would have been difficult to achieve otherwise.

For entrepreneurs facing similar chicken-and-egg problems, the lesson is clear: don’t be afraid to use manual, unscalable approaches to get your business off the ground. What matters is creating value for users, even if the methods behind the scenes aren’t yet optimized for scale.

2. Creativity Can Overcome Resource Constraints

As a young founder with limited resources, Durkin couldn’t afford to purchase inventory outright or launch massive marketing campaigns. Instead, she used creativity to solve her problems, finding a way to present a fully-stocked marketplace without the capital that would normally be required.

This resourcefulness is a reminder that constraints often breed innovation. When the conventional approach is out of reach, entrepreneurs are forced to find unconventional solutions—and these can sometimes be more effective than traditional methods.

3. Balance Short-Term Tactics with Long-Term Strategy

While the Nordstrom strategy was effective as a short-term tactic, 99dresses always recognized it as a temporary measure. The company simultaneously worked on building the infrastructure and community needed for long-term success.

This balance between short-term tactics and long-term strategy is crucial for startups. Unscalable approaches can help you get started, but you need a clear path to more sustainable operations as you grow.

4. Consider the Ethics of Growth Hacks

The Nordstrom strategy raises interesting ethical questions about the lengths to which startups should go to achieve growth. While not technically against Nordstrom’s policies, the approach certainly pushed the boundaries of what the return policy was intended for.

Entrepreneurs should carefully consider the ethical implications of their growth strategies, even when operating within the letter of the law or policy. Short-term gains achieved through ethically questionable means can sometimes lead to long-term reputation damage.

5. Solving the Cold-Start Problem Doesn’t Guarantee Success

Perhaps the most sobering lesson from 99dresses is that successfully overcoming initial hurdles doesn’t guarantee long-term success. Despite cleverly solving the inventory problem and building a user base, the company still struggled with its business model, unit economics, and competitive positioning.

This highlights the importance of thinking beyond initial traction to consider how your business will operate at scale. Growth hacks can get you started, but sustainable success requires sound fundamentals.

The Legacy of 99dresses

Though 99dresses ultimately closed its doors, its legacy lives on in several ways. The company was an early pioneer in the fashion resale space, which has since grown into a multi-billion dollar industry. Platforms like Poshmark, Depop, and ThredUp have successfully built on the concept that 99dresses helped popularize.

Durkin’s transparent account of her startup’s failure has also become required reading for many entrepreneurs. Her willingness to share both the successes and struggles of building 99dresses has provided valuable insights for others navigating the startup journey.

Perhaps most importantly, the creative growth strategies employed by 99dresses—particularly the Nordstrom hack—have become part of startup folklore, inspiring other founders to think creatively about overcoming the initial hurdles of building a business.

Conclusion: The Art of the Unscalable

The story of 99dresses and its Nordstrom strategy is a testament to the power of doing things that don’t scale. By temporarily “borrowing” inventory through Nordstrom’s return policy, Nikki Durkin was able to create the appearance of a thriving marketplace while building the user base needed for organic growth.

This approach wasn’t sustainable in the long term, nor was it meant to be. It was a bridge—a creative solution to the cold-start problem that plagues marketplaces. And while 99dresses ultimately didn’t achieve lasting success, the ingenuity behind its early growth strategy offers valuable lessons for entrepreneurs facing similar challenges.

In the world of startups, where resources are limited and conventional approaches often require capital that early-stage companies don’t have, the willingness to embrace unscalable, manual, and sometimes unconventional methods can make the difference between gaining initial traction and never getting off the ground.

The 99dresses story reminds us that building a successful business isn’t just about having a great idea—it’s about finding creative ways to bring that idea to life, even when the path forward isn’t obvious. Sometimes, that means buying clothes from Nordstrom with the full intention of returning them later. It’s not a strategy that will work forever, but it might just work long enough to get your startup off the ground.

And in the early days of building a company, that can make all the difference.