Online Fashion Startup Case Studies with Sramana Mitra

As you know, I have a passion for personalized luxury fashion and ventured into that market early on in 1999 when the market wasn’t quite ready for it yet. Rafael is building a wonderful luxury fashion venture with unique personalization details.

Kalon Clothing CEO Stephanie Madesh was a sophomore in college when she started her venture. Wonderful story of a student entrepreneur growing into a multi-million dollar ultra-light e-commerce business.

Most major retailers are latching on to the e-commerce trend but there is also a growing number of online men’s fashion upstarts like Combatant Gentlemen and JackThreads that are using social media channels to understand the consumer and sell effectively under their own retail brands.

Combatant Gentlemen’s strength lies in creating a brand that produces high quality clothing at an affordable cost and then effectively selling it to their target customer of young, aspiring professionals through Facebook. CEO Vishaal Melwani says, “One of the big reasons that we still, to this day, take away clients [from competitors like Men’s Warehouse] is because their messaging is incorrect. They don’t understand the pains and the trials and tribulations that our guy goes through on a daily basis.”

On the other hand, JackThreads’ focus is on providing street wear and contemporary fashion brands at great discounts. They have flash sales of authentic brands and engage their customers with new offerings every day. In the first year, they reached out to blogs writing about the brands they were selling. Once users found their site and recognized the value proposition, they became extremely engaged. And it was viral.

They sell products that are geared towards all aspects of a lifestyle and have been very successful with t-shirts, pants, denim, accessories and watches. They have a members-only community and they know what their shoppers are interested in and what they are recommending for their friends to buy.

In May 2010, they were acquired by Thrillist, an online publication for urban men.They have editions in 16 cities and write a daily newsletter showing the newest and coolest in fashion, nightlife, and dining for urban guys who are 18 to 35 years old. The brands that JackThreads were selling were the same ones that Thrillist wrote about. CEO Jason Ross says, “We saw them as a trusted voice that put a brand in front of an audience who trusted whatever they said. On the other side of that story, we are selling the same products. It is a great, cohesive strategy for us to be the same company.” Revenue at JackThreads grew from $5 million at the time of acquisition to $50 million in 2012 and the
number of users ballooned from 150,000 to 1.8 million. See what combining Content and Commerce in Context does to a business?

Combatant Gentlemen’s focus is on providing a premium fashion experience at a price point even lower than Men’s Warehouse. Using the e-commerce model, they are able to save on the overheads incurred in running a brick-and-mortar store. Apart from this, they generate margins of up to 16% by deep vertical integration to the level of producing their own cotton and wool. They bootstrapped to $700,000 in revenue, followed it up with a $2.2 million financing round, and are on track to deliver $15 million in revenue in 2014.

They target young, aspiring professionals who spend a lot of time on social media channels like Facebook. Their clothes can be used for multiple purposes and their value is in providing a high return on investment. They inventory all the likes on their Facebook page and study their characteristics and interests. A lot of their customers use them as a service and ask their stylist for recommendations. Nearly 50% of their customers come back for more and also act as their brand ambassadors.

Men and women have very different shopping dynamics. Women spend a lot of money on clothes. Men don’t spend as much. However, these retailers understand that when men find a brand that they trust, they are loyal to that brand, and will spend significant amounts on that particular brand. Men are more brand-conscious while women would shop and experiment with new styles and designers that resonate with their style. Brands perhaps last longer in men’s fashion. This psychographic tendency works beautifully online, as
retailers can almost become replenishment businesses for basics like black turtlenecks, khakis, boxers, etc.

These men’s fashion e-commerce entrepreneurs are thriving because they are able to leverage technology and understand the new age, social media savvy male shoppers well. They are creating brands that their customers trust. They take away the pain of shopping for them. They provide great quality at great prices. They are bringing content and commerce together and doing it in context.

All of these are winning strategies to build significant e-commerce companies!

Check out some excellent case studies shared as external resources.

The e-commerce model of business allows women entrepreneurs to have greater flexibility in their lives. That is probably why we see several mompreneurs launching home-based businesses, and some of them scale to much bigger outfits. Of particular significance are mompreneurs selling baby products online. Here are three inspiring stories of mompreneurs who used their love for babies, clothes, shopping, and sharing to create successful ecommerce ventures.

Women Love To Share

Smocked Auctions sells children’s smocks and other clothing through comment-selling on Facebook. It was started by two friends and mompreneurs, Amy Laws and Nicole Brewer. They met in 2008 while trying to get back in shape after having their first children. They had a lot in common – their sons were of the same age and they soon had little girls. They became great friends and it was in the summer of 2010 while attending a sample sale in Dallas that the idea of doing business together was born.

The wholesale showrooms in places like Dallas and New York purchase sample sets from manufacturers and at the end of season, sell off the remaining stock through sample sales. The sample sale that Amy and Nicole attended was for children’s smocks and outdoor play clothing and they thought the idea of shopping that way was brilliant. The clothes were their children’s sizes and the prices were great. They thought they could host a sale, get some great clothes, and also provide a great service to their friends. They had their first sample sale in August of 2010 and sold 700 units for $20,000.

For some friends who could not attend their sale, they took pictures of clothes left over from the sale and posted them on their Facebook pages. Within hours of doing this, people they did not know showed interest in these clothes. That was when they decided to start auctioning through their company site on Facebook.

Their auction model is a cross between eBay and Craigslist. The price does not increase during the auction and there is no outbidding. The first person to comment for that size gets to buy that item. In their first year, they made a million dollars.

What strikes me as the foremost reason for the success of Amy and Nicole was that being moms themselves, they understood the product and the market very well. They were passionate about their products and wanted to share the shopping experience with their friends and customers. Their personal taste resonated with that of the customers. They offered great quality at great price points. They soon brought in their own label to control the style and volume of the clothes.

Women Love Clothes

When Amber Schaub started children’s apparel company RuffleButts, she was not a mom yet but was planning to become one. She had left her job and wanted to start her own business. The idea for the company came when she went to a store to buy ruffled bloomers as a gift for a friend. The saleslady told her they didn’t have any and wondered why they did not carry them because people came in looking for them all the time. That is what spurred Amber to get into this specific industry and start RuffleButts.

Amber did not have a design background but designs all the clothes for RuffleButts. She researched and studied how to design, get samples, and how the retail industry works. She even took a sewing class. She would draw things up and take her designs to a pattern maker who would convert them into a paper pattern. She would send those paper patterns to the factory where they would cut the fabric based on that pattern.

Amber adds, “I designed from a common sense perspective. I just put myself in the shoes of a mother who will be purchasing and I asked myself what would be important. It has to be soft, it has to hold up in the wash, and it has to have quality. I could not produce bargain apparel, but I still wanted it to be available and affordable to the masses.”

Amber and her husband Mark invested $40,000 to start the business. She worked on getting a full collection produced and launched her site with e-commerce capabilities in August 2007. For about half a year, they operated in red. Amber worked hard on getting publicity for the business. Luckily, she got an opportunity to do an event at the Golden Globes with a few celebrities and their babies. Some of the celebrities were impressed, supportive and that
catapulted her brand.

In late 2008, she had her first child and around the same time retailers like Nordstrom contacted her for her products. Soon, Target, as well as mom and pop stores across the country, followed suit because customers were asking for their products. In 2009, gross revenue was $375,000. In 2010, they crossed a million dollars and her husband left his job and joined her to maximize the opportunity. In 2013, their gross revenue was $5 million.

I have seen several talented professional women turn to entrepreneurship to achieve more satisfaction and a balanced life. Many of them have a strong sense of aesthetics and a fine understanding of what mothers want for their babies. Amber worked hard to combine these into a successful venture.

Women Love Shopping Deals

Steals.com is a daily deals website that caters to women in four niche areas–babies, scrapbooks, kids, and women. They are branded BabySTEALS.com, scrapbookSTEALS.com, kidSTEALS.com, and sheSTEALS.com, respectively. They launch one new ‘steal’every 12 hours for high-quality products at 40% to 80% off the manufacturer’s suggested retail price.

Founder Jana Francis decided to become a mompreneur after the birth of her third daughter. She had always been frugal and on the lookout for great deals. Her friends called her the Dotcom Princess, as she would tell them where to go online for the best deal. While looking for ideas to start a new business, she realized that there was no e-commerce site in the baby space that would tell you the story of the product, why you wanted it, and what problem it solved for you.

It took 18 months for Jana to go from concept to creation while working a fulltime job with three children. The month before they launched the site, she took two weeks of vacation and went to a baby expo in Salt Lake City where she got 160 people to sign up for her email list. The night before the site was launched, she emailed her family, friends, and everyone on that list to share the website and spread the word. Today, they have 375,000 emails that are sent every day and have shipped 1.7 million orders. In their first year, revenue was about $650,000 and the next year, they did $2.4 million. They launched a new site every year and in the fourth year with four sites, their revenue was $16.4 million.

It is interesting to note how Jana also uses a niche talent pool of women like herself who are mothers of young children. 70% of her staff is women and 25% of them have had a baby in the past two years. Her buying team is full of talented women who are good at product selection and are in tune with their audience. She has also recruited some of her top customers and fans. Most of her customer service staff is able to work from home for 30 hours a week, which is tremendously helpful for them.

Jana mentioned, “I have two employees who brought their babies with them to work today. We use our team’s babies on our website as models and we actually sign the release paperwork for that. It’s a lot of fun for our employees. For me, it is very rewarding to know that the situation I dreamed of for myself is being provided for so many moms in Utah who would not have a job if they were not working here.”

These case studies reiterate my thesis that Web 3.0 will organize itself around two specific elements: context and the user. Mompreneurs are perfectly tuned into a niche segment of mothers, a user that is very particular and passionate about the products that she wants for her babies. They are able to give mothers what they want because they themselves are mothers.

Check out the excellent case studies shared as external resources.

Jana Francis, Founder and President of Steals.com, has experienced significant challenges in building her bootstrapped company from Utah. She candidly discussed these challenges, and her experiences are eye-opening and inspiring. I’m also sharing my 2013 interview with Jana as an external resource.

You can do a niche e-commerce brand pretty much in any category, especially if you can create a unique design philosophy.

Check out some excellent case studies shared as external resources.

Mass customization has been the holy grail of the fashion industry ever since the Internet was born. Shoes of Prey CEO Jodie Fox discusses why mass customization is so hard, and how her company is scaling a business that offers custom shoes.

Ultra-light startups have become a key trend in the e-commerce world and WatchUWant CEO OJ Whatley’s entrepreneurial journey offers some delightful insights. Selling a product on eBay that was a passion, he went on to build a $20 million business with just 20 employees.

SmartBuyGlasses CEO David Menning has bootstrapped a global e-commerce venture from Hong Kong - splendid execution!

Kish Vasnani and Vanessa Jeswani, Co-founders of Nomad Lane, bootstrapped to multi-million dollars in revenue selling a private label product before quitting their jobs. In this story, you also get to see the nuances of running successful (and not so successful) crowdfunding campaigns. Very interesting journey and insights.

Pura Vida CEO Co-founder Griffin Thall and his partner have turned an investment of $200 into a $130 million company. Amazing execution!

Check out another excellent case study shared as an external resource.

What a wonderful story of an e-commerce company bootstrapping to $12 million from a small town called Horsens in Denmark. All 60 of CEO Sebastian Petersen’s employees work out of Horsens currently.

Here’s an online auction story that is scaling nicely, specifically in diamond auctions. The company is at over $50 million in revenue.

Roberto Milk is CEO and Co-founder of NOVICA, a high-impact artisan marketplace. This is a terrific conversation about NOVICA’s work with artisans around the world.

I continue to be interested in how the fashion industry is slowly and surely finding innovative ways to leverage the Internet. Kiyan Foroughi has created a marketplace for fashion accessories that is scaling nicely and helping new designers find a customer base.

CEO Philip Rooke runs Spreadshirt from Berlin, and discusses the trends in global e-commerce that he observes through his company.

HugePOD CEO Joe Zhou talks about a gap in designing, manufacturing and drop-shipping small run fashion merchandise. Excellent offering from a Chinese company to fill a big gap in SMB e-commerce.

Here we trace the entrepreneurial journey of Mall for Africa CEO Chris Folayan.

Check out another excellent case study shared as an external resource.