Issuu on Google+

THE STORY OF EVERLANE: AN ENTREPRENURAL REVIEW

BY RYAN WILLIAMS

SUZANNE ROSSS FMPC510 Current Issues in the Fashion Industry JANUARY 22ND, 2014

One of the reasons that I chose to pursue a career in the fashion industry was my


2 personal love for well-executed brand presentation. The rise of the Internet has revolutionized the commercial market and had a profound impact on the way in which companies market and advertise their product. Large corporations, majority of who were extremely reliant on the traditional methods of advertising, suddenly had to change strategies and adapt. Smaller or emerging companies without large advertising budgets however were the first to really utilize the capabilities and significance of a well curated an online presence. Michael Preysman started Everlane in 2011 and is a prime example of utilizing an online presence to build an apparel company with a new approach to distribution. Preysman originally worked at a venture capital firm that invested in companies such as Yelp and Facebook (This Week In Startups (TWIST), 2012). Having this exposure to companies that were tremendously innovated and changed their respective industries, Preysman eventually strived to have a similar impact on the retail industry (TWIST, 2012). Preysman’s initial motivation to launch his own apparel brand sprang from the realization that many of his favourite products had been marked up tremendously by retailers through the traditional supply chain (TWIST, 2012). From manufacturer to physical retail locations, there are various channels and vendors along the way that take their cut leading to an markup of up to 800 percent the original cost of manufacturing (TWIST, 2012). Preysman saw the opportunity to condense the distribution process, by operating strictly online, and providing the same quality high end product to the consumer with simply a traditional keystone markup of one hundred percent (TWIST, 2012). Preysman did an initial angel round of funding that scored a million dollar investment from major firms such as Kleiner Perkins and SV Angel (TWIST, 2012). Upon launching Everlane offered a limited run of 1500 men’s basic t-shirts that retailed for fifteen dollars. Manufactured in Los Angeles from U.S. cotton, the product was marketed as the same high-end product offered at major high-end retailers without the unnecessary markups. Along with their initial launch, Everlane released two infographics that went viral and served as their marketing. The ‘From Cotton to Consumer: The Making of a Designer Tee’ infographic showcased the cost of manufacturing a high-end tee shirt, with the final cost of just under seven dollars, along with how the supply chain markups the product landing at a retail price of fifty


3 dollars. Everlane released a second infographic that showcased all the channels and vendors involved from manufacturer to physical retail causing this massive markup. The visual demonstrated how by cutting out necessary channels, Everlane was cutting out the need to markup their product and transferring the savings to the consumer (TWIST, 2012). The Everlane website provides the slogan “Radical Transparency: Know Your Factories. Know Your Costs. Always Ask Why� (Everlane, 2014). Everlane presents all their true costs on their website and directly informs the consumer of their markup. Since launching the brand, Preysman has expanded its product categories offering knitwear, cashmere, accessories, and even womenswear. Everlane oversees the entire manufacturing process to ensure quality control as well as handles all customer service in-house (TWIST, 2012). The biggest struggles Preysman says he faces are fabric and quality consistency along with effectively communicating the products tremendous quality at such a drastically lower cost to his target consumers. Retailers multiply the cost of their products to accommodate an operating cost of up to twenty percent (TWIST, 2012). Without physical retail locations, online businesses are able to cut operating costs down to approximately five percent. Everlane utilizes this strategy and transfers those savings to the consumer (TWIST, 2012). Education and transparency are the main core values of the brand and Preysman sees these values are factors that lead to brand loyalty and word of mouth amongst intelligent consumers. Preysman credits applications such as Netpromoter, an application that tracks how likely a consumer is to recommend the product without being prompted, along with Twitter to provide consumer feedback and engagement. Preysman states that Twitter acts as Everlane’s physical store by allowing him to communicate with his consumers directly about Everlane and their products (TWIST, 2012). The Internet made everything in society easier and more efficient, it is only right that eventually a company such as Everlane would provide a new and more efficient way to operate an apparel business in the twenty first century.


4


5

References About Us. (n.d.). Everlane. Retrieved January 22, 2014, from http://www.everlane.com Week in Start-Ups (TWIST). (2012, April 30). This Week In Startups: Michael Preysman. This Week In Startups. Retrieved January 22, 2014, from http://thisweekinstartups.com All images sourced from Everlane’s public Tumblr page.


The Story of Everlane: An Entrepreneurial Review