Bonobos: A case study in brand agility

Since its founding in 2007, few brands have come to epitomize robust e-commerce strategization as online retailer Bonobos. However, can initial online success translate into successful brick and mortar commerce?

Few companies have had such a tremendous impact on both the success and expansion of online retail sales in the fashion and apparel industry quite like Bonobos. Launched by founder Andy Dunn in 2007 as an online retailer of tailored men’s pants, the company reported sales of $1.9 million in its first year alone. Not an insubstantial number in a $22 billion industry; at least not for an independent retailer operating out of an apartment with virtually no advertising.

With an initial niche focus—fitted men’s trousers and nothing but fitted men’s trousers—and a marketing strategy that relied solely on word-of-mouth, it wasn’t supposed to work. Especially in an economy that was just starting to feel the aftershocks of the great financial meltdowns of 2007 and 2008. Especially in the face of tried and trusted brand monoliths and retail outlets accounting for over 80 percent of online e-commerce. So what helped propel one direct to consumer online retailer from facing potential risk to securing over $127 million in funding to expand physical presence last year alone?

Customer Experience vs. Distribution Density

A chief factor in the critical success of Bonobos has been a firm commitment to customer experience. Early on, the company took the cue from earlier, successful e-commerce retailers such as Zappo’s by providing free shipping and returns, as well as customized service. Now, the company (already described as early as 2010 as “the internet’s fastest growing men’s retailer”) seeks to make waves in the most traditional of outlets—the retail storefront—albeit via their own unique slant.

In addition to offering custom-tailored apparel, Bonobos has expanded to physical locations, both via distribution through the consistently popular Nordstrom’s chain and a platform which allows customers to try on clothing through a one-to-one service known as “Guideshop.” Each visit to a guideshop is personalized; customers must book an hour appointment in advance. This ensures a minimal number of customers at any time; and a maximum amount of attention from sales representatives (dubbed “Ninjas.”) It is one thing to put a playful twist on a staid shopping experiences for novelty’s sake, however, how does this translate into sales and customer loyalty?

A 2011 test trial of the Guideshop platform in their New York City headquarters alone netted in a profit of $1 million; enough for executive chairman Dunn to see both the feasibility and challenges in expansion. Today, Bonobos operates 17 physical storefronts. Has the payoff worked? In 2013, total brick and mortar order value is almost twice as much as it was online, and the collective response, as indicated on Yelp! and other review sites, has been effusively positive.

Key Points

• $69.3 million in annual revenue for 2013
• 17 physical storefronts, in addition to channel line distribution through Nordstrom’s
• Parent company of woman’s brand line AYR, and golf accessory manufacturer Maide
• $127.6 million in funding via venture capital, including Lightspeed Venture Partners and Glynn Capital Management, in addition to a separate $16.4 million backing from Nordstrom’s

To hear from the Founder of Bonobos, Andy Dunn, book your ticket for the Intersect Retail NYC event on October 21st-22nd. FashionUnited readers receive a 25% discount. The code MP-25AMST can be applied here.