Bonobos: Very Fit to Lead
By Carlye Adler
May 18, 2010
Andy Dunn doesn’t seem like the usual suspect to lead a fashion revolution. At 31, the energetic MBA from Stanford has experience at Bain & Co., but never worked in the apparel industry. He studied economics and history, but has no background in design. He’s as passionate about falafel, beef jerky, and premium South American rum as he is about clothing, and, most of all, he hates to shop. “When I’m in a retail store I feel like my soul is getting sucked out of me,” says Dunn, who believes most men feel the same way.
Dunn and his Stanford housemate and best friend Brian Spaly co-founded Bonobos — whimsically named after a particularly promiscuous primate — in 2007 with a vision to do men’s clothing differently. The company is firmly focused on fit (Spaly designed the pants with a curved waistband and slimmer thighs to prevent the bunching of fabric in the rear, or “khaki diaper butt”), but the slacks, which come in a rainbow of colors beyond khaki, cannot be tried on in stores. Everything is done through the Web, though this isn’t just Zappos for nice pants. Bonobos is now launching a plan to bring “mobile fit pods”, or portable, collapsible, dressing rooms to airports, train stations, corporations, college tailgates, beach parties, and farmer’s markets — wherever the potential customers are — to get guys measured by its experts (so-called style ninjas), who will then direct them to the website.
Bonobos’s web site and pop up fitting rooms have entirely eradicated the brand’s need for leases, sales staff, and distribution. “The concept has such validity in today’s world,” says Maxine Martens, the CEO of fashion industry search firm Martens & Heads, and an investor in the company. In 2009, a retail environment that saw shrinking sales, reduced traffic, store closures, and bankruptcies, Bonobos tripled its business, earning $4.9 million in gross sales. And even though the pants aren’t cheap, ($88-$195 a pair), Dunn says there’s enough appeal to double business this year.
Once spurned by venture capitalists and industry experts as unwise to launch a new clothing venture entirely online without a bricks-and-mortar presence to help bolster the brand, Bonobos’s unlikely idea is receiving vindication. In the past two months, the New York-based outfit raised $2 million from angel investors and Joel Peterson, the chairman of JetBlue, joined the board, saying Dunn “has the same sort of creativity, commitment and confidence that David Neeleman showed in launching JetBlue.” The 24-person company has wooed key hires from Club Monaco, Old Navy, and Apple, who also see promise for the new way. “The traditional retail model is broken, says Steven La Guardia, the former the CEO of Bally, who recently signed on as chief merchandising consultant. “Andy being 31 with a lack of industry experience is probably fortuitous. Not knowing all the rules means he can break all of them.”
Dunn has bent the rules when it comes to what men will wear. In addition to promoting a more snug fit, Bonobos has amped the traditional pants palette with “mint julep,” and “pink party starters”. (“They go with just about everything that khakis do… they just start with a lot more fire.”) But it’s really customer experience that may be the biggest change in the game. Customers are encouraged to buy several pairs and try different sizes. There’s nothing to lose: Bonobos picks up all shipping costs and offers lifetime returns. In addition, the ninjas, college-educated fashionistas who are invested in the brand (literally, everyone in the company has equity), are available by e-mail, telephone and video chat. (The ninjas also call every new customer after the shipment is received to ensure the pants are loved.)
Troy Hooper, 27, Minneapolis based financial analyst, and owner of 19 pairs of Bonobos pants (including the mint ones), says he emails or tweets with the ninjas several times a week on both Bonobos and non-Bonobos related business (such as the ninjas love of the fast food restaurant chain Chipotle). “It’s almost like they are my friends. These guys they make me feel like I am part of the company even though I am just a customer,” says Hooper. Another devotee, Michael Loughman, 43, of Grand Rapids, Mich., who has five pairs of Bonobos, says he has visited the Ninjas in the office — twice.
Keeping up with the customer isn’t artifice, but essential. Dunn is obsessed with knowing his customer — 32 years old on average, maybe married (half are), and favorite movies include The Godfather, Caddyshack and Shawshank Redemption — information that helps Bonobos reach its target audience the right way. In an industry that has historically spent 5 to 10% of its total sales on print advertising, Bonobos effectively relies mostly on word-of-mouth. Hooper has referred seven people, including one friend who now has 12 pairs of Bonobos slacks. A program that gives $30 off the first purchase for a referred customers and a $50 credit for the person who makes the referral makes the deal sweeter. Several other online retailers including Gilt Groupe, Rue La La, and Hautelook drive traffic with $10-$25 credits for referrals, but Dunn points out, “bigger discount, bigger bounty.” It works: referrals account for 50% of its new customers.
Bonobos fans are involved in much more than customer acquisition, though. Their feedback also guides new product ideas. After last year’s successful launch of polo shirts — it sold $1,000 of them a day for its first 100 days — Bonobos is expanding with dress shirts in a quest to end the “billowing muffin top” (excess fabric at the waist). They have been using social media tools to enlist customer feedback on some design elements, such as whether the shirts will have one button or two on the cuffs. “Asking the customer? That’s revolutionary,” says Candace Corlett, president WSL Strategic Retail in NY. “The world of the fashion designer is that the designer knows best. But the stuff that gets left over in stores shows that they miss the mark often.”
Customers in the “beta program” — the 900 customers who signed up to test new products and give feedback — are eagerly awaiting the new shirts and are also excited about Bonobos blazers. (The one Dunn is wearing has a red and black tiger stripe on the inside). There’s also the possibility of tuxes, which are currently only available for grooms. But Dunn isn’t eager to do everything himself. “We have no need to be an uber-brand; category leadership comes down to focus,” he says. “Besides, it’s un-cool to do everything.” This is the theory behind Backed By Bonobos, which sells accessories such as bags, belts, ties, and shoes by independent designers. The first to launch was Ernest Alexander messenger bags, which immediately sold out on the site. “We want to be Barneys of the future. We want to play a role in launching other brands,” says Dunn. (Bonobos gets bonus points for actually inspiring this one: Founder Ernest Sabine previously interned at Bonobos while getting his MBA.)
Bonobos has come a long way from selling the 400 pairs of pants Dunn moved to New York with, but it has also experienced its share of growing pains. A foray into swimsuits was a flop (elastic that doesn’t squeeze at the love handles has since rectified that problem.) There have been quality issues, including one instance when a style of pants was made with the wrong side of the fabric. Another time the company incensed PETA activists with a YouTube video that depicted a chimpanzee trying on a Bonobos swimsuit. Dunn’s good at admitting his mistakes: he removed the video (even though it was on its way to becoming a viral hit), and earnestly says he’s now committed to getting legislation passed that would make chimp acting illegal. (The company already supports its namesake by giving $1 for every new customer and $5 on certain products to an ape sanctuary in the Congo.)
Perhaps the most significant challenge though, has been how to cope with what Bonobos wants to be when it grows up. Spaly was bent on continuing as a rogue operation while Dunn, with his penchant for raising money and recruiting pros wanted to grow it with the blessing of industry vets. The difference ended with Spaly leaving in October, but the founders have remained friends. Spaly’s position as one of the company’s biggest shareholders isn’t the only demonstration of his continued belief in Dunn and the new model. He’s been recruited as CEO of Trunk Club, a web-based shopping service also centered on the idea that men hate shopping. And, can you guess the most requested brand by Trunk Club’s 1,000 members? Get ready to see a lot of pink pants.