The Rise Of PK Website

Win the favor of VC

As more and more consumers turn to subdivision websites, they are far below the price of department stores and buy high-end.

New Enterprise Associates, Accel Partners, Lightspeed Venture Partners and Battery Ventures Vc firm are increasing investment in the field of e-commerce.

Driven by these Vc firm, the US online retail industry has raised $328 million 700 thousand in funding this year, more than doubled in 2011, according to data from the National Association for risk investment.

J. Hilburn, American Giant and Bonobos, and other high-end clothing and start-up companies in the United States have also entered the e-commerce market, trying to get a slice of this potential market.

According to Forrester Research, a market research firm, the size of the US e-commerce market in 2016 will reach US $327 billion, far exceeding US $202 billion in 2011.

Garment customization companies deliver goods directly from factories to consumers, which saves shops in the supply chain, so that they can sell goods at below the department store prices, and the profit rate is higher than that of the online retail giant Amazon.

With this kind of business mode, they have gained the favor of consumers and Vc firm.

Battery Ventures partner Brian OMalley (Brian O "Malley) said:" the fabric of the shirts sold by J. Hilburn is produced in a factory in Italy, while Zegna shirts are also used in this fabric, but in Neiman Marcus (USA).

Chain corporation sells for $300.

OMalley added, "J. Hilburn can offer consumers the same fabric shirts that are completely tailored to consumers at a lower price, but their profit margins are still good because of the possible reduction of intermediate links in the process."

J. Hilburn has total financing up to $12 million so far, and Battery Ventures is also one of its investors.

Reduce intermediate links

New Enterprise Associates partner Harry Ville (Harry Weller) said that the reason why high-end clothing custom-made companies were favored by consumers and investors was partly because they provided consumers with experience that they could not get from traditional online retailers.

New Enterprise Associates has invested in many e-commerce start-ups.

"They seize an opportunity for consumer behavior," he said.

If you can solve the inefficiencies of consumers in comparison with price shopping, you can earn more money.

Besides, you have to understand that men don't like to go shopping. If you can provide them with easy shopping opportunities, they will pay you a pretty good price.

According to J. Hilburn co-founder and CEO Hill Davis (Hil Davis), the company will take a series of measures to reduce operating expenses, such as eliminating the costs associated with warehousing and store operations, and minimizing the new product listing cycle.

He said that in most retailers, because of the supply chain from factory to shop, the final time for a garment to be listed is 3 times that of J. Hilburn.

Davies said that the cost of a J. Hilburn shirt for men is about 35 dollars, and the cost of making it is about 22 dollars.

That is to say, the cost of this shirt is 57 dollars, far less than that of Ermenegildo Zegna Group, which uses the same fabric but sells for 200 dollars.

In the official website of Neiman Marcus, Zegna shirts cost between 325 and 435 dollars.

Higher profit margins

Because of this business model, the gross profit margin of J. Hilburn is as high as 54%, compared to the 22% gross profit margin of Amazon in 2011, and the gross profit margin of Messi's department in the last fiscal year was 40%.

"Obviously, we can save a lot of money from the retail supply chain," Davies said.

Amazon spokeswoman Stacy Keller (Stacey Keller) and Zegna declined to comment.

This business model has also been invested in some traditional retail stores.

In April this year, Bonobos, a vertical retail website for men's clothing brand, raised $16 million 400 thousand in a round of financing, and Nordstrom, a high-end department store operator, took the lead in this round of financing.

Nordstrom's move is aimed at improving the network sales of the company's products.

Nordstrom spokesman Colin Johnson Johnson said in an interview: "online business is the fastest growing business of our Colin.

Bonobos is a fast-growing company, and its business model is in line with men's shopping habits.

We are excited about learning from them. "

Bonobos was founded in 2007 as a research project by Brian Spaly, Brian Spaly and Andy Dunn (Andy Dunn), the two college student of Stanford University business school.

The two men obtained hand made shorts during their wedding in Columbia, and found a market segment that had not been excavated before: This shorts tightly tied around the waist met the needs of men who wanted to show their body and build.

After selling some samples to Standford's classmates, Spaly and Dunn founded the Bonobos website.

At present, Bonobos has raised over $38 million from Vc firm such as Lightspeed and Accel Partners.

With financial support, Bonobos has extended its business from shorts to shirts and suits.

Challenge Amazon

Bonobos is currently the largest in the US.

Custom website, and J. Hilburn is the largest shirt custom website in the United States, American Giant mainly sells men's casual wear.

The designers of J. Hilburn and American Giant cooperate with the manufacturer directly in the fashion design, fabric and sewing quality.

Through continuous underground orders throughout the year, the two companies can ensure that manufacturers provide products for them in small quantities.

Davies, a retail industry analyst at hedge fund Citadel LLC, sprouted the idea of founding J. Hilburn on her honeymoon in the Virgin Islands.

In 2007, he co founded J. Hilburn with Credit Suisse First Boston former investment banker Wiral Lahoud (Veeral Rathod).

Davies and Lahoud both like high-end shirts brand, but they hate mad stores.

Davies said, "if you can buy a custom made shirt with the same fabric at a price of 109 dollars, who will buy a shirt made of 250 dollars?" this is also a bet for us.

Although J. Hilburn expects its sales to more than double this year's $17 million in 2011, its success depends on a small number of loyal customers.

Amazon has more than 100 million users, with sales of $48 billion 100 million last year.

Because of the wide variety of products, and the services like Amazon Prime help attract many "repeat customers", Amazon and Messi stores have a strong appeal for consumers seeking a one-stop shopping experience.

Huge market potential

According to the data provided by the American Venture Capital Association, New Enterprise Associates has so far injected $18 million 700 thousand into several high-end custom tailored websites.

New Enterprise Associates also includes accessories supplier BeachMint and flash buying website Gilt.

Gilt spokesman Jennifer Miller (Jennifer Miller) said the company plans to conduct IPO (initial public offering) in 2013.

American Giant began selling t-shirts online from February this year and shipped them directly from factories to consumers.

Like Bonobos, American Giant also provides men's clothing customization.

This business model helps American Giant reduce the cost of a large number of supply chains, so it can take up one thing that many retailers can not afford to do, namely, production in the United States.

American Giant all garments are cut and sewn in Brisbane, California.

Josh Goldman, partner of Vc firm Norwest Venture Partners (Josh Goldman) said that the small men's clothing custom website was favored by Vc firm, "because consumers are very excited about the new shopping experience.

In the past, online shopping was search, such as Amazon's business model, and now it's curatorial.

Norwest Venture Partners has invested in boutique clothing website ModCloth Inc.

In a round of financing before the Pepsi Cola CEO Donald Kendall (Donald Kendall), American Giant raised $5 million from angel investors.

American Giant expects revenue to increase by two times next year, but refuses to provide specific data.

OMalley said: "since the products are welcomed by consumers and attracted a large number of" repeat customers ", these startups have also become the focus of attention.

The market still has great potential for growth. "