Custom suits

Product Mark-ups Are Headed South – Fast

Brand = makes the goods
Retailer = sells goods that brands make

For the last 150 years, the companies that made the products were independent of the companies that sold the products (e.g. Nordstrom, Macy’s). The traditional model for consumer product brands to get-to-market was to be sold via distributors, specifically brick-and-mortar retailers. The retailers could provide convenient access to a wide set of merchandise, and specialize in providing good service. And the brands, who didn’t have capital to build their own distribution via stores, could focus on designing and making the products. This generally worked for the customer, with the caveat being both the brand and the retailer were looking for a 2-2.5x mark-up. Said another way, the mark-up from costs of goods to the customer was generally at 6-10x when you including intermediary distributors and manufacturer mark-up.

In the last 30 to 50 years, brands have started to open their own brick-and-mortar stores to own the production and distribution, think GAP. Because there are heavy overhead costs associated with building large storefronts across the country, and a baseline price at which their retail partners needed to sell. The prices didn’t go down for customers, and hence a 6-10x markup remained. Only when brands started to move away from selling via retailers were customers starting to get more value for their money. The brand was now able to dictate the price independent of a retailer mark-up; e.g. Old Navy is the fastest ever apparel brand to reach $1BN in sales, and their pricing model could never work if they had to sell that via retailers.

More recently, as more of us take our credit cards online, we see the next evolution. Add a further catalyst of the post-2008 value-based economy, and we see global e-commerce growing by 19% in 2013 alone. In a world where anyone can access any brand via the internet, the role of retailers has diminished dramatically. As a result digitally-native brands are seeing an opportunity to rethink the traditional pricing and mark-ups of their products. You see this with brands: like Warby Parker, an eyewear company selling glasses for $95-145 at a similar quality to what you’d see at retailers going for $400-500; or Everlane, a basics company selling designer-quality t-shirts for $15 instead of $50.

Mark-ups exist, at their essence, to cover the cost of selling the product and having a competitive product. But the cost of selling a product is lower than ever, and competition is as fierce as ever. In fact the pendulum on mark-ups is swinging the other way pretty dramatically. Digital brands, ourselves included, are flying incredibly close to the trees, leaving a very small operating margin in an effort to deliver more value to the customer. Go to a Nordstrom today to buy a custom shirt, and they start at around $150 and can get up to $300 pretty quickly with additional customizations. They’re taking a third-party ‘private label’ brand who has their mark-up, then adding the Nordstrom mark-up. Blank Label shirts go for around $83 when you buy into the 3 for $250, and that leaves just enough to support the team that designs, sells and services the product. The most extreme version I know is brands that are launching and losing money on every product they sell, i.e. the price it sells to the customer is lower than the cost to make the product. They only can make a profit when they get to significant volume and benefit from economies-of-scale on the production side. And the difference in the meantime is funded by investors.

This has major implications for retailers and brands that have invested significantly in brick-and-mortar. It’s no secret that traditional retailers are struggling to catch-up. Borders and RadioShack shutting down are just the beginning. And although these new digitally-native brands still benefit from an offline presence, it’s at a vastly different cost base to brands that started offline. Jack Spade and Kate Spade Saturdays recently announced they’re closing all their standalone stores and focusing on e-commerce and retail relationships. Billabong, a surf company with revenues exceeding $1BN last year filled for bankruptcy. This is akin to when Rockefeller no longer need Vanderbilt’s railroad for transporting Standard Oil. There is all this expensive infrastructure that exists, that has been necessary for the majority of the last 150 years, but that value is eroding quickly.

The value of brick-and-mortar in the next 20 years is as a form of media. In-person brand education, feeling of fabrics, sizing of garments, and the sensory experience are all incredibly important and valuable, and cannot be replicated online. But the days of 6-10x mark-ups are very much a thing of the past, and the business model of brands for the next couple of decades is currently being set.

Suit making

The $1 Billion Custom Clothing Brand

In the next 10 years, there will be a $1 billion custom clothing brand, and it doesn’t look like any custom brand today. For the last 10 years, the resounding message menswear brands have sent is FIT MATTERS. With the introduction of slim fit, tailored fit, custom fit, tapered fit, and growth in the big and tall market, men are more fit conscious than ever. Men are taking notice and looking for a new option that works for them. Custom has the potential to disrupt off-the-rack, but we don’t believe anyone is currently close to fulfilling the potential, and becoming the new clothing standard. The simple reason is for custom to replace off-the-rack, it needs to be truly affordable and accessible.

Consumers are more aware than ever

In the world of price transparency via a 30 second internet search, and a post ’08 value economy, affordability is a must. Our belief is for custom to really compete with off-the-rack in the eyes of our customers, the pricing has to be on par.

The traditional approach to custom is the direct sales model; sales people coming to your office or home. The economics of this model are very interesting. It’s generally completely commission based and of what you’re paying, 30-40% of it goes to the sales person. They will tell you their garments are pricey because of the quality of their fabrics; what they mean to say is its the size of the commissions. The experience, although initially convenient because they come to you, can very quickly flip because due to a lack of tools or training, the sales person gets undone with the garments don’t fit. What ends up happening (because we get customers regularly who used to use a direct sales vendor) is you end up with clothes that are expensive that don’t fit particularly well. And these companies are held up, to their credit, not by the ease of experience or quality of garment, but by the salesmanship. If you’ve tried custom from such a place, and couldn’t get your clothes to fit after a year of trying – we want to hear from you!

Uber made using a private driver more mainstream by presenting UberX as initially price-comparable to taxis, and eventually more inexpensive than taxis. Once it’s implanted in your mind that Uber is cheaper than getting a taxi, why would you ever get a taxi again. But taking over the taxi market is just the beginning. Uber recently compared the San Francisco taxi cab market, which does $140 million a year, to Uber, doing $500 million a year in San Francisco; still growing at 200% year over year, and looking to disrupt car ownership. With innovations like UberPool, and the fact most cars are idle 90% of the time, they want to make car ownership a thing of the past. That means Uber not only has disrupted the taxi market, it has surpassed it by multiples, and is going after an even bigger market opportunity. We believe consumers are more aware than ever, and this $1 billion custom clothing company won’t just disrupt the up-market traditional custom clothing approach, but it will take away from the $429 billion global mens apparel market.

Accessibility is paramount, especially for men

Men hate shopping, but value looking good. I haven’t yet met a guy who doesn’t like receiving a compliment on his suit. But on the hierarchy of needs, dressing well is pretty low down the list. We’re not trying to change that. Our goal is not to turn our customers into fashion aficionados. Quite the opposite in fact. We believe our customers should be put at ease with their dress, they should be able to pull any shirt or suit out of their wardrobe and be put at ease that it’ll make them comfortable and look good.

All of that is to say, even though men are growing more fit conscious, and they have a better appreciation than ever of value, making it easy and accessible is table stakes. Uber showed us that the accessibility of being one tap away is a killer feature. No more calling up a private driver the night before, and hoping they’ll be on-time with no way to directly call the driver himself.

There’s a newer, digital, custom approach that’s come about in the last five years that wants to use the internet to bring custom into the future. We believe the model is close, although getting the ‘ease’ part right is tricky. Most of these sites ask you to ask a friend to measure you. We believe to achieve the magic of custom, we cannot expect a customer to have a measuring tape, let alone require the assembly of two people. That’s why our shopping experience defaults to a sizing option that asks questions you know the answer to, and everyone is manually examined by a sizing expert. In addition, we believe a full wardrobe, to include suiting and outerwear, cannot be done online-only. The level of attention necessary to outfit a suit requires the expertise of a well-trained, full-time specialist, with tools that do not fit into a bag. That’s why it’s our ambition to build out 100 Pattern Rooms around the world; to have the distribution necessary to make custom truly accessible.

Operational excellence because product is everything

You can generate all the demand in the world, but not having the supply to pull it off leaves the opportunity on the table. An integrated supply chain is the backbone of this $1 billion custom clothing company.

Blank Label does all of our construction 50 miles outside of Shanghai, in an area that has a history of tailoring. I built our supply-chain in the beginning and continue to oversee it, and the fact I’m natively from Shanghai makes a difference. In the last five years, I’ve spent a total of 18 months on the ground working with the partners that make our garments, and that has a lot to do with the quality, speed and affordability that we’re able to offer.

Pulling off making custom easy and affordable really is magic. That’s why no one has yet been able to do it at scale, and that’s why custom isn’t the new standard, yet. We work hard everyday to bring, and improve, the magic of custom. In the next five to 10 years, we believe custom will be the computer on everyone’s desk, the smartphone in everyone’s hand, the private driver for everyone’s transportation, and we thank you for joining us on that journey.

Custom Shirt Measuring

A Tall Man, a Short Man, and an Athletic Man Walk into a Store

In the past two years, there has been a lot of coverage in the retail, fashion, tech and startup press about prominent e-commerce startups, who were once committed to being online-only, going offline and opening up brick-and-mortar locations. It’s a trend driven by the most funded, fastest growing startup brands: Warby Parker, Bonobos, Birchbox, Etsy, Rent the Runway, Harrys, and wait-for-it, even Amazon (reportedly to buy RadioShack stores).

There are some great opinions on this topic already:

Long Live Retail: Fashion Startups Finally Learned Why Physical Stores Still Matter (Observer)
Why Amazon Is Testing an Offline Store (Inc.)
E-Commerce, With Bricks and Mortar, Too (NYTimes)
Digital-Physical Mashups (Harvard Business Review)
Why Are E-Commerce Startups Bullish On Retail? (TechCrunch)

The main reasons are:

1. The original promise of an online-only brand being a high margin business hasn’t quite eventuated because you have the combination of SG&A (photography, credit card fees, customer service), fulfillment (packing, logistics and shipping), and heavy marketing expense of building awareness for your brand in a busy, online, distraction-heavy world.

2. Having a physical footprint is the most ROI effective form of marketing, i.e. take what you spend in online banner, search and email ads, and offline print, boards, etc, and place it into opening experimental stores where you can create demand, capture demand, and also create emotional connections, and you’ll have a better return on your investment.

3. No one has really figured out fit online, and with the base of 30-40% of clothes bought online being returned, the aforementioned fulfillment and customer service costs add up. In-store, you have a much better chance of helping the customer find fit.

How Blank Label found its way offline:

Our original thesis, like some of the e-commerce brands mentioned earlier, was to stay online-only as we thought that was the best way to fulfill our mission of making custom the new standard; wide distribution, lean operation, high quality to price ratio. In late 2012, we get invited to do a few trunk shows in Boston and New York. The number one question we received from people during these trunk shows: ‘I don’t have time right now, I’m really interested in your brand because I can never find shirts that fit; where is your store?” We’d say, our store is online, we’ve built a really easy experience, but they would insist they needed to come in. After the 30th person asked us where our store was, we thought there might be something to having a physical presence. We did a temporary pop-up in Boston in March of 2013, and the rest is history.

Sewing Machine

What we’ve learned:

Physical retail is a very different business to e-commerce. Though we had a strong supply-chain and technology base, the hard part was taking the brand from online to offline, and thinking through how we would achieve our goals of Fit, Ease and Quality with an in-person experience.

1. Being in-person allowed an opportunity to sell a much broader set of merchandise. Once our customer experienced custom shirting, they found themselves dissatisfied with their off-the-rack suits, so in late 2013 we expanded our line to suiting, and kept that to in-person only. Since then we have launched chinos, corduroys, tuxedos, topcoats, ties and scarves. This actually more than doubled our average order size, compared to online.

Top Coat

2. There’s an opportunity to have both permanent locations and pop-ups. Our Boston Pattern Room will always be our flagship, however we’ve already successfully run a Chicago pop-up and plan on doing more pop-ups in Washington D.C., Charlotte and Dallas. We also plan on opening up more permanent locations, but the two can co-exist. Warby Parker has an interesting model where they have an online store, store-in-store in other brick-and-mortar retailers, and their own physical stores, and even had a bus driving across the country which they were selling out of.

3. The technology stack in our brick-and-mortar business looks very different than our online store. In the past year, we’ve built our own point-of-sale, CRM and online-booking application. We have a custom product that produces a lot of interesting data, and therefore have believed we need customizable technology applications to make the most of those data opportunities. A simple example; we can provide a better customer experience if when we get in new transitional shirts, one of our Menswear Specialist knows which of her clients likes tattersall patterns, and remind them if they like a spread collar or pinpoint.

In the other direction, there are established brands like Jack Spade shutting down their brick-and-mortar locations, and tech pundits predicting the end of traditional retail. We’re looking forward to seeing how the next 10 years evolve in retail; and excited to make our impact on it.

Your Two Must-Have Suits (This is Not Your Average Must-Have Post)

There are a lot of ‘must-have’ recommendations out there, menswear included. The difference between the good recommendations and the bad ones are the bad ones are just trying to sell you stuff. Given Blank Label only sells suits in-person in our Boston Pattern Room, and the probability of you, the reader, being in Boston being less than 1%, let me state very clearly that this is not a sales post.

The most important part of this post: neither of your two must-have suits are black. If anyone tells you the one suit that you really need is a black one, walk away immediately. Things have changed in the last 10 years, and to catch you up, black suits are now only warn at formal functions, including weddings, galas and funerals. Outside of those, there’s no acceptable occasion to wear a black suit.

The two suits that you’ll want to have are solid navy and charcoal. These are the two suits that you’ll get the most wear out of simply because they go with everything. Let’s be honest, for most men, on any average day, we’re just optimizing for the sharpness :  ease ratio. What’s the best you can look for the least work done. You leave the color palette study to the interior designs, you’re job is to look put-together and feel comfortable.

Navy Suit

The navy suit is a British take on a business-ready ensemble. The darkness of this tailored suit enhances the shape of your silhouette, and looks best with a 2 button closure and notch lapel. Try a light blue custom shirt under the suit jacket for a modern look.

Charcoal Suit

From formal to informal gatherings, the charcoal suit is a classic. It has a sophisticated fit, and complements any color shirt fabric. Complete the outfit with a traditional white custom shirt for a combination of luxury and functionality.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

It’s just really hard to screw these two colors up.
– Full suit: white shirt, blue shirt, pink shirt, solid shirt, striped shirt, patterned shirt, neck tie, bow tie, open collar.
– Either jacket: if you’re a fan of the ‘spezzato‘ look of wearing separates, go with lighter colored chinos like camel, beige; or navy jacket with grey trousers, to leave them both in play.
– Either trouser: again, any shirt, and for a bit of warmth add a colored sweater and you’ve got a cool, casual look without the full suit.

If you’ve already got the solid navy and charcoal on lock-down, first of all, well done. One of the first questions we ask clients is what they have that they love, the most common answer is nothing, and very rarely it’s some random navy pinstripe they got on sale four years ago that happens to fit them well. We believe in starting with the foundations; make sure you have a solid navy, a solid charcoal, (and of course five solid white shirts, and five solid blue shirts), that they fit well and you feel comfortable in them. From there, my third and fourth suiting recommendations would still be in the navy and charcoal family, now adding some patterns or stripes in there (depending on profession and personal taste). These are the suits you’ll wear most often, need to think the least about in the morning, and be thankful you’re in the minority of having the must-haves.

The Team – 2015

Most conventional wisdom tells young companies to ‘act big’, ‘fake it till you make it'; something we value at Blank Label is context through transparency and authenticity. With 12 people, limited resources are always a constraint to consider, and this filter permeates throughout everything we do. This affects how wide a merchandise selection we choose to offer, the number of locations we can be in, and most importantly the amount of dedicated attention we can provide to every customer given the variability of busyness day-to-day and month-to-month. One of the most challenging parts of our young company is deciding what we can do, and equally what we cannot do. In the spirit of context, here are the people behind the work we have chosen to do.

Benjamin Bernard / General Manager
– Boston native hailing from West Roxbury, been with the company since 2013
– Works with the retail team to serve clients in the Pattern Room, and implement projects to move the retail experience forward
– Super power is his ability to wear loafers through the coldest of Boston winters
– Photo: Back row, third from the left

Team photo

Rocco Carzo / Operations and Service Manager
– Relocated from Upstate New York in 2014 to join the company
– Works in our back-office team to keep garments rotating in-and-out smoothly, and deliver service to our online customers
– Super power is ability to say a lot with very few words, internally joking that he keeps himself to a daily word count
– Photo: Back row, fourth from the right

William Harper / Head of Operations and Finance
– Originally from Virginia, most recently from Kellogg, Northwestern, joining in 2014
– Either running or improving the ‘magic’ of a garment made for you being delivered in two weeks, and handling the fluctuations of an on-demand business
– Super power is his ability to imitate accents, with a particular penchant for outback Australian
– Photo: Front row, second from the left

Michael Kinlin / Menswear Specialist
– Another Boston native, has been with the company since 2013
– Works with the retail team to deliver an end-to-end client experience
– Super power is ability to communicate in grunts, moans and cackles, with people understanding perfectly what he means
– Photo: Back row, far right

Cheri Nelson / Menswear Specialist
– Boston native, has been with the company since 2014
– Also works with the retail team to deliver experiences that achieve fit, ease and quality
– Super power is her illogical amount of fast food to skinny physique ratio
– Photo: Back row, far left

Alison Romano / General Manager
- Joins from Connecticut, has been with the company since 2013
- Works with the retail team in servicing clients, with a particular focus around fit and pattern-making
- Super power is her appetite for fashion knowledge, from latest designer news to technical garment construction
- Photo: Front row, far right

Sarah Rubenstein / Visual Designer
– Hails from Rhode Island, has been with the company since 2014
– Works with creative team to continue to tell the brand story through content and photography, including all of our email updates
– Super power is a source of constant laughter, which creates a Hawaiian wave of laughter around the office
– Photo: Front row, second from right

Parker Simon / Creative Director
– Representing the west coast, hailing from LA, has been with the company since 2013
– Leads the creative team, overseeing product and merchandise, marketing assets, digital experience and company communication
– Super power is constant source of Lysol wipes
– Photo: Back row, third from right

Paige Sullivan / Menswear Specialist
– Our fourth Boston native, although joining the company from LA in 2014
– Works with retail team to deliver an experience starting from in-person and moving online
– Super power is email response time, goes through her inbox like a knife through butter
– Photo: Front row, first from left

Zee Sheikh / Head of Technology
– Another west coaster, joining the company from LA, pre-launch in 2009
– Oversees all technology infrastructure from website, to retail point-of-sale, CRM and database
– Super power is only wears striped dress shirts
– Photo: Back row, second from left

Davis Vanderlin / Merchandiser
– Our final Boston local, joined the company in 2014
– Manages merchandise and buying, runs product development which last year included corduroy, ties, topcoats and scarves
– Super power is constantly challenging Rocco to feats of strength
– Photo: Back row, second from right

Ready for the Cold: Limited-Run Flannels

Beat the Chill: our limited-run flannel shirts are guaranteed to keep you warm this season.

Flannel shirt

Update: This navy plaid flannel has already sold out. The two remaining plaid flannels in the collection are red and green. Both are limited run.

Update 2: We have updated the button-stance so that the bottom button of any shirt will be no more than 5″ from the base of the placket. This will ensure your bottom button doesn’t sit too high when wearing your shirt untucked.

 

The Last 5 Years

Welcome to Blank Label, my name is Fan Bi and I’m the Founder and CEO of this menswear brand. If you’re visiting us for the first time, let me catch you up to speed on what we’ve been up to. The company was started with a very simple premise: custom was better than off-the-rack, and if it were the same price, it’d be a no brainer. The name Blank Label was, and is, actually a rejection of paying for the extreme margins in designer labels, and furthermore needing to adhere to that designer’s beliefs. We believed in a world where fit was growing in social consciousness for men, custom would be a necessary and obvious solution. So began the journey.

2010
– 3 people
– online only, custom dress shirts
– really laying the technical foundation of our website and infrastructure of taking orders, making and shipping custom dress shirts
– highlight was a splashy feature in the New York Times

2011
– 3 people
– online only, custom dress shirts
– focusing on understanding how a person could most easily provide measurements and customize a dress shirt, i.e. still trying to take this non-obvious idea of doing custom clothing online and trying to make it easy
– highlight was launching version two of our online shirt customizer, which we thought were going to solve all of the world’s problems

2012
– 4 people
– online mainly, with some trunk shows, custom dress shirts
– looking for additional marketing and distribution channels as custom online only wasn’t getting the adoption we were hoping for
– highlight was taking our customer interactions offline via trunk shows and being repeatedly asked the question ‘where is your store’, and being in almost disbelief that we were trying to do this online only; (read: lightbulb goes on)

Muffin Top

2013
– 7 people
– online, permanent store in Boston, pop-up in Chicago, custom dress shirts and custom suits
– make a major expansion into brick-and-mortar with our first Pattern Room and start to aggressively build out technical infrastructure to support offline-online syncing, create training around in-person fit and service, learn in-store merchandising and layout, and develop a suiting program
– highlight was taking our first outside money which was a huge deal as it allowed some longer-term thinking as the company was always living month-to-month, and that other smart people outside the company (in addition to our customers) believed in us

2014
– 12 people
– online, permanent store in Boston, custom dress shirts, custom suits, custom topcoats, custom pants (chinos, corduroys), ties and scarves
– relocate to larger office and store in Boston’s Downtown Crossing which is more than double the space of previous office and store, continue to build out retail operations, major redesign of the online experience, new in-house tools including a custom-built CRM, point-of-sale and database application
– highlight was moving into our new home which will likely be our HQ and flagship Pattern Room for the next few years, as well as winning Best of Boston 2014 by Improper Bostonian

Boston custom suits

2015
- we’re excited for you to wait and see

Whether it be our loyal customers, curious visitors, future team members, or just people who are interested in how we run our young company, and those who are following with what’s going on in retail innovation, I plan on using this blog as a place to keep anyone who is interested up to date.