Bonobos: Taking Men out of the Dressing Room

By Keith Loria

What's a guy to do when he just can't seem to find a style of pants that are comfortable and fashion friendly? For Stanford University business student Brian Spaly, the answer was simple: design and alter his own pants to create a style with a perfect fit.

His roommate Andy Dunn liked the pants so much, that the two came up with a plan to make more pants and sell them around the college to others.

That simple act was the genesis of Bonobos, a men's pants and fashion online clothing store started in 2007 by the two, whose goal is to provide men with great-fitting pants for guys who are stylish, but don't want to spend time in the store.

What started off as two friends selling pants out of the trunk of their car has grown into a blossoming New York City business with 23 employees and impressive sales growth.

"We're rapidly growing with month-on-month growth," says John Rote, who has the interesting title of Ninja Manager for Bonobos. "We've had consistency since we opened up our store, and every day is a little bit different as we bring in customers and more people to help grow the business."

For 2009, Bonobos reported $4.9 million in gross revenue, nearly tripling the previous year's total of $1.8 million.

"We tripled our customer base to over 20,000 in 2009," Rote says. "The goal is to roughly double revenue in 2010 and do the same with the customer base."

The pants' distinguishing feature is that it eliminates the sagging bottom of ill-fitting trousers. While its Signature Fit has had a large role in its success, the company also believes that a positive online experience is just as important to its customer base as the clothes themselves.

"[Acquiring] the clothes you wear today represents a lot of man hours. … Guys are busy and don't like the shopping experience that is typically required. They like the idea of having a great brand like Polo, but also a great level of service that makes it easy," Rote says. "We tried to marry having a consistent brand that people like and know what to expect, with a level of service and delivery that is unique in the men's apparel market."

Staying away from stores

To make the online shopping experience as friendly as possible, Bonobos offers free and fast shipping with a no-questions-asked return policy.

Early on, Dunn, Spaly and the crew had no problem getting products to the store and out the door very quickly, but as the customer base grew, the costs of managing inventory in-house became very high. All company employees, including programmers and marketers, were called in to pack orders or shelve product, and the company realized that it would be better served by using these man hours elsewhere. Ultimately, Bonobos had to make some strategic decisions about how it was going to grow. "In some areas we want to be experts, such as in production and sourcing and finding customers and crafting a great experience on the web," Rote says. In others, such as inventory management, it concluded that developing expertise was not the goal.

To that end, Bonobos made the decision to outsource its logistics processes to third-party provider Quiet Logistics, seeking a partner that would be able to create the same high quality level of service on a larger scale that could keep up with a catalogue business that Rote says is "probably doubling in complexity once a month or twice a month."

While he doesn't expect that doubling to continue indefinitely, Rote says the company is rapidly working not only to expand its core pants business, but also its apparel business in general, bringing items such as shoes, belts, ties, button downs and polo shirts into the mix. To handle all of its new category products and its rapid pace, Bonobos needed an agile and quick-moving partner, says Rote, who describes a typical cycle: "Production will finish on Monday, products are shipped Monday night and received on Tuesday. Because some are limited in quantity they are sold out by Wednesday, so all of our product is sold within 48 or 72 hours, and Quiet is able to handle that."

Quiet is handling the inventory, packing up orders and sending them out the door, allowing Bonobos to focus on getting new products online. Its use of Quiet Logistics is a good example of "fulfillment 2.0," in the sense that innovative companies such as Bonobos are using new approaches that allow their supply chains to meet the demands of online customers in the web 2.0 environment.

"Change to the front end of the Internet, with customers becoming accustomed to 'click and get,' has brought change to the back end," Rote says.

Not just pants

Now that Quiet is handling logistics, the company has turned its attention to bringing more product to its online store. Among its non-pants offerings are flip flops, shorts, polo shirts and belts.

"As a young, growing company, we're trying to rapidly develop products and bring new things to market and partner with a variety of factories and workshops and brands who are making products for us," Rote explains. "For us, it all boils down to fit. It's finding the right products that are all about fit in terms of the physical fit and in terms of lifestyle, delivery and experience."

Recently, Bonobos has added Timberland boat shoes to its store, the first product that the company did not have a hand in designing in any way.

"We didn't make them but so many customers told us, 'We want Bonobos to make us boat shoes and are confident that you know of our needs,' so we offered Timberlands on our site for customers who trust us in delivering great products," Rote says. "If we find a small belt manufacturer that makes a great product but doesn't want to become an expert on operating an online store, we become a great outlet for them. They can do what they love and we can do what we love — connecting great products with a customer base with a consistent, excellent experience."

The company does most of its designing in house, offering just the right tweaks and changes to differentiate their products and hit the mark with their customers. Although they were initially making everything in the United States when the company got its start, Bonobos found it needed to source outside the States order to expand its catalogue.

The company continues to produce in the United States, including in North Carolina and Georgia, but now is also manufacturing in China, India and in Europe, where many of its fabrics originate. "We want to find the best products and get them at a good, fair price," says Rote. So, whether it's a belt from a maker in upstate New York or a polo with high quality cotton farmed in Bolivia, Bonobos seeks to offer the best products it can find.

Continuing to build

Looking ahead, Bonobos understands that it is still a relatively small brand in terms of consumer awareness, and it is setting its sights on growth both in terms of a more-than-just-pants solution for existing customers and increasing awareness to new customers.

As part of this goal, the company introduced a referral program that provides a $50 discount to a new, referred customer, and if that customer buys, the referring party also earns $50 in store credit for helping to spread the word, Rote says. "The size of the reward for our customer is quite high but we are able to offer it as we tend to see high customer loyalty. Chances are you are going to be hooked and like what you see and we will become your go-to source not just for pants, but for ties and shirts and more," he says.

About Quiet Logistics

Quiet Logistics is the first Fulfillment to Consumer (F2C) provider to deliver a complete outsourced solution that leverages the game-changing material handling robotics of Kiva Systems. Quiet Logistics "Consumer Driven Fulfillment (CDF)" services is an alignment of best-in-class operations experience and a fully integrated technology platform with a simplified business model which considerably improves distribution throughput, accuracy, scalability and flexibility at a lower cost.