“It’s a fact: Your $120 designer shirt sells for 10 times what it cost to make. Not at Everlane.”Retail startup Everlane launched with that viral Twitter campaign last summer. It also created an infographic detailing how much it costs to make a designer T-shirt versus how much consumers pay for it (see below). The infographic received more than 17,000 notes on Tumblr.
With the help of both campaigns, Everlane has organically grown to 200,000 users. Almost every sale Everlane has sells out.
Everlane was founded by 20-something Michael Preysman. We spoke with him about his startup, which produces designer-quality items at realistic prices.
Preysman comes from a family of entrepreneurs. At his former investment firm, Elevation Partners, he was surrounded by startups. Preysman made a decent salary there and found he could afford to buy nice things — he just didn’t want to.
Designer items, says Preysman, are extremely marked up. The retail price has to support the cost of making an item as well as the cost of brick-and-mortar stores. In addition, designers tack on a hefty fee for themselves. A Louis Vuitton wallet, for example, retails for 10-11 times more than it costs to make.
Preysman feels consumers are too smart to pay outrageous prices.
Without any fashion background, Preysman left Elevation to start Everlane. The vertically integrated clothing brand is online only.
Everlane produces everything it sells from scratch. It chooses which fabrics to buy, what colours to dye them, and what clothing to make. The inventory is held exclusively at Everlane’s office too. Its goal is to build a brand by not over-branding itself.
“We thought, ‘What would it mean to build a Ralph Lauren from scratch on the web and go straight to the consumer?” Preysman tells us. “We’re not going to be the cheapest price, but we won’t be the most expensive either. The clothing will be Barney’s quality at one-third the price.”
All of his products are marked up about 2X. T-shirts retail on Everlane for $15 and cost about $6 to make.
Everlane’s first product was a T-shirt. Since then it has launched a line of sweatshirts, ties and belts. Most of the apparel is for men, but it is launching more items for women later this year.
Unlike many other retail stores, Everlane isn’t concerned about creating multiple designs and giving the consumer options. It wants to make one T-shirt really well — like Ralph Lauren’s polo shirts. Only four items are released per month. “We want our belt to become the one belt people buy,” says Preysman.
The lack of variety is smart from a cost-cutting standpoint too.
Everlane releases one or two items at a time and orders them in small batches. It then observes the buying patterns of its customers. A ton of fabric is purchased in white so Everlane can produce and dye whichever cuts and colours sell best. “We can tell literally within five days what’s selling,” says Preysman.
Preysman says nearly 600 items are ordered per sale and most of them sell out. Of its 200,000 users, more than 30 per cent are repeat buyers. Everlane’s team of 26 people come from retail backgrounds; many of them are from near-bankrupt American Apparel.
Investors are beside themselves over Everlane’s constant sold-out state. Everlane raised $1.1 million in October from Kleiner Perkins, SV Angel, Lerer Ventures, Betaworks and angels like Path’s Dave Morin.
Here’s the infographic that started it all: