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Men’s Wear CEO Summit: Breaking the Rules

Bonobos founder Andy Dunn didn't follow the usual channels to launch his men's wear label.

Appeared In
Special Issue
Men'sWeek issue 04/07/2011

The idea for Bonobos came serendipitously to Andy Dunn when he was an M.B.A. candidate at Stanford University. Watching his roommate and Bonobos co-founder Brian Spaly altering his pants using a girlfriend’s sewing machine, Dunn identified a hole in the men’s wear market: affordable pants that fit well. He zeroed in on a problem area for many men — the saggy backside or, as he called it, “khaki diaper butt.”

Working from his downtown apartment in 2007, Dunn was a one-man order and fulfillment center, with 400 pairs of pants tacked to his bedroom wall. He answered customer service e-mails in the morning, then picked, packed and shipped the merchandise. “On a good day, you’d lay out four invoices on the bed, pull the pants from the wall and put them into packages,” Dunn said. “Six months later, we had five employees and were growing by 25 percent month to month.”

Along the way, Dunn broke plenty of rules.

“In many ways, it was a crazy idea,” he said. “Folks in this [apparel] industry were the most skeptical. We said, ‘We’re going to design a best-selling men’s brand, sell it over the Internet and name it after a promiscuous chimpanzee.’” Meanwhile, Silicon Valley’s tech companies were no more visionary. “People didn’t just say no; they said, ‘Hell no,’ ” Dunn said.

The first person to recognize Bonobos’ potential was Joel Peterson, chairman of JetBlue Airways Corp., who was one of Dunn’s professors at Stanford. Peterson encouraged Dunn to go against the fashion industry’s grain. “We were going into an established industry with a very customer-centric model,” Dunn said. “We decided we were going to spend all of our time thinking about our customers. And we were going to take advantage of a different way to reach customers — the Web. Great customer service would be central to the concept.”

Without the overhead of stores, Dunn was able to hold the price of Bonobos’ San Francisco-made pants at $50. “Without print costs, the Internet is a better catalogue,” Dunn said. “We were excited about the gross margin of being a brand combined with the growth of being an e-commerce player. As an e-commerce player, you’re aggregating demand and you can grow much more quickly.”

Bonobos pants have a point of difference — an anatomical waistband. Like a belt, which has a slight curvature, the waist is contoured. “We actually built that contour into our waistbands,” Dunn said. “The next step was the rise. European-cut men’s pants are notorious for a very tight rise, while American pants have this horrible long rise.”

Dunn believes flash-sale Web sites such as Rue La La and Gilt Groupe are bringing about “a fundamental repricing in the industry. The customer that used to be lazy and not shop on sale now has that opportunity every day. This is a game changer for men’s shopping. It’s fundamentally changing the price structure in our industry. By taking control of vertical distribution, Bonobos will have a fundamentally better price structure over time.”

Almost as important as the product is giving consumers a great shopping experience. “We’re trying to provide our customer with a service, which is not just great clothing but a great experience of buying that clothing,” Dunn said. “It starts with fantastic product, free shipping both ways and lifetime returns. They’ve gotta love the pants. We’ve just moved on to having a great button down shirt, which alleviates BMT, or billowing muffin top,” where the shirt gathers and bunches at waist. “We’re working on a denim concept,” Dunn added. “The denim brand will launch on the Web.”