It’s an ambitious task to carve out space in the modern luxury handbag market — dominated by legacy European brands with decades of history and capital behind them — but several years ago, seasoned industry vets, Frank Zambrelli, Stephanie Sarka and Anthony Luciano set upon just that path, launching their New York-based luxury handbag brand that centers on the concept of customization: 1 Atelier.
Now, only a few years in, the brand is shaking off its start-up status, closing 2019 just shy of $2 million in revenue, with the executives predicting just under $5 million for 2020 by scaling its business model and developing a new direct sales channel.
“The truth is we didn’t know what was going to stick,” Zambrelli, who has previously worked at Chanel, said of the brand’s early days.
The bulk of their clients begin their personal handbag journey with 1 Atelier online where they can customize almost every detail using one of their 21 silhouettes — using classic shapes like hobos, crossbody bags, totes, clutches and even a backpack — as a blueprint. Options to customize span from aesthetic features like hardware and lining or a stamp of ownership inside each piece, to functionality updates including how the strap sits, zipper compartments or credit card pockets, or if the bag includes a top zip or is open. All assembled in their Manhattan factory.
The results are pieces that are crafted with the care of luxury classics with a directional nod to each customers unique personal style. Pricing is itemized based on customizations and materials, with wristlets starting at $295, and a small clutch at $995; the average price spent on a bag with the brand is $1,240.
“These customers go on the journey with us, the day she places the order starts the relationship,” Zambrelli noted, explaining that their path is “the real type of experience retail.”
The day after placing their order customers get an e-mail where their bag is pulled together with the materials and hardware in a composition, as a sort of mood board of all the parts used to assemble their unique piece. Zambrelli credits his time working with couture clients at Chanel with helping him see a deeper level of connection between brand and customer and he wants his 1 Atelier client to “go along for the journey” of each piece.
Exotic skins are sourced from the same tannery as Hermès, and are cut to speck, so the executives report there is almost zero waste.
“There are never materials or scraps that go to landfill, and never a finished product that goes to landfill,” he explained. “If someone doesn’t order it, we don’t make it.”
Zambrelli compares their brand to the luxury car industry, where each car that comes out of a factory is unique to the customer. “Everything we do here is on demand,” Sarka quipped.
From ideation to shipping there is a 21-day window, but “we tend to beat that number” Sarka says, with Zambrelli saying they typically land around 16 days.
Zambrelli reports the average customer owns 1.22 bags, meaning nearly quarter of their customers own a second bag.
Their brand journey has been swift. In 2016 they launched their web site tested inside a small selection retail partners, in late 2018 they opened their first shop in shop inside Nordstrom but this year they see as their tipping point as they scale a new distribution channel, a direct sales model, similar to what has worked in the beauty space.
“This is not a glorified 2020 version of Mary Kay, this is a very developed stylist network, of very high net worth people, and have the built-in relationships,” Sarka explained, adding the program uses a revenue share model were “stylists” receive a “reasonably high rate of commission, certainly no less than we are paying in a retail environment.”
They brand tested the program in Q4 of 2019, and Zambrelli says it proved to be enormously successful. “We treaded lightly to test the framework only to discover these very large networks (hundreds of stylists) who were not only looking for an extension into handbags and accessories but who appreciated the level of customization that was possible, and which also supported coordination with their apparel offerings,” he explained.
Their plan is to reach 50 to 75 stylists by the end of 2020, and 150 to 200 during 2021, “we see it[direct sales] being a full third of the revenue base,” he said.
Currently the brand is in two at Nordstrom locations, and looking to grow their in-store retail presence with new doors. The trick, they say, is to take something that is digitally native and translate it to an in-store experience. They landed on using dedicated brand ambassadors who incorporate product samples and swatches in tandem with their web portal on 55-inch flat touch screens, walking customers through their process in real time.
“We aren’t just shipping product that will sit on a floor, it’s a nurtured sale,” Sarka says of their shop in shop experience. “Our brand ambassadors are actively engaging with customers.”
They do hold a small amount of product in store, in effect selling finished bags off the floor for “the client. or a desperate husband. who comes in and needs says ‘I need that bag today.'”
Scaling their in-store experience, Zambrelli explained “requires, a lot of human capital and a very different level of training.”
Another distribution channel the brand is working to enhance is their connection with a purely online customer through technology advances like augmented reality and artificial intelligence models that will roll out online in the next 12 to 24 months. “To really create that nurtured experience online,” Sarka said.
Technology also offers a way for the team to cut down their production time. “Our time not market is about half the time of the classic fashion industry, but we are going to bring it down to a quarter of that,” which Sarka says will “allow us to onboard new products and styles.”
“It’s a matter of time before we are in multiple points of classic retai,” Zambrelli said, adding that they have had multiple conversations with retailers and are “weighing if they plan to grow with Nordstrom, or if this is the time branch out.”
“If you had told me four years ago, you’re going to build a luxury handbag factory in the middle of Manhattan, operate in channels of distribution that don’t yet exist in the luxury space and have the kind of growth we’ve had in the last 24 months,” Zambrelli said, “I would have said you should put the pipe down, yet here we are.”