It’s a big shift for the direct-to-consumer digital brand — which is aimed at helping women build wardrobes backed by a solid foundation of good pants — but one that was necessary as Cho looks to keep the business chugging along and competitive in the marketplace.
“It’s a huge change, but I think it actually makes a lot of sense because we do pants and, [with] pants, people just want to try on,” she said.
Cho founded Aella in 2014 as a brand aimed at helping women find the perfect staple pant with the main pitch being innovative fabrication. The offering has since expanded into outerwear, jackets and tops.
She first began laying the groundwork for wholesale last season when Chicago boutique Ikram began ordering from Aella initially through its regular online site before a wholesale business had even been established. After market in February, Cho picked up about 10 accounts for Aella and has continued to pick up more. She estimates by the close of market in Dallas, Aella will be up to 25 doors.
“Before we properly did market, I kind of tested our product by sending samples to some stores and so Ikram ordered some pants on our site,” Cho said. “We decided we really need to differentiate between what’s considered basics on our web site and then what’s considered our wholesale collection because the margin structure is different and that’s something we really need to figure out as we grow our wholesale business.”
Other changes have taken place to keep pace with the shift. Cho moved out of her showroom and office space in downtown, now working out of South Gate within the headquarters of fiber- and textile-maker NexTrade, which is owned by her parents. She recently showed her current collection for wholesale, a mix of more fashion-forward pieces for Aella that included a flare leg dress pant with bow detailing on the sides that she said buyers have been reordering.
With the success at wholesale, Cho said online now becomes less of a focus in the near term.
“Ultimately, my goal is that online picks back up because once we have enough of a wholesale distribution we’re going to be able to build enough inventory for the web, too,” she said. “But right now, because we’re trying to get to a point where we’re aggressively growing the wholesale accounts, we’re not really focusing on the web. I realized, at least internally, it’s really hard to do both. And so now, I’m flipping how I used to think about everything where now wholesale comes first and then everything will bleed into the web business and it’ll just pick back up when it makes sense.”
A similar logic applies to the pop-up strategy the company had tested a few times, most notably beginning in 2016 at Bloomingdale’s Costa Mesa, Calif., San Francisco and New York stores. There were also a few standalone pop-ups in Larchmont Village. Cho said pop-ups could make sense again in the future, but only once the brand has built up enough awareness via its retail partners.
“I think we would [do pop-ups] only if we get to a point where we are able to invest in a proper amount of inventory just for the pop-up stores and I think that means being able to secure really good real estate,” Cho said. “Most of our pop-up stores were either a success or a draw where we made just enough money to break even or come in right underneath and I would say that’s because we always kept it small in the big perspective of doing pop-up stores. In order for them to be really successful, I would want to grow the wholesale business where there’s a definite name recognition from a very large contingent of people and then do a pop-up in a prime retail area.”
The industry is seeing more of this shift by digital brands thought to be disrupting the traditional way of doing business now entering into wholesale deals or exploring physical retail.
Reformation, Bonobos, BaubleBar and Allbirds are all good examples and all sold now at Nordstrom, among other retailers, in some cases, after getting their starts as digital direct-to-consumer brands. On the brick-and-mortar side, real estate firm JLL said in a recent report born-online brands in the next five years are expected to open some 850 stores throughout the U.S. That includes mattress brand Casper with plans calling for 200 stores within three years and lingerie and sleepwear company Adore Me with as many as 300 doors in its five-year pipeline, the report said.
Ultimately, while Cho would have liked to have stayed the course with the pure-digital model, the ultimate need was to get to profitability without continuing to pour money into online customer acquisition. A profit now looks close with the shift to wholesale, she said, and this is what makes sense for the brand right now.
“People have been making money and starting brands and growing brands using the traditional model for a really long time,” Cho said. “It’s not easy for either of those models. It’s not like if you go with digital, you’re just guaranteed success. You have to do what’s right for your brand.”