Mike Karanikolas and Michael Mente

Moving past the start-up phase and into profitability is a difficult task, but the Cerritos, Calif.-based e-commerce site Revolve seems to have found a formula.

Cofounders Michael Mente and Mike Karanikolas, who said the company is set to post $400 million in sales this year, detailed that formula on Sunday at the inaugural WWD Fashion Forum in Downtown Las Vegas at The Venue.

Karanikolas offered his keys to creating a sustainable e-commerce site, which included having a sound business model and hiring experienced business leaders from other companies, but he emphasized the importance of the person buying the product.

“It’s all about the customer,” said Karanikolas.

Revolve’s customer is the fickle Millennial, and Mente said the retailer’s primary way of appealing to that generation is with unique product. “We look at a Millennial customer not as a demographic, but a mind-set,” said Mente. “For this generation, it’s not about belonging to a particular brand. This generation is about self-expression and individuality. It’s a fashion disaster if you are wearing the same thing as someone else.”

Providing new product to that consumer has been a big investment for Revolve, which acquired Alliance Apparel Group earlier this year. The deal folded Alliance’s Lovers + Friends, Tularosa and NBD brands into Revolve’s stable.

Mente said the deal came about after Revolve, which recently entered bridal, saw two of its top 20 brands go out of business. “We wanted to establish an infrastructure to support emerging designers,” said Mente. Karanikolas added, “It became clear that after building the business for 10 or 15 years that we understood our customer more than any other brand did. Our team knows exactly what our customer is looking for. It’s not a private-label strategy where you produce a cheaper version of on-trend clothes. Our strategy is to carve out spaces for brands that work in the right way and price them at premium level. That’s been our key to success.” According to Karanikolas, each of Revolve’s private label lines are part of the e-tailer’s 10 top-selling brands and the company will launch another brand next month. 

TSG Consumer Partner’s minority equity investment in Revolve, which happened in early 2014, helped the site acquire Alliance Apparel Group. Both Mente and Karanikolas said the relationship has gone well. “We heard the horror stories from people about taking on investors and having to change the business, but that wasn’t the case with us. They collaborate. They compromise and they listen to us,” said Karanikolas.

Karanikolas and Mente said that China, which is currently Revolve’s number-two market, is another priority, and while they were hesitant to outline specifically how they plan to grow in that region, Mente said that larger companies make a mistake when they enter China with a conquest mentality. “You have to figure out the consumer and what they are looking for. Thankfully the brand and lifestyle we represent is something that resonates globally.”

Another mistake Karanikolas thinks brands make is placing too much emphasis on content. “I don’t think it’s critical. The key to retaining a customer is to provide them with great product. If you do content the right way, it enhances the experience greatly. But I personally feel like everyone feels like they are expected to have editorial content and they force it,” said Karanikolas. Mente added that Revolve, which partnered with Los Angeles luxury retailer Elyse Walker to operate her e-commerce site in 2012, has changed its content strategy to rely less on editorial-inspired content and more on bite-sized pieces of information the customer can absorb quickly.

When it comes to bloggers, Mente said Revolve works with them in an authentic way, but he isn’t interested in them actually selling product.

“When we collaborate with bloggers, it’s not about pushing product, it’s about reflecting our brand. In the past communicating a brand was about a still picture, now it’s about something different,” said Mente.

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