The CEO and co-founder of Indochino on what it means to be an eight-year-old startup and why the Vancouver-based suit e-tailer is going big in bricks and mortar.
You started Indochino in 2007 as an online retailer, but you’ve been opening more and more physical retail locations. Pop-up shops have made way for six permanent showrooms, including a new store in Boston this month. Why does going full bricks and mortar make sense now?
The pop-up stores were really our version one, and they were wickedly successful. We had huge amounts of revenue, and we were able to get customers all across North America. But pop-up stores are very difficult to execute. It’s like opening a store, but instead of paying back that opening cost over years, you do it over days. We had big enough sales that we could do that, but it put a lot of pressure on the business—and just the amount of travel, and the back and forth made it hard. We also had to hire a lot of temporary staff. Some temporary staff are great. But some we weren’t able to train as well over such a short period of time. So we found that by being in the market permanently we could offer a more consistent, better customer experience over time, not only on their first purchase but also on subsequent purchases, on perfecting things after you get the garments a few weeks later—those sorts of things.
Your Boston location is on Newbury Street, next to some very high-end retailers. I know affordability is one of the keywords associated with the Indochino brand. Are you conscious of not wanting to feel—for want of a better word—cheap?
What we offer is the best value for money. That’s really the core of our brand. We offer the absolute best suit for $500: custom, half-canvas, high-quality wool, natural fibres and so on. And it’s personalized. We also offer suits as expensive as $1,000, but the value equation is the same. You’re getting a $2,000-plus suit for $1,000. Most men can appreciate value. Having retail stores allows us to communicate that value to a broader set of people, because they can feel the quality of the garment and compare it to what they can feel down the street in some of those high-end retailers you identified. We don’t look to be beside high-end retailers. We look to be in locations in cities that are convenient to where our guys shop, where they live and where they work, and every city’s a little different. In Boston, Newbury really is the primary spot that people go to shop, and it’s a really tight downtown core, so it’s a relatively convenient location. In other markets, like Chicago for example, which is frankly a bigger city, we will likely have multiple locations in time, some in higher-end areas and some in other areas.
I was surprised to see Indochino has had customers in over 140 countries. I imagine some of those bring in only a small number of orders. But a lot of e-commerce retailers stick to North America. Why the wide scope?
There’s depth and breadth. North America is our focus—that’s where we’re opening all our stores. The U.S. and Canada make up the majority of our business. That doesn’t mean we want to alienate everybody else out there, because as a brand we had big aspirations about helping guys get dressed and helping them look good and enabling them to be successful in their lives, whatever that means. We’ve got meaningful cohorts of customers in the U.K. and Australia and Germany, and it grows our business. It helps them, and we don’t lose. We’re maybe unique in that our supply chain can enable that. We have facilities in Asia, and a third of our team is based in our office there. And we deliver from Asia globally. Most e-commerce brands set up fulfilment infrastructures—they bring over finished product and ship from within the continental U.S. or Canada—so they’re limited by their business model, which we aren’t.
The speed at which you are able to deliver custom clothing is impressive: made-to-measure suits in as little as three weeks. How do you manage to combine custom with speed?
Our big idea is that if you can get custom clothing at a similar speed to buying off the rack and getting it altered, it’s a fundamentally better offer. We’re one of the largest custom clothiers on the planet. We went to China and nobody there could do what we wanted, which was custom clothing at value prices with some element of speed. So we just did it ourselves, and built that supply chain from the ground up to where we are today. And so that concept of custom, personalized and speed is really built into the DNA of how we grew up.
Does that put pressure on your margins?
We think about margins very differently from traditional brands. The majority of their product is sold through wholesalers, and so half the margin is eaten up with wholesaling; inter-point shipping; multiple layers of packing, warehousing and distribution; and the list goes on. We don’t worry about inventory in the same way. There’s the infrastructure of holding inventory, but there’s also the risk of inventory: you oversell something and you aren’t able to sell more of it; you don’t sell something and you have to sell all these finished goods; you have to pre-buy, which increases all of your risk and also makes financing more complicated. We remove a lot of that complexity and risk out of the equation. And we sell on value as opposed to brand image. You can have garment costs that vary by single percentage points, but they’re sold to the consumer for dramatically different prices, depending on whether it’s a high-end fashion label or a discount suit retailer. Typically, the manufacturing costs are equal—one just has to pay more for marketing and a different brand experience.
You started the company eight years ago. Is Indochino still a startup?
It’s a nuanced answer. We’ve got 100 staff. How do you approach things like payroll and managing teams and policy and procedure? Those things have to get implemented, because I think that’s just a function of scale. But the flip side is we’re still very iterative with how we approach retail and how we approach mobile and omnichannel. There are always places in the company where we are younger in our approach or less stable or still figuring things out. So I always see it as a bit of both. I think we very much hold on to our entrepreneurial roots, and build structure and stability around those roots, so things can still run on time—and you actually have a well-operating company in addition to a highly innovative one.
What do you feel your role is? What do you bring to the table as co-founder and CEO?
More than anything, what I have is a depth of continuity and experience that very few people have in the organization—just having been here since day one and from employee one; from one customer to 100,000-plus; from no retail to coming up with the idea of retail through pop-up and then permanent stores. When it comes to actually running departments or functional leaders or even my C-suite, they all have far better and deeper expertise because they’ve managed large organizations before. What I bring is continuity, context and the intuition of where to poke and prod, and also help to avoid pitfalls or things we’ve tried before but didn’t work for any number of reasons.
Is there something beyond custom suits? What’s going to continue to grow Indochino?
Suits are always going to be at our core. Dress shirts is a growing business for us. The idea is that, in time, everything in your wardrobe could be custom. That can be casual pants, a broader range of dress pants, accessories: You name it, and I think, in time, we will do it. All of the above, including suits—if anything, led by suits—is what’s going to drive our growth.
Is it a big enough market? Is the future of Indochino everything for everyone?
No. I mean, I get excited by the idea of offering Indochino for women. I think there’s a really clear market and opportunity. But how you do a great job of product and experience in apparel for women versus for men is just very different. So while we see a huge opportunity there, we see such a huge amount of room for us to learn in menswear.
- Interview: Hudson’s Bay president Liz Rodbell on taking retail upscale
- Most Canadian retailers don’t know who’s in charge of their e-commerce
- How Nordstrom built the world’s best customer-service machine
- Why Canada has a serious e-commerce problem, in one infographic
- How to break the office dress code the right way
- Some badly needed real talk about wearing a short suit to the office