Wall Street Journal: http://online.wsj.com/article/SB10000872396390444184704577589720319031382.html
It's Not Book of the Month: It's Men's Fashion
New Services Offer Subscribers Items Chosen for Them
By SARAH E. NEEDLEMAN – Wall Street Journal
Fashion-savvy entrepreneurs are putting a new twist on personal shopping: Let the luxury come directly to buyers' doors.
A new crop of retail start-ups is offering home delivery of designer goods -- from clothing and jewelry to make up and home décor -- all hand-selected by style experts or celebrities. Sarah Needleman has details on The News Hub. Photo: Brian Kelly for The Wall Street Journal.
A growing crop of retail start-ups is offering home delivery of clothing, jewelry and home décor—all selected by style experts or celebrities like actress Kate Bosworth and comedian Nick Cannon, with customers' individual tastes in mind.
Reminiscent of book-of-the-month clubs, the subscription services charge customers anywhere from $29.99 a month to $500 or more, a few times a year, with the option to pause or cancel at any time.
Trunk Club Inc. mails subscribers "trunks" filled with blazers, dress shoes, ties and other menswear from popular brands including Jack Spade and Jeremy Argyle. Style experts at the Chicago-based company pick out the items according to customers' preferences and measurements.
Other start-ups, like BeachMint Inc. of Santa Monica, Calif., and 12Society Inc. of West Hollywood, Calif., have actors, athletes and musicians curate goods in categories such as home décor, jewelry and electronics.
In some cases, the specially selected products are priced below retail, but in general the services pitch convenience to consumers seeking expert-recommended goods that align with their personal style.
Two-year-old Trunk Club is targeting affluent male professionals who care about how they look but dislike shopping. "Guys have this visceral negative reaction to the process of shopping," said Brian Spaly, founder of the 110-employee start-up.
Trunk Club and BeachMint have yet to turn a profit, and some retail experts say the subscription model isn't surefire. David Wolfe, creative director and trend forecaster for consulting firm Doneger Group in New York, said he expects demand for regular deliveries of hand-selected high-end goods to be limited, even though he sees the appeal of not having to wade through merchandise at stores. "It will lend itself to only certain kinds of merchandise and certain kinds of customers that have enough money and faith to allow someone else to do their thinking."
George Belch, chair of the marketing department at San Diego State University, added that acquiring and retaining customers will likely be the biggest challenge for a start-up using the subscription model. "It could end up spending a lot of money replacing potential defectors," he said.
Trunk Club customers sign up online and fill out a brief questionnaire to describe the kind of items they want, in what size and how often they'd like to receive shipments. They are assigned a stylist who selects 15 to 20 items from the company's 50 wholesale partners—menswear brands such as Eton, Gant Rugger and Bonobos. (Mr. Spaly co-founded Bonobos Inc., but left in 2009 to launch Trunk Club.)
Trunk Club customers can discuss specifics with their stylists by phone, email or live chat, such as if they prefer mostly dark colors or a preppy look. Once they receive a trunk, they can return any items they don't want and pay only for what they keep. Prepaid return labels come in the package.
Most Trunk Club subscribers stick with about $500 of the trunk's roughly $1,500 of clothing and accessories, and they prefer deliveries once every two months, according to Mr. Spaly, 35 years old. While there is no discount, he says subscribers don't pay for shipping and they get their stylist's personal attention free.
So far, two-year-old Trunk Club, with some 15,000 subscribers, has raised $11 million from venture-capital firms including Anthos Capital LP and Greycroft Partners. But it isn't making any money. The company charges retail prices for goods it buys at wholesale, with a 1.8 to 2.2 times mark-up. Fixed operating costs include talent, technology, shipping and other expenses.
"We've got a start-up team here that's expensive," including 11 engineers, Mr. Spaly said, "We hope to achieve profitability in the not-too-distant future by reaching a much larger audience and growing our top line."
BeachMint is made up of six brands, including JewelMint, a site where members choose from 15 to 20 exclusive pieces of jewelry designed by Ms. Bosworth and stylist Cher Coulter. The selections factor in information members provide about their personal style. Subscribers pay a minimum of $29.99 a month for one piece of jewelry and have the option to spend more on additional items. BeachMint's other brands, such as BeautyMint and ShoeMint, charge different rates. Customers can skip a month anytime they don't see items they like. Shipping is free.
BeachMint, founded in 2010, has raised $80 million in venture capital while doubling its revenue every two quarters, said 42-year-old Josh Berman, co-founder of the 140-employee start-up, and a founding member of the social-networking site Myspace. Still, the company isn't profitable and is currently focused on growth. It makes most of its own items, which are priced anywhere from 20% to 80% above the cost of production.
Celebrity endorsement plays a bigger role at 12Society, which debuted in June. Subscribers pay $39 a month and receive four to six consumer products valued at about $125 total. The goods are selected by the company's six male celebrity co-founders, including rap artist Nasir Jones and football player Michael Strahan, but there are variations to account for customers' tastes. Preferences are determined by a survey that includes questions asking whether your style is more like Ryan Gosling, Johnny Depp or Mark Zuckerberg, and what kind of phone you own. Last month, the company sent out a pair of Creative Recreation sneakers, a Mangroomer electric razor, Munitio headphones, Sheets energy strips and the Electronic Arts Inc. videogame app FIFA 12.
With 5,000 subscribers, the start-up is profitable, according to Sameer Mehta, co-founder. It pays about just 10% of the total cost of each package or less, as it gets most of its merchandise below cost or free since marketers see value in the celebrity endorsements, he said. The company's celebrity curators receive undisclosed royalties and have equity stakes. It has raised about $1 million from angel and venture-capital investors, he added.