The lingerie market & adore me secrets to it’s success

Adore Me’s secret for disrupting the lingerie market<br /><br />

Models wear latest-season Adore Me lingerie: the start-up’s customers are able vote on new styles or lines it is considering

In the weeks leading up to Valentine’s Day, the headquarters of Adore Me, a lingerie startup, are frantic with activity, for good reason: Its daily sales in this period are more than 20 times the typical volume.

So significant is Valentine’s Day for this 3-year-old company, in fact, that a flat screen mounted on a wall in the company’s offices, in the heart of New York’s fashion district, counts down the days, hours and seconds until Feb. 14.

There is more to the lingerie business than meets the eye. These garments are complex to design and size – bras have up to 20 components – and manufacturing them requires long lead times and large minimum orders.

“If you want to start a brand with, say, 100 different styles, and you need to purchase 5,000 to 10,000 units of each, that’s a $10 million to $15 million [all figures $US] investment before you’ve made any sales,” said Adore Me’s chief executive and co-founder, Morgan Hermand-Waiche. “It’s a hard problem to crack,” and it is the reason, he said, that Victoria’s Secret has been the dominant player.

The market is top-heavy, to say the least, with L Brands, the parent company of Victoria’s Secret and Pink, accounting for about 42 percent of the $13 billion U.S. lingerie market, according to the research firm IBISWorld. The next largest competitors, Frederick’s of Hollywood and American Eagle Outfitters’ Aerie brand among them, have market shares in the low single digits.

“VS changed the game for the lingerie market,” said Britanny Carter, industry analyst for IBISWorld. “A lot of stores try to sell sex, whereas VS is more of a lifestyle brand.”

Rather than tiptoe into the market, Hermand-Waiche has raised close to $12 million in funding, hired a former design director from Victoria’s Secret and charted an ambitious plan to make Adore Me a household name. In 2014, it tripled its revenue from a reported $5.6 million the previous year.

The company introduces a collection every month and offers a wide range of sizes, from petites to plus. Like many startups today, Adore Me has used online advertising, social media and referrals to build its brand, but it is also using old-school tactics. In January, it began a television campaign, with spots on networks like Bravo, Lifetime and MTV.

The lingerie business has unique advantages and challenges, said Shikhar Ghosh, a co-leader of Harvard Business School’s entrepreneurial manager program and an investor in the company.

“This is one area where the fashion doesn’t change quickly, and it is dominated by a single large competitor,” he said.

Unlike many startup businesses today, however, this one demands a high initial investment.

“You don’t want to aim low and miss,” Ghosh said.

The inspiration behind Adore Me resembles that of Victoria’s Secret, which was founded by Roy Raymond in 1977 after he went shopping for lingerie for his wife and decided there had to be a better alternative to the department store.

Hermand-Waiche started thinking about the lingerie business in 2010, when he was a second-year MBA student at Harvard and went shopping for a gift for his girlfriend. He couldn’t afford the lingerie he liked and was unimpressed with the lingerie he could afford.

Hermand-Waiche, who was born in France, used the remainder of his time in business school researching the industry, fine-tuning his plan and talking with investors. Soon after graduation, he teamed up with another Frenchman, Gary Bravard, who oversees supply chain management and operations.

The fashion industry was not a huge reach for Hermand-Waiche. His family owns and operates clothing stores throughout France. Before business school, he worked as a junior associate with McKinsey & Co., spending much of his time working with manufacturers in Asia.

Rather than hire a designer and wait up to a year for the merchandise, he started a website in January 2012 with garments designed by suppliers. The logic is not unlike that of a winemaker who sources grapes from another grower until his own crop is ready. To work around the problem of high-volume minimum orders, Hermand-Waiche negotiated with suppliers to stagger deliveries over several months.

Meanwhile, he went to work recruiting his own designer to help shape the Adore Me brand. As luck would have it, Helen Mears, a former design director for Victoria’s Secret and, later, a division of Wacoal Corp., was looking to do something more entrepreneurial. A lace manufacturer introduced Mears and Hermand-Waiche.

“I hired her the same day I met her,” he said.

Today Mears and another designer have a hand in every garment sold by Adore Me. This is no small undertaking, given that the company unveils 30 to 40 new styles every month. There are more than 400 items on the Adore Me site.

Like many retail startups now, the company helps consumers select items by having them take a style quiz and by selling all of its bras and panties in sets.

The company offers a wide range of sizes, from 30A to 42G. Women who wear plus and petite sizes account for roughly a third of the U.S. market, Hermand-Waiche said, and that share is growing. Yet these groups are underserved by traditional lingerie brands. (An online petition is currently on asking Victoria’s Secret to offer larger sizes.)

Adore Me encourages users to sign up for a free VIP membership. Members are sent a new set of lingerie each month at a discounted price of $25 for the first order, then a $10 discount on sets, which typically sell for $50. Every sixth set is free. Members can opt out of monthly orders or cancel any time.

Shipping is free, as are returns – and everything can be returned; the policy, commonplace among online sellers, is a benefit to online shoppers who like the option of trying on styles and sizes at home. Still, the return rate is just 6 percent, according to Hermand-Waiche, versus 20 to 40 percent for other e-commerce companies.

Hermand-Waiche said he planned eventually to sell Adore Me products in department stores or through stand-alone locations. For now, however, the company is exclusively online and mobile – with the latter accounting for 60 to 70 percent of Adore Me’s traffic.

Customers who follow Adore Me on social media receive the usual promotions, such as free items and express shipping, but they also have the opportunity to give feedback or vote on new styles or lines the company is considering.

“We can develop styles and have prototypes made, put them on the site and see how the customer reacts even before we place the order,” Mears said.

When Adore Me began its television campaign – a bold move for any startup – it used some of the information it had gleaned from social media and its testing to determine what ads to show on what networks, and when.

Expensive television advertising may seem to be an anomaly for a lean online startup aimed primarily at younger customers, but Hermand-Waiche said it made a difference.

Adore Me founder Morgan Hermand-Waiche

“With online advertising, there comes a saturation point, where if people see an ad one more time, it’s not going to help,” he said. “It took almost a year of research, but so far the results have been very good.”

©2015 New York Times


Henry Sapiecha

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