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How Two MBA Students Build Bonobos- a Walmart Acquired $310 Million Men’s Apparel Company

 

Two MBA Spartans of Stanford Business School, Andy Dunn and Brian Spaly, popularized the concept of buying men’s pants online in 2007 with their ecommerce start-up Bonobos. What started as an MBA project soon turned out to be a mission to design an ideal pair of pants for men.

They launched Bonobos.com when the concept of buying online wasn’t popular as present times. Within one year itself, the company made $100000 as revenue. Today they have over 60 Guide-Shops, full suit products for men, and were purchased by Walmart for $310 million back in 2017.

 

Andy Dunn, an online culture enthusiast, was deeply interested in Brian Spaly’s pant designs, so he decided to invest 401k in launching the website bonobos.com. He raised capital from angel investors and Stanford lecturers. On the other hand, Spaly cancelled his plan to Brazil to work on fabric, the pattern for his curved- waistband with a flattering pant. In the year 2009, the company received a major investment of $3 million from angel investors.

Journey from Digital to Bricks

Bonobos’ remarkable journey began in the digital sphere as an e-retail brand, but in 2012, in response to customers’ request to “try on before buy”, Bonobos came up with Guide Shop, the first brick and mortar store in New York where the customer could try on clothes.

The idea of a Guide shop was innovative, unlike other clothing retailers. It was designed to be completely stock-free except the floor stock. Customers could book an appointment, try on pre-selected clothes and buy them online. In 2015, Bonobos sold its millionth pair of pants, making itself the US’s largest online retail shop.

In a statement, Andy Dunn confessed that customers who contacted Bonobos through Guide Shops purchased products 75% more. The main contributing reason for this is – human experience. “Having a great human one-to-one experience is unique these days. For me, it builds enormous loyalty if I like the people that I’ve transacted with”. In the following five years, Dunn opened additional 50 Guide Shops around the US.

 

Takeaways from Bonobos’ Success

1. Digital-First Mindset
Andy Dunn’s fascination with online culture and Brian Spaly’s love for great-fit pants brought Bonobos into life. Andy Dunn had an innate understanding of online culture, and he knew that creating a better physical product is essential for success. Most importantly, the model of business was pre-determined. He was clear with the idea to sell and market products digitally.

The model was hugely proven successful, and Dunn termed the coin DNVB for companies who followed Bonobos’ ethos.

2. Powerful Word of Mouth Marketing
Even before the launch of Bonobos, Dunn and other co-founders used to sell handmade pants stitched out of Trader Joe’s bag on their college campus. Gradual networking of friends and classmates who already expressed a desire to have well-fitted pants helped the company grow. As word of mouth spread, they started hosting truck shows. By the time Bonobos’ website was launched, the brand had a good number of following. Within the first six months only, the firm grew to 5 employees and $1million net revenue.

Ecommerce retailers don’t need a huge marketing budget. All they need is such a good product that can keep people talking. Bonobos was the first e-retailer to prove that.

 

3. “Make one thing great. Get one thing right”
What’s more important for success? Happy customers or selling more products? Well, this was deeply understood by Bonobos hence creating a better physical product became their strategy.

“Consumers don’t need many things from your company- they just need one thing. You may want them to need everything from your company but guess what: consumers don’t care what you want. Your job is to care about what they want, not what you want them to want… Make one thing great. Get one thing right”, Andy Dunn.

4. Ninjas for Customer Experience
When it comes to customer experience, Bonobos is described as “maniacal.” They are known to put the customer first both at a virtual and physical juncture. No online retail shop can touch Bonobos. They have an excellent team of customer service executives who tirelessly work to achieve the company’s goal and facilitate customers with a hyper-personalized shopping experience. When Bonobos was still an online-only platform, the company provided top-tier customer service experience- whom they called ‘Ninjas’ who were available to provide personalized support. The company’s only goal was to enrich customer’s shopping experience.

After Bonobos came up with Guide Shops, the philosophy was passed on to ‘Ninja Guide’ who provides one-to-one support and personalized attention to in-store customers. The customer is also greeted with complimentary chilled beer to experience hyper-personalized shopping.

 

5. Free delivery & Stress-free Online shopping
The biggest challenge for the company in the beginning was to convince people to go and buy pants online. Some questions were inevitable such as – What if the pants didn’t fit? Why wait for items to arrive when you can directly go & shop? Why pay shipping charges? All these challenges were smashed when Bonobos came with a fast checkout, free-shipping & free-return policy to make online shopping more convenient for customers.

 

6. Guide Shops for Personalization
What made the brand stand out from the rest is its Guide Shops. It was an innovative approach to blend personalization in digital spheres. A customer could visit the store, try on the clothes, place an order at the store and get it delivered at home or office on the following day. A Ninja Guide available at the store ensures a one-to-one customer experience to support the customer make right purchase.

 

 

7. Smart Inventory
Inventory-free Guide Shops helped keep turnover high and investment low, enabling Bonobos to expand the business rapidly. Currently Bonobos has 62 Guide Shops across the US.

 

Summing Up!

Here’s a little inspiration for all those who want to make it big!
“The risk is not in doing something that feels risky. The risk is in not doing something that feels risky”, Andy Dunn.

 

 





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