How a Simple T-Shirt is Changing Retail

For the online clothing retailer Everlane, it all started with a $15 T-shirt.  And while this T-shirt was a catalyst for their success to date, it could just as easily have been their downfall. 

Michael Preysman, founder of Everlane, saw an opportunity to improve online clothes shopping.  Even though big retail fashion brands are teeming with inventory, offering steep discounts and struggling to attract customer attention, he believed that the products being sold were only partially to blame.  He perceived a problem with the entire shopping process. 

Preysman noticed the changes that the food industry was undergoing.  He extrapolated that the same customer interest in sourcing, pricing, and quality could be translated to the retail shopping experience. 

Everlane was created in 2011 to bring transparency and simplicity to online shopping.  “Radical transparency” is its mantra.  Everlane informs its customers where their clothing is made and how it is priced.  Their markup is explicit and they offer minimal discounts.  When they do promote a sale, they experiment with concepts such as “pay what you will”, where the customer is provided with the input costs for the item and is asked to select what they think is a “fair” price.  And all of this is done online. 

Preysman created the company in a very Effectual way.  His mindset from the beginning was that he was the Pilot in the Plane.  He believed he had the vision and capability to assemble the resources needed to create a new retail experience. His venture capital experience and connections in Silicon Valley made this start up a plausible venture for him. 

He started with what he knew – his Bird in Hand.  He was an online shopper confused by the haphazard method of displaying and pricing items online.  He was also baffled by why a retailer would price the same item differently in the store versus on the web.  Envisioning a new business model, he applied his operational experience from other tech ventures to the fashion industry and pulled in friends and family to help him develop the concept. 

From there, he picked one item that he wanted to start with – the T-shirt.  His approach was to sell that item until he was confident that he had a good handle on the operational and customer experience requirements for top notch service.  This was within his Affordable Loss.  He could afford to do an initial product run of 1,500 T-shirts.

Even with this carefully crafted strategy, Everlane has had its share of mistakes.  One of them was the mis-ordering of 12,000 men’s pocket T-shirts.  When the order was received it was obvious they were cut about two inches too short.  But using the Lemonade Principle, Everlane adjusted.  The tees were rebranded and sold as women’s Box-Cut Tees. 

Learnings from Everlane

Everlane has developed a process of acquiring, pricing, and selling clothing that is unique in the retail space.  However, there are lessons from their start up story that can help people in companies who are pondering how to innovate in their own industries. 

·         Mindset matters.  It’s important to cultivate a culture that systemically believes that what one does makes a difference.  Overreliance on benchmarking and prediction quells innovation.  It puts an organization in catch-up mode, trying to replicate and repeat rather than innovate and experiment. 

·         Import ideas.  Get out of your industry.  Look beyond your field of focus to what’s happening elsewhere.  Borrow ideas from science, the arts, different disciplines and sectors.  Look at how customers behave in completely difference scenarios and see if there is anything that sparks your imagination.  Imagine, invent, and apply.    

·         Perfect and proceed.  Start small.  Experiment.  Set your affordable loss.  Pilot and pay attention not just to bottom line results but the entire experience.  Capture learnings.  Adjust.  As you gain confidence in your real world observations expand your efforts. 

Will Everlane Last? 

Everlane is trying something very innovative in fashion retail.  It’s not amassing significant speculative inventory.  It’s not jumping into discounts and flash sales.  Instead, it’s sticking with its core promise of transparency and simplicity.  And it regularly sells out of its product inventory. 

Everlane’s primary focus is on the stakeholders who buy into their promise of radical transparency.  They want to partner with their customers, suppliers, and investors to figure out how to create a win-win value proposition for both the retailer and the consumer. 

There is no pre-determined path for Everlane’s success.  Its creation wasn’t predestined.  And Preysman can’t predict what the future will look like.  But what he can do is continue to shape Everlane’s products and processes in pursuit of a different future for retail.  

All of the major fashion retail brands know their existing operational model is in trouble.  They have invested a lot in competitive benchmarking, market research, and strategic analysis.  But it might all come down to a simple tee.

--Written by Sara Whiffen, Founder & Managing Partner, Insights Ignited LLC