FIRST UP: Wellen Women was introduced with a few items such as a pocket T and a pullover sweater instead of a full line. Image courtesy of River Jordan Photography.
MANUFACTURING
Wellen Women Tries New Model In Product Launch
Just after wrapping up its Free & Swell collaboration with global Japanese retailer Uniqlo, Los Angeles–headquartered label Wellen is getting ready to roll out its line for women aged 20 and up called Wellen Women.
But the May 29 debut of Wellen Women will not follow the typical rhythm of business for a new division of an existing brand. Wellen founder Matt Jung has no plans to introduce it at trade shows. He has no plans to look for a loan to fund the new line. Instead, the 7-year-old Wellen brand will join a handful of established fashion businesses that intend to raise money and spread the word on their projects in a way typically embraced by new entrepreneurs starting their first venture.
Wellen plans to debut its project on Kickstarter, the 5-year-old crowdfunding platform headquartered in Brooklyn, N.Y., said Taylor Gramkow, Wellen’s marketing director.
“We’ve been a smaller player going against the grain in the men’s surf market,” Gramkow said of Wellen’s chosen path of maintaining an independent standpoint, even after working with Uniqlo.
There are also financial reasons for opting for a Kickstarter campaign, Gramkow said. “Trade-show costs run a small fortune,” he said. “By the time you’ve paid to show your brand, build out your booth and take on the costs of traveling out the team, you’re keeping your fingers crossed, hoping that show orders will help break even on the expenses.” Even with running a small trade-show campaign and renting 10-by-10 booths at six shows a year, a trade-show budget can be more than $25,000, and some companies spend more than $150,000, he said.
Wellen hopes to raise $25,000 on Kickstarter, and the brand also hopes that its Kickstarter investors will serve as passionate advocates who will spread the word on the new brand. Wellen plans to sell the label through a direct-to-consumer channel at its website (www.wellensurf.com). It also plans to offer the label through a handful of select boutiques. However, it doesn’t plan a big retail rollout. “Retail works as long as buyers understand what you are doing with the brand,” Gramkow said. “They can curate your brand well. Or they can put it in a small corner.” A bigger bricks-and-mortar retail presence will take place once demand for the brand starts taking off, he said. Wellen will continue to exhibit its current brands, Wellen and Grover, at trade shows such as Agenda and Liberty Fashion & Lifestyle Fairs in the upcoming year.
Wellen’s crowdsourcing path has already been explored by a handful of fashion labels with a track record. Gustin, a San Francisco–based menswear label that has been around since 2006, raised $449,654 in a February 2013 Kickstarter campaign. The denim-based label now calls itself the first fully crowdsourced premium fashion brand. In May 2012, Brooklyn-based Flint and Tinder raised $291,493 on Kickstarter to make men’s underwear. After its first campaign, it has developed its initial product offering into a collection of basics. Patrick Robinson, former executive vice president of Global Design for Gap Inc., launched his new label, Paskho, on Kickstarter in April 2013. He raised $68,770 on the platform.
Jeff Shafer has spent more than 20 years in the apparel business and founded premium-denim brand Agave in 2002. It has been sold at Nordstrom, Zappos and high-profile emporiums such as American Rag. In 2013, he introduced his Bluer brand on Kickstarter. He raised $44,529 on the crowdsourcing platform in July 2013. He forecasts Bluer will earn more than $400,000 in revenue in its first year of business.
Shafer said a crowdsourcing and direct-to-consumer model has become crucial because it has become harder to start a brand through conventional means. “There used to be hundreds of new brands at trade shows,” he said. “It’s tougher than ever to launch and build a brand today.”
Crowdfunding also enjoys a high cachet with the college-age crowd and those enamored of the cyber community found on Kickstarter and other crowdsourcing platforms. However, there are risks. There is no guarantee that a project will be funded on a crowdsourcing platform, Shafer said.
If a project is funded and sold direct to consumers, it’s up to the entrepreneur to spread the word on the product through social media. With no boutique salespeople representing the brand, it’s often up to the brand’s founders to do all of the marketing and sales.
“There’s a lot of new territory. There’s no rule book,” he said of the burgeoning model of launching a brand through crowdsourcing funding and direct-to-consumer sales.
But he claimed that funding a venture through crowdsourcing, and selling it direct-to-consumer, creates savings, which makes it feasible to manufacture in America, not overseas. Gustin makes a similar argument on its website. At one time, the San Francisco brand priced its selvage denim for more than $205, but the brand can offer it for $81 because of its crowdsourcing, direct-to-consumer model.
Because the model of established companies crowdsourcing for funds is new, it has not been seen much by financial professionals such as Nick Hart, managing director for Westlake Village, Calif.–headquartered Bibby Financial Services, the prominent factor focuses much of its lending business on the apparel industry. But Hart did not dismiss the crowdsourcing avenue.
“My recommendation is that your business strategy match your cash-flow requirements with an appropriate funding source,” he said.
Banks, factors and venture capitalists specialize in funding businesses at different stages, so it is up to the entrepreneur to get advice on what institution would be the best funding partner, he said.
With success, Wellen Women has no plans to remain a direct-to-consumer brand. It hopes to have robust sales with bricks-and-mortar partners eventually. Before that, the new brand will take baby steps before it runs. It will introduce several pieces in its Kickstarter campaign—a maxi-skirt, a pocket T and a pullover sweater.
“We want to make smart strategic decisions that are long term and help us stay in business for a long time,” Gramkow said. “Wellen Women is not a two-month project. It is a 12-year project. Retailers will come when the consumer demands it.”
