EP101 - Indochino CEO, Drew Green
An interview with Drew Green (@Drew_Green), CEO and of Indochino. Indochino is one of the largest made to measure menswear brands globally with active customers in 50 countries. We spoke with Drew about his previous e-commerce startup Shop.CA as well as Indochino's business model, Amazon strategy, and the future of the indsutry.
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Episode 101 of the Jason & Scot show was recorded on Thursday, September 14th 2017.
Join your hosts Jason "Retailgeek" Goldberg, SVP Commerce & Content at SapientRazorfish, and Scot Wingo, Founder and Executive Chairman of Channel Advisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing.
New beta feature - Google Automated Transcription of the show:
Jason: [0:25] Welcome to the Jason and Scott show this is episode 101 being recorded on Thursday September 14th 2017 I'm your host Jason retailgeek Goldberg and as usual I'm here with your Tahoes Scott Wingo.
Scot & Drew: [0:40] Hey Jason and welcome back Jason Scott show listeners this week's episode we have a really special treat for you, in a world where everyone's really scrambling to survive against Amazon we wanted to highlight a brand that is really thriving please welcome to the Jason Scott show Drew green CEO of indochino who is joining us live from Vancouver, thanks guys I appreciate you having have an assignment scratch.
Jason: [1:09] It's entirely our pleasure let's get the really controversial questions out of the way early did Scott pronounce your name right.
Scot & Drew: [1:16] Hey daddy daddy didn't say where to me but that's that's okay cuz I don't use the at the end of Green.
Jason: [1:23] Awesome and you don't want the things we always like to start out with is get an idea of how you.
[1:32] Came to your current role on so before we talk about your control can you tell us a little bit about your background and in what way does the origin story for indochino.
Scot & Drew: [1:43] Yeah well I don't know what I do both because both her are bit different so you don't myself I've been in you know e-commerce. Retail for almost 20 years first company we we built up was really the time of time of my life I was told to double click in the late 90s and from there. I have this amazing journey by double-clicking New York I love being out of retail. And as you know double quick was was acquired a couple times by private equity in the Google and then went to have the privilege of. Going to a company by the name of shop.com and helping build that into a top 10 multi-category retail destination in the US and the UK and that eventually became part of. Market America which I think is that isn't IR 500. Iri R50 excuse me online Merchant sound of my own company and I really enjoyed that Journey House shop.ca here in Canada. Multi Merchant market place that has since been Amalgamated with. Several Brands under an umbrella company called emerge Commerce of which I'm sure. And you don't back in 2015 it feels like. Feels like quite a few years ago but but really only a few years ago I really got the opportunity to come into indochino. And help transform the way men dress and it's been you has been an incredible few years you know the business has tripled in size.
[3:18] Are we done so probably attracted some world-class Partners investors and of course. You every success starts with a team would God just a fantastic team at the company. Your top to bottom so it's it's been a great experience indochino was founded in 2007. So you know we've been around for for just over 10 years. And have become you know the last few years have become really the market leader globally answer to what does that mean while it means that from a made-to-measure custom apparel standpoint I don't believe there's any other company in the world. I cells and produces as much as we do and so that's had somewhere very proud of but you know we treat with a lot of care and a lot of humility because you know we want to continue to build the Great business not only for the team here but. Obviously first shareholders.
Jason: [4:13] Terrific some before we jump into indochino actually have a shop.ca question.
[4:19] So I use them or I should say you all the time as an example of one of the the first e-commerce sites to turn their entire customer base into affiliates.
[4:33] Am I being truthful there I feel like that.
Scot & Drew: [4:36] Yeah that sucks yeah that's actually shop.com and and so you know that was post-acquisition that that occurred. And you know that is the that is sort of the bread-and-butter or models at that market America's built their business on and and you know they felt that that was the best application for. Shop.com I mean shop.com originated as a Marketplace not unlike. Amazon Marketplace but it was bifurcated we had both you know card transactions as well as affiliate transaction. Orly cost as it would be known but yeah Market America turned it into a almost a pure purely and consumer affiliate site after they acquired.
Jason: [5:19] Don't you very cool and did you have you applied any of the the best practices from that in your current gig do you guys do like customer referrals and all that sort of stuff.
Scot & Drew: [5:30] Absolutely I mean I think you know that the interesting thing about that is I think it's excessive. Going to take you out online only but it really any retail business is based on. Your consumer advocacy or or fandom as we can talk about sometimes it into Chino you're the more that you can have fans of the the product of the brand of the experience. In particular for us that in the channel the experience. Yeah really the more the more not only are you going to grow about the more efficiently you're going to grow you know when you have customers that are telling. Your friends and fam.
[6:07] They had a wonderful experience and the noset friends and family coming and make breakfast it just creates a really efficient gross and so yes certainly I would say that refer-a-friend weather. Whether through paid or unpaid is probably a second biggest Channel at its cheetah and so certainly we feel like we have a ton of fans. You're talking about the Brandon and appreciate an experience we deliver, cool the server folks that may not have had the opportunity to to use the site Maybe, can I give my dog a quick picture of of indochino you you said kind of measured so does that mean someone comes to me and measure so and I know you guys have it you didn't take so long to hear what that is.
[6:51] Yeah so if you think about you know bespoke or made-to-measure custom apparel. You know it's an industry that's been around for hundreds and hundreds of years you know man have gone and gotten measured and. You have been able to to create their own garment what we wanted to do was you know create a platform essentially to allow it to be mass-market to allow anybody to measure themselves. Girls online only first pick their Fabrics pick their customisations their personalization such as a monogram. You know I'm on the Garment and and really create a one-of-a-kind garment and so you know we were the first globally to ever sell made-to-measure online.
[7:36] Really proud of that but we realized in 2015 and really what what I've been driving the most.
[7:43] After years is you knows our success is based on an omni-channel experience and really giving customers the choice of. Did I buy online which I calls or the self-serve mode or getting a full serve experience and whatever that 70 show rooms across North America.
[8:02] Yeah that's a good Segway cuz I kind of mentally put you guys in the bucket with but no bows and Stitch fix and kind of what what Andy done calls digitally native vertical Brands and then just like those guys you guys, open up the showrooms where they're kind of a smaller Outlet the no kind of a traditional retail experience and kind of different unique buying experience, so tell us a little bit more I think that's all been in your 10 year or did the company have some started. Yeah I mean we we we've essentially opened every one of our showrooms or relocated them you know 2015 to 2017. We really felt like to be. You know that the Undisputed leader and made to measure but also to compete with ready-to-wear that we needed to provide customers with an omni-channel experience and you know what it's really allowed us to do is to open an app. You know the made-to-measure experience to customers that just might not be comfortable. Making their first purchase online as it relates to a you know for the $500 purchase offer a garment and. Yes really become actually are number one acquisition Channel think about online only business is really scaling that business from a media perspective. And you know you are a retail environment not only benefits customer but it really benefits are model and creates you don't media efficiency from.
[9:33] I'm back from a girl's perspective you know we'll have averaged just over 50% growth year-over-year lost. You're so 2015-2017 and we're seeing a declining across for acquisition and cost for crossbow order. From a media perspective in that you know almost entirely to do with with our our commitment to retail and channel.
[9:57] I'm having not add up to you being a showroom may be described it as it's like I'm imagining 2000 square feet some some examples that kind of thing but then I've seen pictures of Foosball Tables kind of curious where that. Yeah you know every showroom that we have it as I mentioned we got 70 you going to us were in Boston we got to in New York to in the Philadelphia area. Now one in Washington one in Chicago San Francisco and Beverly Hills every showrooms a bit. Different and unique but they all have a very open Design Concepts and they all allow for you no appointment no I won't what we have isn't as appointment base model where the customer would come in. They would be masked with what we call a style guide for that hour and that's the guy that I said would help them create their at their garment they would walk them through and get the measured. They would have the customer you to pick out fabric since we got almost 300 fabrics for suits in almost 300 rabbits for shirts. So they would pick their fabric that they're stitching and pick other customisations and personalization said you know at the end really allows them to. You know create this one-of-a-kind garment that that nobody's going to be there not going to go to a party or dinner or an event and see somebody wearing the exact same everyone is is entirely unique a customer.
Jason: [11:26] That's awesome.
[11:29] Question about the sort of omni-channel experience so it makes perfect sense that their children's could be your top acquisition Channel you go in there you you get fitted you get that first suit and have a great experience, but I'm presuming that now you have their measurements on file and now that that customer has a lot more confidence in your brand, are you able to turn those kind of full service customers from their first experience into more cell service customers for subsequent orders is that.
Scot & Drew: [12:00] Yeah that that that's exactly what happened so course you got some customers that just you don't prefer either the retail environment or our showroom environment but. You know the reason that we're investing in retail in such a big way is that the majority of our retail first customers actually come back on their second third and fourth purchase and buy online and so it Christmas really sort of official relationship with a customer. We get it right the first time. Bathroom showroom perspective but because we've gotten it right there the other entirely comfortable coming back and buy it online you know we don't have a subscription model but if you looked at. Yes they do that the repurchase rate in our business here is almost like we do you know customers are very loyal to the experience very loyal to the brand. And frankly you know what we found especially these last couple years is you're made to measure and custom apparel is becoming mainstream. And so you know a young man or or you know someone at that house that experience was made to measure is saying you know what. I no longer want to buy a suit their shirt and Blazer pair pants off the rock I want to I want to create my own, because it's not easy and it's a crime.
Jason: [13:12] Cool yeah you know one thing I filled it to ask about is can you talk just a little bit about what the like sort of into end time line is for it for a customer that buys a product like you know.
Scot & Drew: [13:24] Yeah absolutely so that you know what you're doing if you're doing me buying processor. You know what we are at from an internal perspective because the conversion final you know it does take some time so it's not a an instantaneous purchase your you're choosing all your selections on the Garmin. But once you've done that and you know the Garmin essentially arrives and. Right now under three weeks we've we publish for is the expectation but we've really improved that through your different Partnerships and optimization supply chain. And so if you think from start to finish your you're basically creating your own garment your own one-of-a-kind garment and receiving it and under in under 3 weeks.
Jason: [14:10] Wow very cool.
[14:13] In my my senses like sort of old-school made-to-measure garments when you go to a local tailor or certainly like you have some of the the International Suit house is like the. Like one of the big pain points traditionally with me to order is that there's a super long lead time.
Scot & Drew: [14:33] Yeah yeah I need a Nazi that you're absolutely right I mean some. You're on some environments your weight 5 6 7 weeks for your for your garment and we've really. You got to really compete against made ready-to-wear to really be an alternative to off the rocks. You know we feel like we've got to get that that turnaround time you don't continue to optimize I continue to approve it and we don't have a timeline for it we don't have. Your specific launch date but our goal is to get at under a week. And you know once you get it under a week because think about your own experiences buying a suit even if you buy off the rock you're still going to have to get it alteration so. You know when we are at under a week in terms of production and and final delivery. You know we're entirely competitive with ready-to-wear and and just that much more appealing to two all types of consumers.
Jason: [15:31] Yep that brings up another day question that so. One of the Banes of the apparel industry in general in e-commerce is the return rate is higher than we'd all like and I am curious if, the me to order it helps resolve that problem because you've got a chance to meet the customer and you you know that you have less fitment issues or you know. Part of me feels like even with a bespoke tailor and a made-to-order suit like they're often is more than one round of of adjustments if you will if I'm if I'm saying that right how do you handle that that's what it's about.
Scot & Drew: [16:08] I mean neither of us are really question cuz if you know what I think back to you know the first time I took a look at this business and and the things that really jumped out to me was the fact that. You don't return rates were so low you know they were two three sometimes 4% depending on the time of the year and as you guys know and e-commerce in apparel Footwear. That's that's incredibly low number now we've actually been able to get a returns to well under 1%. I'd have been there for over a year now and again that's that's an incredible number now we do have. Alterations by a small percentage of the Guard. You know sometimes if it's not made to the customer's exact specifications will do it what we call a remake but again that's the the minority of of of the garments that we create. It's all Rino return rate as one of the most incredible things about this business because if you compare you know two other apparel or paralyze a category. You're most of the Power Rhonda you know in the twenties or even 30% from a return perspective.
Jason: [17:19] Yeah I think I think most people would give us some significant body parts in exchange for getting down to a 2 - 4%.
Scot & Drew: [17:25] Well I absolutely because it because it's the biggest impact online only. Apparel retailer it's it's it's very difficult and I from a model perspective it's very different. Difficult run p&l perspective then so you know where we're pretty proud of the fact that you don't return rates are so low.
Jason: [17:48] And then when I scratch.
[17:51] On on the general business I noticed on the website you also have weddings in your in your taxonomy and we recently had the Zola on the show so we we've done some talking about how lucrative the the overall wedding industry could be what, how are you guys playing in the wedding space.
Scot & Drew: [18:11] Yeah me back that really goes to the customers that we serve an alien are number one and for the core demographic would be Millennials 65% of our transactions online. Or are serving you know that Millennial mail it's a little bit lower and in our showrooms closer to 50%. But really what we committed to a couple years ago and it's become our fastest-growing demographic is the is the wedding Market. And so you must send you message foosball tables earlier and call you know one of the things that we've done with each other room is set up a groom's lounge and that's really just serve that market. And to really become you have a place that that young man or any age men can get can get themselves in there and their groups party you know fitted for their wedding and so I would I would say that wedding is probably our fastest-growing segment. And certainly something that we're going to continue to focus on, it wouldn't be a Jason and Scott show if we didn't talk about Amazon a little bit so Jason I do a joint talk or we talk about you know, the obviously how big amazon is how much they're soaking up the growth out there but one of the big rabbits we give people on protecting yourself is to wrap a service around a product and seems like you guys, done that dude you have any fear of Amazon doing that or do you feel like this is a quadrant e-commerce are probably not going to get to, yeah I was watching you can never live live in fear you you got to.
[19:46] You got to continue to innovate and continue to ideate you know whatever business you're running I think. I just have a tremendous amount of respect for Amazon and and within the apparel categories are obviously very very committed to it and doing some amazing things. You'll for us one of those things that we really. You're committed to not just to not this to differentiate ourselves from Amazon but really I would say the entire apparel category is really not. Not put forth that we're selling a product we've really focused on selling or even just providing an experience and so more and more. For our customers what we Aspire and what we try to inspire is the fact that we do provide an experience and it's it's a totally different experience than. You're going into a store going online and buying an item in that instance you really just buying a product right and and for us it's entirely different. It or whether it's you know the interactions that they have with our saw guys and how what they're trained or the you know the online experience of pretty on Garmin we've really focused on selling an experience versus a product. Call you guys have obviously caught the eye of you season an environment when it's really hard for me, she kind of companies to get funding I noticed madronas in there that's that's a really kind of real consumer Blue Chip how much, Capital if you guys raised yeah we're really we're really fortunate to have you no work last set of investors we got.
[21:22] Madrona and Scott Jacobson at Madrona as my partner there. Yeah I'm deeply involved with the success of the company at Portside equity which was formerly Highland consumer is also very very involved. And our success and has been you know a big force and driving it we also out of strategic investors so we have no Diane group that's based in in China and one of the largest. And best suit manufacturers in the world owns a part of the company. We got a media company here in Canada that that took ownership in the company and will continue it to round out and look for what possible. And you lots of that say you don't really good position to be in, the best time to raise money is when you don't need it in my experience, to quick one so you kind of peaked my curiosity with the millennial kind of, concentration at any interesting observations as someone that's been in the industry for a while about in your all these kind of it's kind of funny meme that says joke around office money orders are killing this any other but they're they're obviously, not killing YouTube suits so any observations you can share about what you see in there.
[22:42] Well I think there's a few different things I think number one you know it's a it's a the demographic that really takes a lot of pride in. And being their own brand and your for us I think that's why we resonates so well with Millennials you know they're able to create. You know one of a kind in the Chino which in a lot of ways becomes a representation of who they are and and their own brand and so. You know I think that that we are just the experience the product that we provide really fits into that. They're also they become and we see it in our. In our lifetime value studies and repurchase rate studies extremely loyal you know if they if they enjoy something if they like something. You know they're going to be loyal and they're going to tell their friends and so. But it is important to get it right I think that's true and in any demographic.
Jason: [23:43] When it when the things it's interesting to me in the short of a custom product space which I I sort of put you in.
[23:52] You know all customers but in particular Millennials in and Western CSN genze as well like the.
[24:00] There seems to be a strong preference for more individualistic process products and in sort of you know Wes following the pack but. They also want people to know that it's individualistic so I I'm almost wondering like are you know that I think there's certain features in your product that, sort of reveal it's a made-to-order product as opposed to it you know looking like a ready-to-wear product like to do you find customers like. Intentionally select those pictures so that they're sort of broadcasting a little bit that they that they wearing a maid.
Scot & Drew: [24:34] Yeah I mean that's not what I mean about being able to create their own brand right there not. You know they're when they're creating an indochino garment they're creating something that's truly one of a kind. And they're able to you don't put a monogram very very easily you know what that the jockey on the shirt or on other parts of the Garmin. You know they're able to pick their own lining from dozens of different choices are able to pick a fabric. And maybe mix. Fabrics you know applecross the suit and so you're really there's dozens of difference. Customisations in personalizations and if you know you kind of look at all the permutations that could be great just literally tens of millions of different types of suits. I could be created I think that's really feeling you don't know if you guys remember but I always hated you know in high school going to a party and. Bought a sweater at you know whatever retailer and then find out that there's three other guys about party with the same sweater or same jacket out of you and so yeah that doesn't happen within the Chino grated your own again one of a kind.
Jason: [25:44] I totally get your point but I don't think Scott or I got invited to parties in high school very much.
Scot & Drew: [25:50] I've I've seen Scott of the few parties I don't know then I don't know.
Jason: [25:55] I am teasing you like to see your urine. That's one of the Leading Edge category in terms of made-to-order I do do you see that extending two more generally the other consumer products like the fact that that's a continuing Trend or do you think it will stick with you no particular vertical.
Scot & Drew: [26:14] Are you know what's another great question that I do think that. A big part of the future retail is going to be more customize and personalize product and the more of that you know retailers or companies or any tractors can get away from. Commoditized product I think more success than the house and so I really do feel like at the highest level custom but I'll say is custom. Your product is is is really the future of retail in a lot of different verticals but certainly in a Peril for sure.
Jason: [26:50] Yep and obviously that's that certainly helps you build a competitive moat.
Scot & Drew: [26:55] You know what does I mean you'll think about competitive Moses you got to be you know aware of of what you need to do to to protect and grow the business and you know we constantly look for. What are call additional Motes if you will but you know where we're at work we're humbled by the response that we're getting from consumers right now. And we're very excited about what you know what the decades ahead are going to bring some.
Jason: [27:25] Another area is our future looking that I'm always interested in and I talked a lot about fit man we talked about, in the ready-to-wear space the return rates are huge and typically the number one reason for returns are are fitment issues you obviously saw that for the subset of your customers that go to a show and they think they can get. Measured by a tailor but to enable more people to be self-service and reach more people I I imagine you're always interested in your how to best get measurements at home I know there's at least one company in the space that tries to use, the mobile phone camera for fitment and I I think you know I suspect that strongly a gimmick but I do know there's a lot of phones coming out with sort of, 3D scanning capability in that, you know I've always speculated that potentially is really useful for fitting in are you guys looking at all it does sound kind of Technologies.
Scot & Drew: [28:20] Yeah we are I mean we're always looking at new ways to create and craft a perfectly fitted garment I think. You know if it's an extremely complex business right in terms of creating you no one to one product on app for Consumer bases and. Well those take that Technologies are full and you know seem to be enough to come in and out I I do think the back-end operations of how you create. You know I shouldn't Wonder one product her customer is is the most important the last thing you want to do. Is introduced the technology that you're going to end up with you know return rates that are closer to you know traditional apparel on so there's going to be a lot of Technology development around. You know how you get measurements or how we get measurements but you know how I kind of like what we're doing right now in terms of the technology that we used to. We got the garments right on a one-to-one basis.
Jason: [29:21] Gotcha another Trend like in this are the Jason spaces that I've been a little interested in last quarter Adidas did this interesting pilot wear their weaving sweaters. On demand in a store and then I think it's Ministry of Supply in Boston literally have a.
[29:40] A blaze or weaving machine in the store and I'm going to say Loosely they make a Blazer while you wait I think it's like a three or four hour process.
[29:51] So obviously not not super convenient or scalable right at the moment but like is that a potential.
[29:57] Opportunity for you or competitor for you in the future iqc the technology ever getting good enough that a lot of the stuff gets made in in real time in stores or ship same day to customers are those kinds of things.
Scot & Drew: [30:09] Yeah I mean I think anything's possible as we you know as we go through the years and decades ahead of deep deep thought of being able to create. You know garment like we create but do it same day or in the store or have it delivered the same day I mean that's an incredibly. You know bold dream or delivery but you are hot for my from a super spective I do believe that were one of the fastest in terms of how we produce. Supply chain all the way through the consumer demand and like I mentioned earlier you no more costly off to my second tweaking. Because once you get it down to under a weeks you've got something very very unique and highly competitive. You know what is essentially about a 7 billion dollar Market North America on South. Yeah I've seen I'll call them campaigns or product launches that you mentioned but I think we're a little ways from being able to scale that I'm a space South.
Jason: [31:12] For sure for sure it does certainly seem like that kind of you know early tip of the spear examples on which are always interesting but probably not economically viable for the last question. Anything else that has you excited or interesting about the the future of Commerce in general or or your space in particular and India.
[31:31] Trans you are seeing on the horizon.
Scot & Drew: [31:35] You know what man like I said as a technology e-commerce guy I'm just. I really really big fan and really interested on how retails of all day you know it's that's what's got me most excited and interested on how. Online-only Brands transition into either or not the channel environment or how do they leverage retail to drive their business I think there's going to be. Thriller credible Innovations and developments over the coming years and we hope to be part of that we think we are actually you have big part of it and Four Mile from a later shift perspective in and leaving the weather.
Jason: [32:15] Terrific I think that's actually going to be a great place to, to wrap up because it is happen again we've used up all our a lot of time so Drew I really want to thank you for joining us in the sharing the indochino experience with the RR listeners and I'll remind listeners as always, you're welcome to continue the dialogue on our Facebook page if you like today show we would certainly appreciate a 5-star review on iTunes if you hated today.
Scot & Drew: [32:44] Absolutely do not review cuz it was probably my fault if you hate it you guys are great I appreciate your time today. Thanks truly look forward to hearing more about the success of indochino.
Jason: [32:59] Until next time happy conversing.