Fashion is the fastest-growing segment of online commerce, and it’s being propelled by an atypical source: men.
Men who have had to live with department stores designed primarily for women are flocking to websites such as Bonobos and Thrillist that push convenience and a fast shopping experience. And these sites are capturing a growing part of the $41 billion fashion e-commerce market by providing services like recommending items based on personality or shipping trunks of clothes to a guy’s home so he can pick.
“Men don’t hate fashion, they just hate shopping the way it’s designed for women,” said Ben Lerer, founder of Thrillist, which gives men tips for activities or products and then sells them. “The young generation of guys love to shop, they love to talk about the brands they like and they really care about how they look.”
While women’s share of the online clothing market is still more than double men’s, the men’s market is growing faster, at a 13 percent annual rate compared with 10 percent for women, according to NPD Group, a consumer tracking service. And that growth gap is seen by many as about to get wider.
“It’s an area of e-commerce that companies are only just now starting to really figure out,” said Joshua Goldman of Norwest Venture Partners, who specializes in retail deals.
Competing for Share
Male-focused online fashion startups are competing with established brands like Gap Inc. (GPS:US)’s Banana Republic and J Crew Group Inc. for a slice of the fashion e-commerce market. The market for clothing and accessories is expected to grow 78 percent to $73 billion by 2016, according to EMarketer. That’s faster than categories like electronics or music.
Frank & Oak, a Montreal-based men’s site that gives personalized recommendations each month, said last week it raised $5 million from investors. The site launched in February. Thrillist raised $13 million in August from venture capitalists, valuing the company at $150 million in its first round of funding.
Lerer, founder of Thrillist, acquired clothing site JackThreads to get in on the trend. Now, he said, his users snap pictures modeling new clothes and post them on Twitter, bragging about getting them delivered to their doorstep.
The boom in men’s fashion follows by a couple years the success of companies that started out catering to women, like Gilt Groupe and Rent the Runway. Men may be a better target because they are more likely to make big purchases in one swoop to get shopping done quickly, while women often browse recreationally and may not buy, said Jeremy Liew of Lightspeed Venture Partners, which invests in Bonobos.
“Because of that relatively high basket-size, that makes it quite an attractive transaction if you’re talking about several hundred dollars,” Liew said.
Men are also staying single longer, according to the U.S. Census Bureau, meaning they have more income to spend on themselves during their early careers. Gilt Groupe, a high-end sales site that started out focused on women, added a men’s section in 2008. The typical shopper is 35 years old and single, living in an urban coastal city and making a bit more than $100,000, said Keith George, who heads up the division.
Still, there are risks. And not every idea pans out. Frank & Oak first tried out the market as Modasuite, which made personalized men’s clothes. Gilt has stopped investing in its separate men’s site, Park & Bond.
Yet there’s been enough success for the companies to attract investments from Silicon Valley’s venture capitalists. Brian O’Malley of Battery Ventures said he’s attracted to a more stable revenue stream than most technology startups, like ad- supported social networking companies.
The menswear sites are testing business models like personality-based recommendation or shipping clothes to a guy’s home so he can pick, a service offered by Trunk Club Inc. Although they’re not typical technology companies, investors like O’Malley are attracted to the growth potential.
“Day one you’re getting real revenue from the product,” said O’Malley, who invests in J. Hilburn, which sends representatives to measure men at their homes and make customized clothes. “A lot of the other companies are reliant on venture capital and don’t make a lot of money from advertising until they have a ton of users.”
Andy Dunn, the founder and CEO of Bonobos, says after one or two questions his retailers can tell whether a customer fits into one of six categories, which include “metrosexual or gay,” “finance guy” and, more recently, “hipster.” Depending on the label, they’ll be pitched a different kind of pants.
“I hear about a new menswear e-commerce thought every day,” Dunn said. “But to know that this could work in 2007 was really a leap of faith.’
Because they don’t require intensive computer engineering to start, many of the companies are based outside of the San Francisco Bay Area. Thrillist and Bonobos are based in New York, where they can take advantage of its fashion network.
“Think of the computer programmer, and then think of the banker,” Lerer said. “Fashion is much more likely to be a top focus here in New York.”
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