Posts Tagged ‘Bayard Winthrop

23
Apr
12

American Giant: A New Business Idea for Made in USA Clothing

SHOOT FOR INC. MAGAZINE | VERDICT PHOTOGRAPHY. The link has a 1 minute 36 second commercial on why American Giant is making clothes in the USA through the internet. American Giant makes sweatshirts in the USA.

So, why should I cover a company that sells clothes over the internet, when my mission is to help people to find clothing made in the USA at brick and mortar stores? It is not the lure of a free sweatshirt, but it did get my attention. It is because: the company is local, Headquarters in the Mission District of San Francisco and manufactured in Brisbane, CA ; and it just opened for business on February 1, 2012;  plus, their marketing department has done a great job getting their name out. In fact, I have never seen a new start-up internet clothing business with so much advertising through the internet. This may be the future of new business start-ups. (There will be a list of the internet articles at the end.)

The Name: American Giant

The phrase American Giant conjures up a lot of images, usually of large, oversized people, for some, it is that huge green man with the skimpy shorts, but, possibly, it conveys the image of the movie: “Giant” co-starring James Dean, the icon of cool. Bayard Winthrop, American Giant Founder, came up with the name and then checked to see if it was trademarked. His heart dropped when he found out it was. But he did not give up. Mr. Winthrop found out that the trademark was owned by a trademark lawyer, who had trademarked American Giant which was the title of a book he had written. He, then, called the lawyer, they started chatting and found out that the lawyer was a big fan of American made apparel. They became friends and Mr. Winthrop was granted permission to use American Giant.

The Owner

Bayard Winthrop was the former CEO of Chrome Bags. For those of you who have never heard of Chrome Bags, I will provide a little background on the company. Chrome Bags started 16 years ago when a couple of guys needed bags and found that nothing to fit their needs (it reminds me of the story of the founders of Rag & Bone and their search for jeans), so they started making bags on their own in very modest surroundings, their garage. They grew slowly at first, then moved to San Francisco and expanded their inventory to include clothes, gear and shoes. So, American Giant does have a background in clothes making.

The Philosophy of American Giant

The purpose of American Giant is to produce good quality clothing in the United States and sell them at affordable prices. They have directed their competition towards J. Crew and GAP customers. Mr. Winthrop loves the make of sweatshirts of the past: the 1960’s and 1970’s and is devoted to making clothes in this manner, which means obtaining good quality material and better manufacturing practices. To keep prices down, American Giant will be selling over the internet only. The reason is as follows.

Traditional Business Model of Clothing Stores

It was not that long ago, (and presently with a few independent clothing stores) that the clothing store owner bought clothing (traditionally it was all made in the US) at wholesale cost. These clothes were then sold to the public at a 50% mark-up. This 50% mark-up was used to cover all costs to run the business: the rent, the gas and electricity, the salaries of employees, taxes, shipping, supplies etc.  Having big sales were not very common and usually skimpy (compared to today’s sales) So, overall, there was not great profit in this business, but there was enough to make a decent living. Today, there are multiple mega-stores which buy volumes of cheap clothing. The mark-up, at these places are no longer 50%, but 300 – 2000% . That is why they can have 40% sales, or 50% sales or even 70% sales and still make money. For a small store, when a customer who is used to going to discount stores and expects 50% off, it is a difficult situation. To make a sale to this type of customer it usually involves educating the consumer – who is usually less than interested in learning anything.

New Business Plan

American Giant has combined the manufacturing of clothes with the selling of clothes. When many people discuss costs, they incorrectly assume that most of the costs are due to labor. Most authorities agree that labor makes up a small percentage of costs, about 5-10%. But, according to Bayard Winthrop, CEO of American Giant, it is the soft costs – the overhead that drives up the costs. The costs including setting up a facility, travel, transportation, executive pay as well as the costs of maintaining a brick and mortar space. Overhead is responsible for up to 600% of labor. By eliminating stores all across the country with all of their inherent costs, much of the overhead is eliminated. Therefore, American Giant has elected to do everything over the internet.

Why Some People Do Not Buy Over The Internet

There are a couple of inherent problems with selling clothes over the internet: 1)a  huge problem is that nobody knows you exist – hence, the establishment of a marketing department for American Giant, mostly through the internet; 2) a few people have no internet access, but, also, some people do not trust internet companies, as they have no address, and contact is limited, there is no actual person that you meet, contact is only through the internet or if you are lucky via phone; 3) often it is difficult to judge a piece of clothing on the internet – the color may be off, the quality may be poor, the size and fit aren’t right. To remedy this, American Giant has just opened a showroom on April 17, 2012 at 3171 21st Street, San Francisco, CA (in the Mission District – the Mission District is a growing place for trendy clothes – down the street is Freemans Sporting Club, all US made clothes, and Self Edge, mainly Japanese made clothing). In the future, may be there will be new additional showrooms.

Business Plan

American Giant has been making and selling sweatshirts since February 2012. American made sweatshirts are a difficult to come by commodity and it is a welcome addition. American Giant has just started making T-shirts. Their plan is every 6 – 8 weeks, they will bring out another line of clothing, next, I believe, will be Polo shirts. Now, this will be a very greatly appreciated as Polos made in the USA are harder to find than sweatshirts. Other basic wear is to follow. I will not post any pictures of these clothes as pictures of clothes just laying on a table are not really enticing to the buyer.

Potential Advantage

There are two advantages to manufacturing things yourself and selling via the internet besides the costs. One advantage is that, if you sell-out of an item or a size, new items can still be made and sold as long as the raw material is still available. Second, because American Giant manufactures all their clothes locally, there can be a very quick turn around (from idea to ready for sale). For example, Zara, a Spanish company with clothing stores all throughout the US (most clothes are manufactured in Spain, Turkey and some overseas) can design and distribute a garment to market in 15 days. Whereas, a brand will have to make a purchasing decision for overseas production 18 months in advance. That is correct: the newest colors and designs for next year and possibly even the next year after that, have already been pre-determined. There is no reason, you couldn’t wear next years colors this year.

Remember to avoid slave labor made products, remember to listen to your conscious, buy American. Good luck to American Giant. I cheer for your success but I hope that you, unlike many other companies who became very big, became too greedy, and started outsourcing their jobs overseas, stay true to your original mission and keep making clothing locally.

Success

To be an internet only company, the most difficult part is developing name recognition or even to be seen. American Giant has been successful through marketing. But they have also been blessed by being discovered by ABC News in their segments about Buying American. As there business has grown, the types of articles of clothing has also expanded.

(Updated April 18, 2014)

Internet Articles

Esquire

Tech Crunch

Inc.

Fast Company

Gear Culture

Get Kempt

Selectism

Men’s Threads

Get Kempt – Cardigans

The Style Raconteur

Gear Patrol

Free/Man

San Francisco Business Times

ilovekeithedmonds.com

“Fashions have done more harm than revolutions” -Victor Hugo




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