For Bonobos, a Good Fit in Stores as Well as Online

July 02, 2014

Bonobos, the e-commerce business best known for its well-fitted men’s pants, was never supposed to have brick-and-mortar shops. Then, all of a sudden, they opened a few and money came pouring in.

“We said we would never be offline, and then, wait a second,” said Andy Dunn, the co-founder and chief executive of Bonobos. “We hit a big turning point. We realized offline really works.”

In the next two years, Bonobos will open about 30 stores nationally, on top of the 10 it already has, Mr. Dunn said. And, no, this isn’t a story of an e-commerce business stumbling backward toward a tried-and-true method. Instead, Bonobos is using these stores to prop up its online business. None of these stores will have inventory that can be sold. Customers can go to a store, try on some clothes, buy them and then wait for them to be shipped a couple of days later.

Mr. Dunn, 35, admitted he is no expert in retail, but he sold his idea well. In the company’s most recent investment round, it has raised $55 million, he said. A good portion of that newfound pot of gold will go toward opening these stores.

Coppel Capital is pouring in $25 million along with an additional $30 million from a group of investors that include Mousse Partners and Nordstrom. (Mousse Partners was founded by Charles Heilbronn, who is a member of the Wertheimer family, which owns Chanel. He will become part of the Bonobos board.) Bonobos, founded in 2007, had previously raised more than $70 million. Mr. Dunn declined to disclose the company’s revenue last year but said Bonobos is not yet profitable. 

The company found early success selling pants online to customers whom Mr. Dunn described as “athletic dudes, guys with big quads relative to their waist size.” Within a couple of years, those pants got a reputation for accentuating men’s — how to put this delicately? — behinds. (In 2010, New York magazine’s Cut blog described Bonobos pants as “sexy man-pants.”) With early success, and millions in the bank from investors, the inevitable question arose: Should we expand?

“So we had this debate within the company: Should we ever do shirts given how much the cachet of the company is in pants?” Mr. Dunn said. “It wasn’t a straightforward decision.”

They went forward with the shirts plan, but it was a small bust. Mr. Dunn said: “We made these great-fitting shirts and put them on the site, and no one cared. They weren’t selling well.”

So they tried an experiment: In 2011, the company opened the lobby to its 25th Street headquarters with some fitting rooms to see if customers wanted to try them on. Sales started picking up for its shirts and its pants as well. It turns out people really like to touch and feel clothing.

“There was an incredibly nonobvious takeaway,” Mr. Dunn said. “Instant gratification didn’t matter. People were coming in and trying them on. They were buying stuff, often $500 or $1,000 at a time, but they weren’t walking out with the product. They were receiving it a day or two later. The clothes weren’t even there.”

Since then, Bonobos has opened 10 stores, including ones in SoHo, Los Angeles and Dallas. (The SoHo store, by the way, is closed for the next two weeks because of neighboring construction.) Success followed for those stores, as well.

Actually, wait — don’t call them stores. “Guideshops” is the preferred term. These guideshops are armed with stylists (excuse us, they call them “guides”) to help men navigate the pants and polos that will fit them best. Warby Parker has likewise used showrooms to fuel its online business. (Mr. Dunn was an early angel investor in Warby Parker.)

“You don’t have anyone manning a stockroom or playing defense against changing rooms where customers are dumping inventory in a corner,” Mr. Dunn said. “You don’t have the same folding nightmare or visual presentations nightmare.”

And if there’s another lesson learned? It’s that men do not need to walk out of a store with a little brown bag. In fact, they may prefer not to. Mr. Dunn called shopping bags a “tiny badge of shame.”

“The fit and quality should speak for itself,” he said. “You’re running around, and you want to jump to dinner or back to the office or to the gym. You don’t want to have to deal with this bag.”

At the very least, Mr. Dunn’s investors agree.