Online retail is constantly evolving and changing. What have you learned over the years?
Over the years I’ve seen a lot of stuff change and a lot stay the same. The fact is the retail clothing business has been around for a long time, and while there are different ways to approach it, at the end of the day people want cool stuff at a good price. As long as you stick to the fundamentals you’ll be able to exist and evolve, if you lose focus on what you’re good at and your niche and talents, then you’ll have problems. When you launch a business online, the same rules of regular business still apply.
What’s next in e-commerce?
We’re seeing certain companies come onto the scene that are hot and exciting, but you wonder—can they make money and sustain themselves? I can’t tell you how many times I’ve seen ‘the next big thing’ in online retailing that gets lots of interest, but the company can’t figure out a way to at least break even. Eventually it has to become a real business. Markdowns and the way you supply inventory is the same as traditional retailing; there are no new models when it comes to that.
One of the big things we believed in from the beginning is this hybrid of commerce and content. Early on we felt that it builds brand loyalty and excitement. We’re selling to a certain lifestyle and a culture: music, fashion and skate are all very symbiotic and contribute to the overall strength. When we first started out we did interviews with designers, we shot the clothing on models, and tried to create this lifestyle component. A lot of people told us that we were crazy and that it would only distract the customer from the buying experience. Now everyone is doing it. We’re evolving our content strategy by getting heavier into video programming with KarmaloopTV.
Tell us more about KarmaloopTV. You just announced Pharrell Williams as the creative director. What’s his involvement?
KarmaloopTV is a premium YouTube channel and we’re relaunching a more robust version in three weeks. We spent between a quarter and half a million dollars building it. It’s going to be more interactive and advanced than the original. We’re increasing our regular programming. Viewers will have more opportunity to comment, submit ideas and customize the videos they watch. We’re doing more clickable videos, so they can actually buy clothing from the video they’re watching. We have some scripted programs now, but there will be more of that, too. We just finished filming this series called Girlhattan, which is a funny, parody of reality TV and the PR world in Manhattan. The lead roles are two guys who play women and it’s hilarious. We shot nine 20-minute episodes for the season, and they’ll be up later this spring.
Pharrell is the creative director and he’s obviously a busy guy, so he’s not in the office everyday, but we’re constantly on the phone discussing ideas and he’s giving a lot of input. Much of the stuff he’s been working on hasn’t even been seen yet because it’s the stuff we worked on in 2011 that will be implemented in 2012.
Check out this teaser video Karmaloop created with Amongst Friends to promote the exclusive “Revenge of the Nerds” capsule collection.
In your opinion, do flash-sale sites lend themselves to extensive content strategies?
The flash sale model is dependent on overstock. We have PLNDR.com, which is going to be a $30 million part of business next year, so it’s significant, but the majority of our business is from in-season brands that sell on Karmaloop. We’ve done a little bit with content on PLNDR in the form of contests and giveaways, but off-price sites are really more about getting a good deal. The main takeaway is that if you don’t act quickly the product will sell out; we found that people don’t necessarily want to spend a lot of time looking at content because they might miss out on the deal. We’re also in a unique position where we don’t have many competitors the way [higher-end sites] like Gilt, Rue La La and HauteLook do. We have this buying power with our brands that allows us to get the limited overstock.
Tell us about the e-commerce sites you recently launched. What’s in the works?
We’re launching a dedicated women’s site sometime in Q2, we’re not sure of its name yet but it’ll be affiliated somehow with Karmaloop. [Editor’s note: Karmaloop.com currently sells women’s on the site.] BrickHarbor.com, our skate site, will launch March 1. We saw a void in the marketplace—there isn’t a lifestyle skate site out there that combines both the product (hard and soft goods) with the content (video, etc). There’s a lot of overlap with our demographic and skate kids, so we thought, why not start our own?
BoylstonTradingCo.com launched in November. It has more of a boutique feel and stocks higher-end brands that we always wanted to carry but found they work better on their own site. We have a lot of collaborations and limited specialty products on Boylston and we feature more editorial, similar to a magazine.
We bought Streetammo.com (a Danish-based streetwear site) in December, and that will become Karmaloop Europe within the next two to five months. We really like the people at Streetammo—we have a similar philosophy, carry a lot of the same brands, we want to expand into Europe, they want to expand in the U.S.—so it just made a lot of sense. We’re keeping their team in place, and Mark Urban (the creator of Streetammo) will be the head of Karmaloop Europe. Our philosophy has always been to figure out ways to work together, so we’re doing that by merging the two sites.
There are a lot of cool things happening with the brands we carry, too. For example, with Pharrell’s brand Billionaire Boys Club. We’ll be one of the few places you can buy the entire BBC collection online and we’ll do a big launch once it goes live. We’re doing a lot of exciting stuff. Bottom line: guys want to find something unique and special that speaks to them, and if you can do that well, you’ll be successful.