Flamethrowers help online shop stay cool
“You really sell mini flamethrowers?” I recently asked Jerry Hum. “Yes!” he cheerfully replied. “Um ... why?” I said. “Because they’re cool?” Hum said. And there you have it, the essence of Touch of Modern, the fast-growing, irreverent San Francisco e-commerce site that, in addition to flamethrowers, sells apparel, accessories and home goods geared for guys. Neither CEO Hum or his three co-founders had any retail experience when they launched the site in 2012 — just an instinctive feel for what Millennial men want to buy and how they want to do it.
“We really didn’t intend to start an online store just for men,” Hum said. “We wanted to target people just like ourselves, and we just happened to be men.”
They must be doing something right: In just four years, annual sales have now crossed the $100 million mark. Executives said the company is profitable but declined to give specifics.
While brick-and-mortar chains are shutting stores or just plain shutting down, online entrepreneurs like Hum are filling the void by tossing aside the business model that underpinned American mass retail for nearly 60 years in favor of one that favors speed over volume, curation over sameness, style over usefulness. Flamethrowers may not be practical, but they sure are cool. And cool is
what moves product now.
“Web 3.0 commerce has really been about lifestyle and want versus need,” said Sukhinder Singh Cassidy, a former Google executive who now runs video shopping site Joyus in San Francisco. “If you look at all the companies that have come out of this last generation of commerce, it’s all about introducing you to discover new products, and the model of how you discover lifestyle product is very different than the model for how you search for a utility product.”
Instead of trying to sell everything to everyone, Touch of Modern wants to sell a carefully selected assortment of merchandise to men with themes like “The Denim Depot” and “All Black Everything.” The company also recently launched private-label brands like “Dapperman,” “Edge Industries” and “Pillars of Thought.”
Instead of ordering goods a year ahead of time, the retailer is replenishing its inventory every few weeks so the site remains fresh.
“We see things come in and out a lot faster” than traditional retailers, Hum said.
And unlike some online retailers that dispatched unsold department-store inventory with big discounts, the company relies on quick “flash” sales to promote just-arrived wares.
“They are clearly not just using flash sales just to get rid of stinky merchandise,” said Kim Garretson, principal of Realizing Innovation retail consulting firm in Minneapolis. “They are using flash sales to say ‘We’ve got so much more.’ ”
The challenge for ecommerce startups is balancing growth with the quirky distinctiveness that attracted consumers in the first place. Gilt Groupe, Fab.com and One Kings Lane all overextended themselves to justify the nine- or 10digit valuations investors placed on them, and ultimately sold for a fraction of those lofty prices.
The category Touch of Modern has chosen may make a difference. Men’s clothing seems to be a fertile market for e-commerce startups. Though women are thought to be more frequent shoppers, a number of men’s apparel sites have appeared in recent years, including Indochino, Bonobos, and End.
From 2011 to 2016, online men’s clothing sales in the U.S. grew at an average annual rate of 18.6 percent to $17.4 billion, according to IBISWorld, a marketing and research firm. Sales grew more than 13 percent last year — a slightly slower, albeit still respectable, clip.
By contrast, McKinsey & Co. consulting firm estimates overall apparel sales increased in the low single digits in 2016.
Madeline Hurley, an analyst with IBISWorld, says that men in general are more brand-loyal but less picky about variety, which makes guys ideal online shoppers because they won’t make as many returns. They will buy the same shirt in multiple colors. By contrast, women prefer to try on more clothing in stores because they often can’t find the right sizes and selections from the Internet.
Indeed, the first item Hum showed me in his office was the retailer’s new V-neck t-shirts sold under the Pillar of Thought brand. The product was the result of Hun’s desire to buy the same well-fitting T-shirt, but in multiple colors.
“We’re pretty confident” about the company’s ability to create and brand its own merchandise, Hun said. “If we can design and make a better product, when we should do that. It’s what makes consumers loyal.”
Retail today is mostly about scale, which is why two large players — Amazon and Macy’s — sell a significant amount of men’s clothing online, according to IBISWorld. But the two companies control less than 15 percent of the market.
So perhaps what we’re seeing with Touch of Modern and its peers is a glimpse into retail’s future: traditional players ceding most of the market to a fragmented mix of upstart e-commerce firms hoping to lure a particular customer with specialized assortments.
Because you can never have too many flamethrowers. Or V-neck T-shirts.