United States clothing companies outsource manufacturing because they believe it's one of the only places where they have wiggle room on the enterprise's cost structure. But what if that weren't the case? What if you could compress costs elsewhere? Would it then be possible to keep manufacturing stateside?
The former president of Chrome Bags who is starting up a new venture, American Giant, thinks you can. And it all comes down to this, says Bayard Winthrop: Now that people are comfortable ordering clothes online, sight unseen (thank you Zappos), it's possible to build a large-scale clothing brand that is online only.
American Giant aims to be just that. Headquartered in San Francisco with production done south of the city by a sewing shop in Brisbane, American Giant is producing and selling middle-market menswear at scale. This is no luxury boutique. Winthrop is setting his sights on the market currently dominated by Gap, J. Crew, and Banana Republic, with a whiff of American Apparel's domestic manufacturing MO in the mix.
The store opens today, online, and will roll out its catalog piece by piece. Five styles of sweatshirts in seven colors are on the virtual shelves now, with T-shirts coming online in six to eight weeks and polos six to eight weeks after that.
Bayard Winthrop says he can offer higher-quality garments for lower prices than his competitors—and do all his manufacturing in the U.S.—by skipping the brick-and-mortar route. Once you take store rent and maintenance out of the equation, along with the costs of staffing and stocking those stores, you suddenly have a lot of money left for production.
Winthrop is a veteran of the consumer goods industry. He got his start sweeping floors for Atlas Snowshoe, before rising up to the COO slot. After a brief stint in the Internet world, he led Freebord Manufacturing (snowboarding-simulating skateboards) and then Chrome Bags before starting American Giant last year.
"I've always been obsessed with manufacturing costs," Winthrop says of his consumer products career. "Can I go with a cheaper fabric? Can I outsource it and get it made for a cheaper piece price?"
But if you can compress costs on the distribution side, he says, "you have much more margin to reinvest in product and service and that enables you to deliver a much better product."
Talk in the U.S. about jobs being lost to factories overseas, combined with an increasing consciousness on the part of consumers about how and where their belongings are being made inspired Winthrop to take a second look at the cost equation. Now that a majority of Americans are on broadband connections and many are comfortable shopping online (provided shipping is free and returns are handled smoothly) a play like American Giant is now possible.
"This wouldn't have been possible even two years ago," Winthrop says.
[Image: Courtesy of American Giant]