E-commerce veteran Drew Green sees Indochino selling a million suits a year by 2020.
In 2007, while still at the University of Victoria, Kyle Vucko and Heikal Gani came up with a great idea for a tech company — online, made-to-measure suits. Everyone seemed to love the idea, even though launching an e-commerce site is a thousand times harder than it looks, and matching picky customers with their perfectly fitted suits, delivered on time and at a profit, is maybe a thousand times harder than that. And there was also the small detail that neither of the college kids had experience in e-commerce or fashion.
Nevertheless, hometown heroes including ex-Yahoo head Jeff Mallett, basketballer Steve Nash and emerging VC phenom Boris Wertz pitched in to help Vucko and Gani get $18 million in financing. The two, meanwhile, spent way longer in China sniffing out supply lines than they would have thought possible. Still, almost everything went better than it should have, and the venture enjoyed several early years of triple-digit revenue growth followed by a few more years that were also pretty solid. By 2015 the company, called Indochino, was still booking 40% annual growth and vied for status as the continent's top online retailer of made-to-measure menswear.
At that point, Vucko might have been expected to do one of two things. He could have followed Gani's lead and headed for the exit, or he could have continued down the corporate path, by then well-paved. What he wouldn't have been expected to do is hang on to his stake while turning Indochino over to someone he'd just hired, so that he could leave the Vancouver head office to semi-retire with his wife (Amelia Warren, who runs a start-up of her own) back in Victoria. "It was the right time for me to catch some family time after a decade of going full tilt," Vucko explains.
Of course, kicking back is that much sweeter if the guy you've hired as your replacement is a fellow e-commerce pioneer, who, six months and a couple of dramatic moves later, can say he's got Indochino back onto its triple-digit growth trajectory. The new CEO, recent Torontonian Drew Green, had made a couple of exits himself and still holds a stake in Shop.ca, which he founded. Within weeks of arriving, he announced a deal that saw China-based Dayang Group invest $42 million while becoming a manufacturing partner. "It was an opportunity to put in a large amount of capital and accelerate the business," he explains. Meanwhile, he's stepped up a process launched by Vucko that — less paradoxically than it might seem — has the online retailer opening a dozen bricks-and-mortar storefronts in major cities across the continent by August.
Green is still jet-lagged from a Japanese scouting mission as he walks the half block from Indochino's headquarters to one of the first of those showrooms, in the midst of Vancouver's appropriately stylish Yaletown district. Open-beamed and spare, it could be the menswear side of a Prada store but for the dearth of inventory. That's a key detail, says Green. "This showroom will do between $4 million and $5 million a year, and we operate on a zero-inventory model, so we don't have a backroom with thousands of suits."
Instead, Indochino's showroom customers buy their suits, shirts and ties much as they would if shopping from the website except that, instead of having to measure themselves and trust that the fabric matches the way it looks onscreen, they get to see the goods first-hand and let someone else do the measuring. Either way, the suit will arrive on the customer's doorstep within four weeks and cost about the same as if it had been picked off the rack at a department or mid-price apparel store, while, in all likelihood, requiring no alterations (reviewers tend to give the chain an A-minus in this regard) or, heaven forbid, returns. "If you look at apparel companies or even department stores that have gone online, return rates are one of the biggest challenges," Green says. "They're up to 30%, whereas ours are around 2%."
Far from cannibalizing online sales, the storefronts act as billboards, increasing awareness, Green says. "Our online business is seven times higher in markets where we have showrooms." A store in SoHo has been the star performer, so plans are afoot to open several more in Manhattan.
The new CEO also promises to dramatically increase the number of offerings. "I came from a business where we had 15 million products at the time of launch, and this business had 40. So there was a real opportunity to broaden the selection." But the really big step ahead may see Indochino opening up for offline business on the continent where the suits are actually made. (Online customers are already global in scope; the home market of Canada is a sweet spot, since Indochino prices only in U.S. dollars.) The company won't necessarily go into China, Green thinks, but will almost certainly tackle Japan, where formal work clothes are de rigueur and the currently fashionable tailored look that's been very good for Indochino never went out of style. Whatever form the expansion takes, Green is sure it will involve a partner. "We want to learn before we open, then every day after," he says.
Ambitious? That's a word that definitely fits. "My goal is to sell a million made-to-measure suits a year by 2020," Green says. "That would put our revenue, back of the napkin, at over half a billion dollars."