Born Online, Fashion Startups Still Flock to Bricks and Mortar

Xconomy Boston — 

Ministry of Supply has its high-tech credentials pretty well nailed.

The Boston-based company was founded by a group of MIT students who wanted to make comfortable, durable men’s dress clothes out of scientifically advanced materials. Its first shirt employed temperature-regulating technology also found in NASA space suits. Some of its clothes are knitted by robots.

To bankroll its projects, the startup has twice turned to the popular crowdfunding website Kickstarter, where fans of the company have helped pay for something new in exchange for early access to the finished product.

And when it’s time to decide which new clothes to offer, Ministry of Supply performs the real-world equivalent of a website A/B test, selling small batches of new ideas and asking customers for their reviews before committing to a full production run.

So it might be a little surprising to find that as it looks to grow, Ministry of Supply is embracing some decidedly old-school salesmanship. In 2014, one of the young company’s highest priorities is figuring out how it will use bricks-and-mortar retail to help spread its high-tech approach to menswear.

It’s a lesson that other e-commerce upstarts have learned in recent years, which flips some of the earlier assumptions of the era on their head. While big retailers have scaled back their physical locations as e-commerce bites into the overall retail sector, some smaller companies have found that a real-life showroom is a must.

“There is something to touch and feel,” Ministry of Supply co-founder Aman Advani says. “Whatever you may have seen online before doesn’t tell the story in the way that two minutes with our product in your hand can tell it.”

That lesson is particularly apt in the fashion world.

Venture-backed companies such as Bonobos, which also sells men’s clothes, and Warby Parker, which offers stylish but low-priced eyeglasses, are online-first retailers. But each of them have opened small brick-and-mortar shops in key cities, giving customers the ability to try on the products and place orders that will be delivered to their homes.

After starting out online, Ministry of Supply began experimenting with its own real-world retail stores, including short-term “pop-up” shops in New York and in Boston’s Newbury Street shopping district.

While the amount of overall foot traffic was necessarily small compared to a 24-7 online shop, people who came by a Ministry of Supply storefront were more than twice as likely to buy something as they were online. The price of an average purchase was also more than double the online equivalent, Advani says.

That kind of response indicates that in-store customers are more likely to become long-term buyers, Advani notes. They’ll also cost the company less in returns, which Ministry of Supply offers to online shoppers to let them try on different options at home.

“Let’s say our time on site is five minutes,” he says. “Our time in store is 45 minutes. When people come in, they stay in, and we get to tell this story. And they leave with 45 minutes of information. They don’t leave with a cursory understanding of our products, they leave with a deep understanding of our mission.”

While it’s clear that Ministry of Supply wants to add more real-life retail to its sales strategy, the startup hasn’t settled on a direction yet. More pop-ups are an option, along with longer-term boutiques and possibly sales in other, larger retailers. Bonobos has carved a potential template there as well, striking a deal to sell its clothes in Nordstrom stores following an investment from the venerable retailer.

“There are so many options,” Advani says. “I think the conclusion, though, is clear. Touch and feel matters.”

This is still a small company, however, even when compared to other tech-infused fashion startups. Bonobos has raised more than $75 million in investment backing since its founding in 2008, and Warby Parker has racked up more than $115 million since 2010.

Ministry of Supply has raised less than $5 million, with its most recent investment noted in a recent SEC filing indicating a new $3.8 million equity sale. The company wouldn’t comment on the latest fundraising, citing commitments to its investors to stay quiet about its financing, but we do know that previous investors include Tony Hsieh’s Vegas Tech Fund, SK Ventures and various angel investors. 

Advani said Ministry of Supply is more concerned with building its product line and proving out its business model than amassing a big bankroll of venture investment. The company has about 10 employees, including a new design director, former Brooks Brothers and Eddie Bauer executive Jarlath Mellet, who joined the company last fall and is busily planning Ministry of Supply’s future product lines.

“What we want to prove is that this can be a long-term, sustainable enterprise,” Advani says. “It’s not to say that down the road we don’t take zillions of dollars. It’s more to say that we’re out to prove that this is a product and a concept that people desperately want. And we’re going to be the ones that provide it to them first.”