The fashion retail industry is crowded, and rightfully so. If you look at Michael Porter's economic framework, "The Five Forces That Shape Industry Competition" you'll see exactly why. For street wear specifically, it costs very little money to start up, which leads to a high number of competitors. To boot, customers have too many clothing options, which leads to low competitive advantage. In this type of industry, it's very hard to make a lot of money, let alone dominate the industry.
But somebody's doing it.
For every twenty or so independent clothing brands, there's one or two that create a sustainable operation. Who are these brands that are beating the odds? And more importantly, how are they beating the odds?
In Philadelphia, Duke and Winston looks like a brand poised to be one of the ones who destroy the odds. The founder, Seun Olubodun started the company in 2009, and now holds over 20 wholesale accounts while maintaining a strong online store, and a brick-and-mortar showroom located in Philly's trendy Northern Liberties section. Not bad, considering that many independent brands that launched around the same time are still pushing t-shirts out of their trunks (not a diss, just a fact). What Seun has accomplished is extraordinary.
Seun will tell you that he doesn't even feel the brand has "officially" launched yet because there's so much more in the works.
So back to the original question, how is Duke and Winston able to see success in an industry that sees so much failure? If you're disciplined enough to read the relatively long interview below, you'll get very clear answers. You'll see exactly how Seun approached the business and you'll learn how you can take a similar approach with your own company, regardless of whether or not it's related to fashion.
CC: Can you please introduce yourself for those who don't know?
SO: My name is Seun Olubodun and I am the founder of Duke and Winston, a Philadelphia men's clothing line.
CC: When people think of city-based clothing brands, they typically think of street wear, yet you've gone a different route. Can you tell us how that started and how you've gotten to where you are now?
SO: I was working at a web design company in 2008 and I had zero fashion background. There's a brand in Boston, called Johnny Cupcakes—that everyone knows—and I was trying to get their web business. So my company sent me to Boston to try and solicit them and other clients. I ended up going to this seminar that Johnny was hosting and I just really liked the way he developed a brand around t-shirts. This was in 2008 at the height of street wear, where you had brands like Supreme, Crooks and Castles, The Hundreds and 10 DEEP. And I love a lot of street wear stuff but it wasn't really my style. I'm a little more preppy.
So I was listening to this guy talk about how he branded his entire company off of this cupcake. I thought I could do something like that in Philly but because there are so many street wear brands in Philly, I decided to do something different. I wanted a more preppy aesthetic. This way I can appeal to different demographics so I won't pigeonhole myself as an urban street wear brand. If you were a professional, upwardly mobile guy and you didn't want to shop at J. Crew or Ralph Lauren, Duke and Winston was a great alternative. Especially in Philly where as far as independent brands, you really only have street wear or hipster style.
Even against J. Crew and the others, there's always an in for the underdog brand. Duke and Winston is a Philadelphia based company and people know the owner so I figured I could convince enough people to not shop at those bigger brands.
CC: You don't have a fashion background, so how were you able to create a fashionable brand?
SO: I lost a lot of money in the beginning [laughs]. But I actually started the whole company with $5,000. I sold my car and that was all the money I had. So I made a conscious decision to start with t-shirts because the learning curve for that is super simple—everyone wears t-shirts. And the main way I was able to make up for my lack of experience was by looking at brands at the very top of the industry. I looked at brands on Fifth Avenue like Ralph Lauren, Tommy Hilfiger, J. Crew and replicated what they did—not copy—but did it their way. I look at Ralph Lauren and the way they shoot their products—the type of graphic designer they hire. I'll spend a lot of money to get my stuff to look similar to that.
From the beginning, I skipped using graphic designers that were friends of mine who would charge like $25 per design. I went right to New York and went to designers who wanted $500 per design. I would spend that money on one graphic because I knew that it would carry me for the next four years. I have a graphic that has Duke wearing a crown and it's like a knock-off of the Biggie Smalls photo but I've been using that since 2009. I spent $300 for that. And that one design is what got most people to recognize the brand.
I spend to get the best possible people I can or the best possible design because that puts me at the forefront as opposed to a brand that looks like an amateur.
CC: Do you feel like your investment has been worth it?
SO: It was. Sometimes it's a risk because when you only have so much, you start to question why you'd spend so much on a design. But it's the one thing that'll get you into a bunch of stores. The thing that the stores want is good design, so if you spend a lot of money on the design, it'll be a no-brainer for them to pick you up.
With design, you can tell if something looks amateurish or if it looks professional. If you see a t-shirt brand that's selling in Neiman Marcus, Nordstrom and Barneys, I want to hire the same designer that did that stuff. Even though I'm on a lower level, that'll elevate my brand and put me in the same conversation.
CC: Let's rewind. Not everyone is born an entrepreneur so at what point did you decide that you wanted to leave the web design company and create Duke and Winston?
SO: I was working at the web-design company and making decent money but as one of the partners in the company, we were making the least. And I wasn't happy with the job at all. After I went to the Johnny Cupcakes seminar, I went back to my partners and I said that we should start a t-shirt brand. I said that right now we have to keep going out to find new clients and when we find one, we have to start over. But this kid can design one t-shirt, print it thousands of times, and people will actually line up to get one of his shirts. We're smart and we have a team of designers here so let's start a brand. And they were like, "we're not feeling it."
This was probably in July of 2008. So between July 2008 and January 2009, I went to work everyday but all I did was just research how to print t-shirts and what t-shirts to buy. As soon as I realized that I could do this on my own, I quit my job the next day. I was done.
As soon as I left, I realized that I had no money. All I had was this 1999 Audi A6, which was like my dream car. The car was probably worth $10k but I put it on craigslist and somebody came to me with $5k in cash so I took the cash. It was not a good decision because the car was worth more but I needed to get started. I wouldn't recommend that approach because there were times when I was completely broke and I had to take random freelance jobs and I even bounced at a bar. Although that helped me a lot, I wouldn't recommend that anybody should do that. Some people will say just jump right in but you have to be realistic. For your company to get anywhere you have to have a certain level of finance. The thing that saved me was that my focus was always on this company. I was 100% in.
CC: What was the turning point for you?
SO: I got picked up by Urban Outfitters in 2010 for one tee shirt that they wanted to test out. They ordered 300 units. At that time, I had been in business for about a year and I had only sold about 2,000 tee shirts. I was selling like 10 shirts here and 10 shirts there so 300 at one time was a lot. They sold them out in 2 weeks. Then they wanted to place an order for 2,000. But I couldn't fill the order. For 300 shirts, they were willing to give you $7 per shirt. For 2,000 shirts, they wanted to give you like $6.15 per shirt. It cost me about $6.00 to produce each shirt. So for 2,000 shirts I was only making 15 cents per shirt but I was actually losing money when you consider packaging and getting help to fill the order. I had to turn it down.
But fortunately, my website started to hit after that first 300. I didn't get a lot of press but I would always promote that we were in Urban Outfitters and I would have my friends go in and take pictures and post them. People started thinking the line was legit. By mid 2010, I actually started making some money. I sold about 5,000 t-shirts that year with a company that had zero marketing dollars. That's when I realized that I could sustain myself.
CC: That second deal with Urban Outfitters wasn't a good deal but eventually Duke and Winston was being distributed in several stores. How did you get a better deal with your current retail outlets?
SO: I didn't want Duke and Winston to be a mass marketed brand. My thing is, I'm building the brand really slowly. People really like that personal relationship with the brand so when you put your line into places like Urban Outfitters and Macy's, that really dilutes the brand. In Macys your stuff is like in the corner and when people come across it, they've never heard of it, which isn't good. You want to build it the Johnny Cupcakes way and build a following. So I decided to stop pursuing big retailers and also because those guys give you the worst margins. But there are a lot of boutiques.
In every city, they are probably 40 boutiques to every 2 "big box" Macys-type retailers. Say my t-shirt cost $8 to produce but a boutique will give me $16 per shirt and retail it for $32. Now you need many boutiques to sell at the level of Macys, but over time if you get into 50 stores, that's 50 different places where people are slowly meeting you. And with boutiques, you can manage how your stuff is displayed because they're more open to you coming in and setting up, especially if you have a nice display. So the boutiques are a nice approach.
I haven't even done any trade shows yet. At a trade show you go and setup and all the outlets come out and they decide whether or not to order from your brand. The way we get into stores now is just from people calling us and saying that they like our line. We haven't really done any sales outreach to stores. Which is a good sign because now we're at about 15 to 20 wholesale accounts—some are not as active—but all of them have come from people calling us. I feel like we haven't really launched the line yet. When we launch it, we'll be looking to pick up a hundred wholesale accounts at once.
Wholesale makes up about 50% of our revenue and the rest comes from on-line, vending, and our own store. So wholesale is really the way to go to build a company up. Unless you have a lot of money and a great retail shop of your own on like Walnut Street, wholesale is the way to go.
CC: For someone who isn't convinced that they should do wholesale, what do you say to help them make that decision?
SO: I think for a lot of people, fashion is just their passion. People get into this industry for many reasons and a lot of times those reasons are not business-minded reasons. For some reason people see fashion as this fun thing with photo-shoots, fashion shows and there's this big party. And when I meet people like that, I realize that most of the time they don't really understand the end goal they're trying to get to.
They don't realize that it's a business. How much money can I make from this? What is my ultimate goal? Do I want to sell the company? Do I want to get to a point where I'm doing 20, 30, 40 million dollars and I have hundreds of employees? A lot of people are just happy with having one or two fashion shows a year and just losing money. So the first thing is to figure out what you want your end goal to be. Once you figure that out—if you know that in 5 years you want to sell the company for $10 million dollars, you'll realize that you need mass distribution.
Like, if I meet a new designer and they mention distribution, then I know that they know what they're talking about. Unless you have a lot of money, it's tough to say I'm going to build a website and people are just going to come to it. What I would say to new brands, is to research companies that are smaller but are really blowing up; companies like Life Is Good and street wear brands like Supreme. These are all brands that were started by one or two people, yet they're doing 20 and 30 million dollars. If you look at why, it's wholesale. They do trade shows, they put their product in 300-400 stores and it frees them up so they can hire good talent and not have to run around to every event. When you first start out you have to run around but as the brand grows, you don't want to have to sweat for every dollar that you bring in.
CC: What about licensing, where you don't have to print your stuff out at all?
SO: Licensing is alright. If you can build your brand up where you don't have to license everything, then it's good. I think 8% is the standard licensing fee, which is fine but you don't want to do your whole company like that. Someone else will be getting rich off your ideas. So what you can do is, license part of a collection or limit the license to maybe 1 year. After the year, you can take it back over because your stuff will be out there.
The only thing is, if someone puts your stuff into a thousand stores, they have all the resources to manage the orders. If you take it over and it's just you and a couple people, when they dump that on you, you won't know how to service all those stores. You have to make sure you have infrastructure. So while you're getting 8% licensing fees from a thousand stores and you're getting those checks for not doing much, you should take that time to build some infrastructure to scale your business.
CC: What's next for Duke and Winston?
SO: We're going to develop a full line and participate in our first two trade shows this summer. Our goal is to pick up 100 wholesale accounts and then we'll have 3 months to deliver. This way we can have more money to build the brand up. Another goal is to move the store into Center City, around the 18th and Chestnut area.
CC: Any last words of advice?
SO: Everyone wants to start a clothing line. It's not easy—but it's doable. You have to focus. Nine out of ten brands that I see are amateurish and you can tell that they're not going to go anywhere. You have to focus on your branding. If you have to spend more on your designs, your visuals, your photography, then that's what you have to do. Look at the top companies in your category and look at what they do. If you don't even think that you can come close, try something else.