The eternal question for DTC companies: Find success as a category killer, à la Warby Parker, or expand product selection beyond your core competency?
Two apparel companies, Cupshe and New York & Company, are taking the latter approach; the former is introducing an athleisure line and the latter has realized that men like clothes, too. And as Holden Bale, group vice president and head of commerce at Huge, told Retail Brew, each company has to make sure their growth doesn’t bloat the product selection and diminish what made them popular in the first place.
“It’s fine to go do more things, but what is the strategy for your business and for your positioning in the market on the other side of that?” Bale said. “The more you focus on a greater diversity of goods, the more you're going to have to scale your merchandising teams and your product capacity.”
Into the deep end: After six years and success as one of Amazon’s best-selling swimwear brands, Cupshe is dipping its toes in the increasingly competitive athleisure market. The company hopes its “Weekends at the Beach House" collection will tap into what made Cupshe’s swimwear popular—affordable prices, quality, and vibrant designs, Jessie Han, senior marketing director, told Retail Brew.
- As for pricing, Cupshe’s athleisure collection costs between $18 and $46, while the swimwear goes for $20–$36.
- Han said Cupshe is able to keep prices affordable because of its strong global supply chain that includes company-owned factories.
- “We also have more profit margins because we want to add that type of value to customers, not only on the brand or with the company,” she said.
In 2020, Cupshe hit $150 million in revenue, and has enjoyed nearly 100% YoY growth in 2021—it anticipates reaching $250 million in revenue by year’s end. Han said 70% of sales are DTC, while the remaining 30% come from Amazon. The company closed on a $15.5 million funding round in March, per PitchBook.
In good company
New York & Company is in a slightly different boat than Cupshe. After going bankrupt and shutting down its IRL stores, the women’s clothing retailer is rebranding after it was picked up by The Saadia Group in 2020, and expanding into men’s apparel.
Guy time: Last week, the company introduced its first menswear collection, with 150 items in the $30–$130 price range. Later this year, New York & Co. will expand into home goods, another strong pandemic-era product category.
- “In addition to leveraging our customer database, we are leaning on the expertise of the brands that we have acquired as content creation experts,” Jack Saadia, cofounder of The Saadia Group, told us.
- New York & Co. is now online-only. It’s the same approach Saadia is taking with Lord & Taylor, which the company also acquired last year.
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The big picture: For new product categories to find success, they needto be somewhat in line with a retailer’s core competency, Bale told us. He pointed to Allbirds’s new venture into athleisure as a good example.
“There's always pressure on brands to capture a greater share of wallet, and the smartest brands in the world know how to restrain that inclination to just do everything, and focus on the things that are core to their business without leaving too much of that money on the table,” Bale said.—KM