Children’s clothing retailer Kidbox Inc. recently launched private-label brands to gain more flexibility and a greater profit margin.
Kidbox has had private-labels brands in the works for about a year and launched them in July in conjunction with Kidbox’s back-to-school season subscription box, says CEO Miki Racine Berardelli. Kidbox sends a styled box of children’s apparel six times per year with seven items per box. Each box is $98. “Out of those six, back-to-school is definitely the largest, or the most significant,” Berardelli says. “Back-to-school is our holiday season.”
Kidbox’s exclusive brands are called Miki B., Kid’s Club and Baby Basics and align with the styles the retailer categorizes for each box, such as “city cool” and “classic preppy.” Kidbox has had supply issues where it has run out of a certain brand’s product and has not been able to get more because it was out of stock, Berardelli says. The private-label brands will allow Kidbox to round out its assortment of products and fill holes if needed.
“Exclusive brands give us more latitude, more flexibility and a strong ability to respond to our customers,” Berardelli says.
Kidbox offers apparel from more than 135 brands, which is critical to the web-only merchant’s success, as it is an important part of its customer acquisition strategy. For example, if a shopper searches on Google for a specific brand, Kidbox can show up in organic or paid results for that brand. Kidbox launched in 2016 with only 30 brands, and in January of 2018 had around 100. With its own private label goods, Kidbox will have a greater profit margin, Berardelli says, because the retailer will be sourcing the product straight from the manufacturer and not having to pay a brand for the products.
“Having your own private label or exclusive brands is a strategic move to maximize margin,” she says.
To start, each subscription box will contain one Kidbox brand of clothing, and after gathering customer feedback, it will increase the number of Kidbox-branded items, she says. Kidbox collects data about each order, such as which styles perform the best or which items a shopper returns, to refine the next order. For example, if a shopper returns a shirt because it was too small, the data about that return and the product is logged in the customer’s account and used so that if Kidbox ships another shirt of that brand to the customer, it knows to go one size up.
Because Kidbox collects this data and hears from both parents and kids regarding what they like to wear, Kidbox saw an opportunity to develop its own line of apparel, Berardelli says. It took the retailer roughly four to six months to design and develop the new styles, in addition to another four to six months working with sourcing and manufacturing to bring the products to life, Berardelli says.
In the first two weeks of launching the back-to-school boxes, sales are “off to an amazing start,” and the demand was there right when Kidbox launched the box on July 25, Berardelli says without revealing specifics.
Sales are up 300% year over year for Kidbox, and so the retailer hopes the back-to-school season will be in line with that trend or better, she says.
Kidbox is not alone in developing its own private-label brands. Stitch Fix, a subscription apparel styling services for adults and No. 59 in the Internet Retailer 2018 Top 1000, has developed its own label products to control costs and increase profit per order. Amazon.com Inc. (No. 1), too, is making inroads in private label. It has launched several dozen private label apparel brands this year. Online warehouse grocer Boxed Wholesale (No. 345) launched its own private-label line of products to offer a wider array of products and control its supply chain.