Private brands drive Revolve’s momentum

Source: https://www.digitalcommerce360.com

A growing share of Revolve’s revenue stems from its private-label brands, which mean more profit for the apparel retailer.

Online-only apparel retailer Revolve offers more than 500 brands—and just 19 are its own. However, eight of the retailer’s top-selling 10 brands are owned by Revolve, and owned brands now generate 27% of net sales at Revolve.com.

Revolve Group Inc. owns its namesake site, along with luxury-focused Forward, offering apparel, footwear, accessories and beauty products. The retailer, which announced it is going public this week, was previously known as Eminent Inc. It is No. 125 in the Internet Retailer 2018 Top 500.

When building its private brands, Revolve claims to have a methodical approach to prevent new products from getting stale. Revolve’s trend-forecasting algorithms track as many as 60 attributes for each product it sells, according to the IPO filing. It uses this to buy a small initial run of a new product, and then it reorders the best-performing products before the first run sells out.

On average, more than 1,000 new styles were launched each week in 2017, from emerging, established and owned brands. Emerging brands made up the largest share of sales at 52%, or $207.8 million, in 2017. But private brand sales are making up a larger portion of overall revenue, up from $79.9 million for all of 2017 to $120.6 million for the 12 months ending June 30, a 50.8% jump. Sales of these brands are more profitable for the retailer, since it offers them at similar prices to third-party brands.

The data-driven ordering approach helped Revolve achieve 75% of its net sales at full retail price, meaning it didn’t have to discount old products to clear out inventory. It grew 28.0% in 2017, with $399.6 million in sales. Proprietary technology also has helped it handle more than 2,500 influencers who are a major force behind the retailer’s marketing efforts. Those influencers, who provide exposure to the brand via social media in return of a share of profits generated or free products, are crucial to the retailer’s success, the filing notes.

“We believe that much of the growth in our customer base to date has originated from social media and influencer-driven marketing strategy,” the filing reads. “If we are not able to develop and maintain positive relationships with our network of over 2,500 of influencers, our ability to promote and maintain awareness of our sites and brands and leverage social media platforms to drive visits to our sites may be adversely affected.”

However, the risk is worth it to Revolve. “Influencers have an outsized impact on the purchasing behaviors of next-generation consumers,” the filing says. The IPO points out that three of its top influencers, Camila Coelho, Julie Sarinana and Natasha Oakley, each have more followers than Vogue magazine had print readers in the first half of 2017, showing the shift in consumption habits between generations.



Categories: Apparel, Brands, Business, Retail, Technology, USA

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