With so many ecommerce companies opening up offline retail experiences, it’s rare to encounter a company going the opposite direction. But that’s what Five Four Clothing has done, shutting down its LA-based brick-and-mortar location and ending its relationships with Bloomingdale’s, Nordstrom, Macys, and others. The company is doing something else that not a lot of other online retailers have managed: generating a profit.
Five Four is a ten-year-old brand, first started out of a college dorm room in Los Angeles. Recognizing a hole in the market for direct to consumer menswear at affordable prices and low friction, the company switched to a hybrid subscription and ecommerce model two years ago. It was among the first to target the male demo with this box-of-the month offering. The model proved so popular that the company eliminated its ecommerce store and is now 100 percent subscription.
Today, Five Four has more than 40,000 subscribers paying it $60 per month – that’s about two- to five-times the industry average subscription price point, depending on category – for $120 worth of merchandise at retail price points. It all adds up to the tune of more than $30 million in revenue annually, and growing.
“We’ve been profitable since 15,000 subscribers,” says Five Four VP of Sales and Marketing Sameer Mehta. “The decision to walk away from traditional retail was all about margin and inventory control. It’s proved to be a good one.”
Five Four is a contemporary, and subtly urban brand targeting young professionals that Mehta compares to JCrew or Zara in terms of quality and pricing. “We try not to be too fashion forward, but enough that it’s interesting and enjoyable,” he says. The company avoids billboarding its logo across its clothing, opting instead for a more sophisticated look, he adds.
The line, which features a mix of denim, tops, outerwear, and footwear, has become popular among athletes and celebrities (mostly unpaid) – in part for its rare willingness to offer sizing through XXXL. It also didn’t hurt adding Mehta, the founder of now defunct celebrity-powered subscription commerce startup 12Society. Given the demographic, it’s not surprising that 50 percent of the company’s subscribers earn more than $100,000 annually – it makes the price point less startling as well.
Given the company’s entirely-bootstrapped growth arch, you could excuse founders Andres Izquieta and Dee Murthy for resting on their laurels a bit. But they’ve done anything but, and Five Four has a lengthy product roadmap, according to Mehta. The company, for example, is currently in the process of rolling out a personal stylist program.
“The reality is, guys still don’t know how to shop, or what they like or look good in,” Mehta says. “That’s not our opinion, that’s the actual feedback we’ve gotten from customers.”
The stylists can also help subscribers customize their monthly deliveries with requests such as “no more denim for a few months,” or, “I need shirts that I can wear on a date.”
Five Four expanded its offering into the accessories category in recent weeks, while over the same period broadening its reach to include Canada. The 65 person company handles all of its own fulfillment in Los Angeles, eschewing the popular third-party logistics (3PL) model, and has its eyes set on an overseas expansion later this year or early next.
As for customer acquisition, the company has found its current combination of Facebook ads, TV, and celebrity influence to be a strong driver of growth, Mehta says. Given its current level of profitable growth, Five Four has no near-term plans to raise outside capital, he adds, although its too early to rule that out entirely.
Of course the major risk with the subscription model, especially one focused around a single brand, is customer fatigue (and closet saturation). But Five Four’s customer have proved loyal to date, many of them transitioning with the company through every stage from brick-and-mortar shoppers, to ecommerce buyers, to monthly subscribers. With that kind of die-hard audience, Five Four likely has more leeway than most businesses to evolve its model.
Five Four may not be an ecommerce behemoth along the lines of Amazon, Gilt, or Zulily. But with no investors to answer to, the company’s scale and growth rate are more than enough to call this a success.
- Five Four ClubSubscription clothing for men
Five Four is a contemporary apparel brand based out of Los Angeles, founded in 2002. The collection consists of denim, sportswear and accessories. The Five Four Club is a monthly apparel subscription service that was launched in 2012 with an emphasis on value, convenience and exclusivity.
The convenience of the club’s service has been its biggest draw for its members. Every member is assigned a personal stylist, who hand picks their package every month and ensures that members receive items that match their preferences- which are easily customizable. With an easy 60 second sign up process, the club alleviates men of one of their biggest problems: shopping. In addition to all this, Five Four provides free shipping, and easy size exchanges.
Five Four has been seen on the likes of Mark Whalberg, Jay Z, Dr. Dre, Chris Paul, Denzel Washington, Josh Groban, Taylor Lautner, Zac Efron, Aziz Ansari, Eric Decker, and most notably, Steve Cook (their newest brand ambassador).Five Four Club is hiring: