Real Simple and Cuyana team up in a smart twist on "content plus commerce"

By Michael Carney , written on April 15, 2014

From The News Desk

Content plus commerce” is cited as a business model Holy Grail of sorts. The strategy, which typically involves an ecommerce retailer launching a glossy blog or a publisher opening up some form of online marketplace, encompasses the coveted closed loop from customer and audience development to transaction. But it’s rare that a single business can excel in both categories, leaving one to typically flounder as the second-class citizen within an organization, or worse, to appear to its end consumers as an amateur effort.

Today Real Simple, Time Inc’s 15-year old lifestyle publishing brand, and Cuyana, an 18-month-old direct to consumer (DTC) affordable luxury brand teamed up hoping to change that narrative. The two companies plan to launch a co-branded collection of lifestyle basics, with the inaugural collection, dubbed “Cuyana for Real Simple,” launching on May 15. The line will include a combination of apparel, outerwear, leather goods, and luggage, released seasonally. The companies have crafted the brand slogan, “Style made easier,” and together, they aim to avoid any second-class citizen problems by each focusing on their individual strengths and outsourcing the rest to the other.

Real Simple brings a built-in-audience of millions of 32- to 60-year-old women who trust the brand for advice around high quality, simple living. Cuyana, on the other hand, is targeting a narrower band of 30- to 45-year-old women and has built a global supply chain out of the excess capacity left by luxury brands leaving their domestic markets in search of discount Asian manufacturing. That means, for example, fine leather manufacturers in Argentina and wool producers in Scotland that for decades have made brand-name designer fashions, are now producing DTC products for this upstart online retailer.

The strategy and brand alignment for the two partners makes sense, however the disparity in their size and maturity begs a number of questions. For example, Cuyana is just 10 months beyond its 2013 launch and has only raised $1.7 million in financing (from Canaan Partners) – an absolute pittance in ecommerce or apparel manufacturing. Thus, one must ask whether the upstart is capable of delivering against the potential demand from Real Simple’s tens of millions of readers.

“That’s always a risk, but we spent quite a bit of time with [Cuyana founders] Karla [Gallardo] and Shilpa [Shah] and they made believers of us,” Real Simple Publisher Charlie Kammerer tells Pando during an interview.

Kammerer adds that Real Simple has existing ecommerce partnerships with FineStationary, 1-800 Flowers, and Bed, Bath & Beyond, but had never truly contemplated entering the fashion space until being approached by Cuyana.

“We hadn’t really thought much about playing in the fashion vertical, but to Karla and Shilpa’s credit, they called, and we were really aligned,” he says. “We view this as a great opportunity to learn more about our audience and how they shop online, while providing a great service to our audiences. Frankly, we were really fortunate to find them when we did.”

Cuyana may be young, but it’s proven itself in a short time period. Founded by a pair of Stanford and Berkley, Haas MBAs with prior design experience, the young team inspires confidence, Kammerer says. But more than that, the company has seen a 30 percent reorder rate in its early going, with 50 percent of those re-orderers coming back three to five times already in less than a year, according to Gallardo.

As the company has grown, its average order value has doubled from $100 to $200, with merchandise return rates holding flat at just three to five percent. And, perhaps most importantly given the punishing nature of ecommerce and manufacturing, the company has carved out 65 percent gross margins. These are numbers that most ecommerce veterans would jump at.

Gallardo and Shah declined to disclose revenue or total customer figures, citing confidentiality. But it appears at least that the customers it has attracted are very satisfied. Also, the Real Simple partnership should address any customer acquisition challenges Cuyana has faced.

For Real Simple, the question is whether the publisher can bridge the gap from storyteller to merchant without eroding some of the trust that it's built among its audience. It’s a fine line that all content plus commerce ventures need to walk that will require transparency and thoughtfulness around where and how to promote the company’s branded apparel offering amid an otherwise editorial product.

“The interesting thing to us about this is that it can be a service to the reader,” Kammerer says. “We’re confident that if we put them in a contextual environment in the fashion section of our magazine or website and give them something that we think is great, they’ll respond positively. Do we need to walk the line in terms of being transparent? Absolutely, and we will. But that’s why we picked Cuyana.”

Cuyana’s brand ethos dovetails nicely with that of Real Simple, Kammerer says. The online retailer has taken a very international approach to materialism – unsurprising given Gallardo’s Ecuadorian roots – focusing on owning fewer, better things and buying with intention rather than impulse, she explains.

“While everyone’s caught up in fast fashion, we’re about slow fashion,” Gallardo tells me. “We think that you can shop and build a wardrobe with greater purpose and intention."

Women shop with the goal of finding that one favorite item they’ll wear everyday, be it a fantastic purse, scarf, or sunglasses, or that perfect leather jacket, Gallardo continues. These staple items need to be quality and need to be versatile, two things that Cuyana’s catalog certainly embodies. And while the company is by no means a discount brand – products range between $50 and $500 – it aims to offer designer luxury quality at a fraction of the oft-marked up price.

“Both brands have a philosophy of making women’s lives easier in beautiful and elegant ways,” Kammerer says.

As the year unfolds, Cuyana plans to raise a Series A round of financing to scale its operations and better meet what it hopes will be growing demand. The company now employs 10 full-time employees and another 20 contractors, but expects to grow significantly in both categories.

The Cuyana-Real Simple partnership is initially just one year in length, making it a bit of an experiment for both companies. Should things go well, both appear interested in extending the relationship. But the short term structure allows flexibility and the option to move on painlessly should things not work out as planned.

“The relationship is a fairly limited edition, it’s not huge at first,” Kammerer says. “And for that reason, the revenue potential probably isn’t great, but it’s there. But that’s not really why we’re doing this. What we love about it is it’s a great way to learn about our audience and about the DTC business.”

No cash is changing hands, but the companies will share revenue on all merchandise sold through the partnership – both declined to discuss specifics of the financial relationship. Real Simple will also give the Cuyana for Real Simple brand in-kind advertising placement in both its online and print publications.

“We’ve done a really good job of bringing audiences to our website and magazines, engaging them in storytelling, and content, and service,” Kammerer says. “What we haven’t focused on is on closing that loop and having them buy something. We think this is a great way to change that.”

The companies are saying all the right things about this still fresh partnership and appear to be going in eyes-wide-open. The real question is, will they be so optimistic 12 months from now?

[Image via Cuyana]