With a large Series B, Frank & Oak hammers home that the era of men's ecommerce has arrived
If there were any doubt that the era of men’s ecommerce is upon us, it’s time to lay that argument to rest. It’s not just that male-focused startups are popping up left and right and raising seed capital to get out of the batter’s box. For the first time, these businesses are achieving the traction and growth needed to raise growth rounds and find exits.
Weeks after Nordstrom acquired men’s fashion discovery service Trunk Club for $350 million, today Montreal-based Frank & Oak announced that it closed its own $15 million Series B round to expand its personalized mens clothier. It’s the latest in a line of data points reinforcing that, while smaller than the women’s market, male fashion and ecommerce is growing rapidly and, in part due to the limited competition, is ripe for the growth of some meaningful venture-backed businesses.
The company’s latest funding was led by Goodwater Capital with participation from Green Oaks Capital, Investment Quebec, Lululemon’s John Currie, and existing investors Rho Canada Ventures, Real Ventures, Version One Ventures, Lightbank, and Bertelsmann Digital Media Investments. Frank & Oak has now raised $20 million across two rounds of funding.
Frank & Oak currently has 120 employees north of the border, but plans to open a New York office and increase that headcount by at least 20 in the next year, according to co-founder and CEO Ethan Song. The company recently crossed the 1 million member mark and has seen its iOS and Android apps downloaded more than 250,000 times, according to Song. The company sold some 700,000 items in 2013, with 70 percent of purchases coming from the US and the remaining 30 percent from Canada. The company is not yet profitable, Song says, but this is to be expected from a two-and-a-half-year-old etailer still chasing growth.
As I wrote at the time of the Trunk Club deal,
The men’s fashion market may not be as big as the women’s, but it’s broken and it’s commanding more and more attention of late from retailers. The male consumer has grown more sophisticated and is spending more than ever before, and the success of brands like Trunk Club and Spaly’s prior startup Bonobos are evidence of this fact. Moreover, there is far less competition and more greenfield in the still nascent men’s market than there is in the oversaturated women’s space. Nordstrom obviously sees Trunk Club as an attractive avenue for reaching this underserved consumer audience.Like Trunk Club, Frank & Oak emphasizes simplifying the shopping and fashion discovery experience for men, who the company believes often times are either too busy or lack the confidence to do so through more traditional channels. The service sends its customers a curated newsletter each month featuring merchandise personalized to their individual tastes. Users then select up to five items to have shipped to them free of charge. Customers only pay for what they keep, while returning the remaining items at no cost.
Unlike Trunk Club, Frank & Oak features mostly its own designs, meaning that its price points are lower, and thus its target audience more mainstream. The company targets what it describes as “creative professionals,” offering shirts for $40 to $60, pants for under $80, sweaters for under $100, and jackets for less than $150 – prices that are in some cases 50 percent less than Trunk Club’s.
It’s not just Frank & Oak and Trunk club that are proving mens commerce has arrived. Numerous other brands and services like Bonobos, Indochino, Thrillist, Combatant Gentleman, 20Jeans, Jack Erwin, and Black Tux, are all helping to carry this torch.
Frank & Oak is part of another major trend sweeping across the ecommerce sector: offline retail. For all the success brands like Warby Parker and Bonobos have had acquiring customers online, they and others have proven that there’s value in the physical interaction with customers in retail stores, including both the data collected and the credibility conveyed through this experience. Frank & Oak has a flagship retail store (or “guide shop”) in Montreal that includes a barber shop, a coffee bar, and a team of style consultants. (Sounds like a fun Saturday!) The company is also experimenting with the concept of pop-up shops in other cities.
Under both formats, customers get to browse and try on merchandise before buying, but then have the option ofwalking out with the goods in hand or having their purchases shipped to their homes. It’s a bit of a twist on the brick-and-mortar model, but it means that Frank & Oak can avoid carrying much inventory and can utilize its existing supply chain and fulfillment infrastructure to satisfy orders.
Ecommerce is a notoriously difficult and expensive category – especially when you’re designing your own merchandise and experimenting with offline retail. Frank & Oak has demonstrated that it’s found traction with its current model, but the company is still extremely early in this process. Riding the waves of men’s ecommerce and online-to-offline retail have Frank & Oak squarely on trend in today’s venture backed commerce world. The company snuck up on a few people by launching out of Canada, but with the validation of its Series B now firmly in hand has grown into one of the more impressive operations within the category. With a fresh pile of cash and the commensurate bump in valuation that will come with it, the pressure will be higher than ever to prove that this is a model that can truly scale.