Thursday, August 30, 2012
How An Acquisition Is Helping Wittlebee Break Into The Clothing Industry
Story by Benjamin F. Kuo
Earlier this week, Los Angeles-based Wittlebee (www.wittlebee.com) announced the acquisition of its own, clothing company--Cottonseed Clothing Company--as it continues to build out its subscription, children's clothing service. Wittleebee is backed by Science Inc., and co-founder Sean Percival is a MySpace vet and a familiar face in Southern California's social media circles. We caught up with Sean to learn more about the acquisition, and how the buy of Cottonseed is one of the things helping the firm break into the closed and protective clothing industry.
As a quick refresher for those who haven't used Wittlebee yet, can you briefly talk about what you offer?
Sean Pervical: Wittlebee is a kid's clothing club. Every month, you get a box of kids clothes, personalized to you as a member. It's aligned to the personality of your child. For example, if they're a diva, or they're sporty, it matches that personality. If you love the color pink, or you don't want to get shorts, we handle that to. Every box is custom, and you can update that as much as you want as your kid grows.
Tell us about the acquisition of Cottonseed, the clothing company. How did it come about?
Sean Pervical: Actually, Cottonseed was our first vendor. When we started, we wouldn't be sure it would work, so we started doing small scale tests. To do that, we needed merchandise. We found it was difficult to find clothing in single, solid colors, and find stuff that didn't have lots of logos or other junk on it. We actually found them organically, through Google search. Working with them, they helped us as the business grew. We gave them small orders, then large orders, and then, we grew so quickly I just told them to give me all of their inventory, and they started to help us with manufacturing. We started with brands, and then started getting into manufacturing and using their existing contacts to move a little quicker on the manufacturing side.
Why buy a clothing company, rather than source from different suppliers?
Sean Percival: From a business standpoint, this is the only way to have complete control over your inventory, and get the margins that allow you to build a business. Initially, we started doing lots of brands, and we still have brands as part of the box, but we're also including Wittlebee private label items. Cottonseed will be its own label. They will be brands that will be part of the box, in addition to brands like Paul Frank and Baby Gap. We have found that parents have strong affinities to brands, but, at the same time, they also like to use us for discovery. They love getting new brands in a box they haven't heard of. The buy allows us to get manufacturing, inventory, and cost of goods where it needs to be. The next thing we can do, is because we know exactly what we're shipping, including the color, sizes, and what our customers want next month, that can help with a predictable model of manufacturing.
What's the biggest reason you find consumer sign up and stay with your service?
Sean Pervical: A lot of our customers are in Middle America. Although we have customers in every major city, Middle America is our largest segment. The reason why, is they just don't have access to stores. The nearest clothing store to them is Wal-Mart, and even that is an hour's drive. And, the selection at Wal-Mart is not great. For us, they're finding that convenience is one thing, price is another. They also really love the discovery aspects. They are finding brands they never would have know, or a brand they never would have been able to afford, and get it delivered to their doorstep.
How has the transition from social media and the Internet to hard goods been for you?
Sean Pervical: It's interesting. I definitely am more well known for social media and blog content. But, prior to all of that, I had run e-commerce sites and an e-commerce agency, building sites for fifty to a hundred properties. In terms of the transition, I like it. I love it that we have a tangible product, and I can look out into the office and people are packing boxes to ship. It's just a different world. I had been just burnt out on social media, and blog content, and online marketing, and all of those initiatives, and to me, this has been a really nice change. It's something tangible, it's something that our members get, and they love it. There are lots of nuances to learn about, inventory systems, different types of acquisition of products, but it's been more or less a seamless tradition.
What's the most important lesson you've learned so far in launching the company?
Sean Pervical: I thought that I could really just claw my way through the downtown fashion district, and quickly and easily get people excited about a new model. The biggest surprise was how old and antique the fashion apparel business is. It's all done on seasonality, where they manufacturing tons of stuff, send it out, and hope that peple can sell it, if it doesn't sell, they use these weird liquidation channels. Plus, no one trusts each other, and no one wants to reveal their secrets. It all comes down to relationships. We really didn't make progress until we had someone with experience in this area for fifteen years help us, who knew everyone at these brands. Maybe I was a little naive that everyone would be excited, but it wasn't the case. There are lots of relationships here, and all of them are ten years plus, and they just don't do business with anyone.
Finally, what's the next big thing for you?
Sean Pervical: We're starting with 0 to five, and we're going to expand that age range. We're also getting into dresses and other things, accessories, and belts, and trying to become the one top shop for kids' apparel. Right now, our customers are using us as a supplemental source of clothing, from 20 to 50 percent of their annual purchases. We want to capture the rest of that and be a one-stop shop for them.