Here’s a fact: Everyone wears underwear. Hence, investors need not look further as underwear startups are ready to take over the market equipped with tech-infused business plans.
“Underwear alone in the US is a $15 billion-plus market per year in terms of revenue,” said Bryan Lalezarian, CEO of MeUndies, a basics brand that has raised over a million dollars in venture cash delivering chic underwear to thousands of customers all over the world.
According to CrunchBase Data, MeUndies is just one of the many tech-enabled underwear startups that were able to close deals with over 100 venture firms and angel investors since 2012. Moreover, undergarment startups have closed 22 venture rounds since 2013, the majority of which are very early stage investors.
But while many would think that women’s underwear industry is the only one that’s been making waves in the market, the men’s underwear sector refuses to be left behind. The men’s underwear bottoms market reached $2.7 billion and grew three percent within 12 months until September 2014. The sector has also branched out from basic cotton to premium and active underwear, as growth in these areas is driving market sales and the utilization of performance and luxury fabrics.
Naked Brand Group Inc. (OTCQB: NAKD) is taking advantage of this growth as the company created lifestyle-categorized packaging for its wide range of men’s underwear. Some of the men’s bottoms collections being sold on its online shopping website, The Naked Shop, include Essential, Signature, Active, and Luxury Collections. Naked Brand has covered each consumer base as these collections are targeted towards men of different lifestyles.
No More Middlemen
The rise of social media like Facebook, Twitter, Instagram, and Snapchat has paved the way for these startups to connect directly with consumers, hence eliminating the middleman. “There are a lot of unique ways we can connect directly to customers to deliver our message, tell our story, and sell our brand, and those didn’t exist 20 years ago when companies like Gap and Victoria’s Secret got started,” Lalezarian said.
For instance, Naked Brand has launched an integrated social media campaign through deploying a year-round social calendar with an active presence on Facebook, Instagram, Twitter, YouTube, and Pinterest. It also builds on an existing, loyal client base by providing offers via e-mail blast and direct mail.
Imitating the business plan of typical tech and e-commerce startups has worked well for these companies. After all, undies are the only things that people wear every day, giving them a consumable and repeatable nature. Sizing is not as important as comfort, so people don’t need to physically shop for them since they cannot try them on.
Therefore, underwear companies dabbling in e-commerce bank on the notion that customers can replenish their underwear stocks without leaving the comforts of their own homes. Startup apps remind customers to re-stock, enabling them to boost their sales revenues at startup speed. MeUndies, in particular, saw a 400 percent revenue growth last year.
Naked Brand, too, has implemented several strategies to lure customers into its online shop. Aside from improving fabrication through its micromodal and microfiber products, the company also created a two-pack program introduction that makes its products more accessible to new customers. Furthermore, the company is leaning towards affordability, with its premium prices less than $40. The elimination of the middle man in an online shop has made it possible for Naked Brand to offer luxury undergarments within an economical range.
“If you take a modern approach and think outside the box, there are some really interesting ways to make a big dent in that market really quickly,” said Lalezarian.
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