The story starts in 2010 when a 25-year-old American came up with an idea of building a brand that was different from the rest. He was ambitious, determined, and confident about his success. Which came out to be true when his company grew from $0 to $100M+ in Just 6 years! This is the story of Everlane.
We at PixelPhant has come up with #eComStories to take you through the journey of the biggest eCommerce companies to give you the insight on how they flew or how they fell. We pledge you learn from them and keep growing.
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Beginning with Everlane
Everlane was founded in 2010 by Michael Preysman and Jesse Farmer where Michael is also the CEO of the company. The organization’s headquarters is based in San Francisco, California.
The company was started with a vision, that was until then, unheard of in the fashion industry. Micheal wanted to set up an online store that dealt in clothing who kept complete transparency.
He would give the customer a complete breakdown of how much it cost to produce each product. From the price of the raw materials and transportation to exactly how much of a markup the company would take.
On the journey of growth
The idea paid-off. It started with a referral invite list that gained 60 thousand subscribers in just 5 days, however, the company only had 1500 T-shirts in its inventory.
This San Francisco startup was on a flight that wasn’t ready to land any sooner. By 2015, Everlane had received $1.1 million in seed funding. The company, in fact, earned $50 million for its revenue in the same year.
This revenue got just doubled in its succeeding year. In 2016, it was a great total of $100M. What was there to look down on now?
On the website, Everlane tries to acknowledge its customers on its supply chain, factories, employees, and the price breakdown of each product. And, the customers love it.
At the time of their origin only, Michael understood the value of transparency which has made the brand stand out from its competitors.
In 2012, Michael Preysman had said that he would rather shut the company down before he would open the retail store. But ironically, Everlane opened its first retail store in 2017 in New York.
This situation created a lot of buzzes as he was coded in his own words. When he went to CBS This Morning, he reasoned this action by saying “When we started 6 years ago, we thought we could do this online only. What we found is that customers like to touch things before they buy. And moreover, Everlane is really about that ethical part of the brand and we wanna help bring that mission to life. So we started to tell the stories of our products. We wanted to build a space where we can do that. So, we decided that retail was that avenue for us.”
Currently, Everlane ships its products to 143 countries.
The primary mission of Everlane was to bring transparency to its customers in terms of pricing – Which it successfully does. But in 2018, the organization took another big step that shook its competitors and even helped in gaining more trust from customers.
That year, the company pledged to get rid of single-use plastic by 2021 including from its supply chain and throughout its offices. It developed a clothing line made with recycled water bottles and is eliminating its use in their previous collections, recreating all plastic elements with recycled plastic.
This was crazy! Michael again succeeded in acknowledging the future consumer behavior. The timely adaptation of eco-friendly consumerism helped the organization to keep a more sturdy foot in the market.
Its website proudly flatters the promise of sustainability using ‘No new plastic’ and ‘Certified organic cotton’.
As we spoke above, in a span of just 5 years, the company was growing at a fast pace. And when you start emerging differently, leaving others of your kind behind – exclusive attention is always the part of the success. The same happened to Everlane too.
This rapid growth caught the eyes of many big investors who also wanted some piece of the pie. Investors like Maveron, AllBirds, Angel Investors, 14W, and many more came forward to invest in the company.
With such great ideas and attempts, it becomes necessary to spread the word. And, what could be better than social media? Everlane leaves no stone unturned in marketing its products.
The company fully utilizes Twitter, Facebook, Pinterest, Snapchat, and Tumblr for marketing and takes care of customer service, and communication.
The annual budget for advertising is estimated to be between $10,000 and $20,000 or less than 5 percent of total company spending.
So does this mean that Everlane has become the one perfect company that everyone should learn from?
Well, the company has done enough to learn things from. But like everyone else, Everlane is not just ‘Perfect’. How did we arrive at this conclusion?
Let’s look at the company’s SWOT analysis to understand it deeply.
- It is clear from the research that the company is sailing strong with its strong financial resources and big investors. So, we can presume that the company won’t sink that easily.
- So far, Everlane is the only online and retail fashion store that is offering, what Michael calls ‘Radical Transparency’.
- There is no doubt that if you invest in Everlane articles, you will be getting it made from one of the best materials used in the market.
- The company is possessing a mixed background between retail and fashion industries for a unique perspective. This distinct feature has and is aiding the company a lot to compete well with its opponents.
It is clear that Everlane has a lot to hold its back, but remember – It’s never good to judge things too early! (Hang on till you reach further in this article)
- Experience: Though Everlane has achieved great success so early, there is one thing that the company lacks. And that is experience. The fashion industry is very vast and dynamic. The trends change every day. What people like today may not be of any use tomorrow.
To handle such drags and drops, the experience is the only tool to pass the hurdles smoothly.
- Lack of assortments: Everlane has come up with styles that are very basic and minimalistic. Though these designs are evergreen and are in trend – it’s never too sure in the fashion industry when the shoppers start looking at the brand as ‘something that has not enough choices’.
- Communication: The company is mostly based online, and have opened just one store. Now it is no wrong to say that when you are shipping to 143 countries across the world – a single physical space is not enough for the customers to interact with the brand representatives.
Retail stores help in building trust in the company as well as the materials. When it comes to fine clothing, people want the touch. They too need the security of having someone to turn to who is not just available to take calls but also meet.
If compared to its competitors like H&M, it is pretty clear that the company needs to come up with more retail stores.
- Physical Presence: The company has enough chance to open new factories and stores near the countries/continents it ships to.
- Marketing: We don’t know what the CEO has in his mind for his marketing strategy. But, according to the data obtained, the company’s investment in its marketing is pretty low.
If focused more, then the company can definitely start investing more in its advertising and marketing. It can utilize new technologies and software to promote the brand through new social media platforms.
Hey! Let’s accept it – where can you find the most of your potential audience? Of course, social media.
- Expansion: Everlane was started as a private limited company and still continues to be till present. If we talk about the expansion here, making the company open to the public can be a huge step towards expansion.
But again, Preysman is the CEO, not us. This analysis is completely based on the observations. And, we do not intend in any way to influence or command the company to do what the analysis says!
- Dependent on suppliers: The company is reliant on its factories to be able to produce clothing in a timely manner. It could be hard to wait for items to arrive on time from a few factories to fulfill the orders from worldwide.
Basically, if we compare it with its competitors, its infrastructure is small in place for supply chain management.
- Potential competitors: Yes, Everlane is flourishing because of its unique strategy of being transparent. But have you ever thought about what happens if the already established and trustful companies start being transparent?
Can they break Everlane’s market or the company will still continue to grow at the same pace? Well, it’s the kind of threat that the company has to decide.
How was it to be that the owner of the fastest-growing company not get recognized by huge organizations, like Forbes?
Forbes annually issues a list of the budding entrepreneurs and select 30 winners from 20 different industries.
So, it was natural for 29 years old (Then) Michael Preysman to be awarded such recognition. Preysman was included in Forbes’ 30 Under 30 for his work on the firm in “reinventing retail and E-Commerce.”
Controversies, complications, and problems
“All That Glitters is Not Gold”, this phrase started getting deeply related to Everlane in late December of 2019. But, it wasn’t just the pandemic and its threat to the business that was troubling Michael.
Rather, it was revealed that it was Everlane that was becoming the problem to many of its own employees.
In December 2019, Everlane employees worked with the Communications Workers of America to organize a union. In March 2020, The group then requested to be officially recognized by the company.
On March 27, 2020, during the phase of COVID-19, the union group’s Twitter account (@EverlaneU) tweeted, “Nearly every member of our team was just laid off. Retail workers from Everlane stores are being trained to replace us to answer your support emails. We are devastated beyond measure.“
It didn’t take long and the news spread like fire. The allegations of being anti-black and being against unionizing were imposed on Everlane. This left many consumers in shock. Something that was being idealized was losing its essence. The curtain was dropped and the public was clearly looking at what was happening backstage.
The company lost its authenticity and trust. No one could believe that the company that was so great for its customers was twice as cruel towards its employees.
Even senator, Bernie Sanders wrote on his Twitter account “Using this health and economic crisis to union bust is morally unacceptable.“
42 out of fifty-seven of the remote customer experience department had been laid off in addition to 180 part-time retail employees, while 68 full-time retail employees were informed they were dismissed. The dismissals were apparently surprising as employees had reportedly been reassured that business was running strong.
The matter was not just limited to Everlane employees only. What can you imagine if a well-known personality is seen practicing anti-Black behavior and union-busting? The public was raged and the media demanded answers. It wasn’t easy to suppress the matter in any way possible as it was now global.
In June this year, many brands showed up to support the Black Lives matter movement. Everlane was one of them. But their support wasn’t given any appreciation and was considered hollow to many. Who would have believed after the employees confirmed that they have experienced racism while working with Everlane?
Further Actions and Discussions
In June 2020, Michael Preysman found himself on a kind of stage that was far beyond his imagination. At an all-staff meeting, after floods of public allegations of being a hypocrite, former employees have accused the company of Anti-Black behavior and union-busting, of presenting an image to the world that did not reflect their real damaging experiences within the company.
In a recording obtained by The New York Times, Michael said that he had cried for an hour during the start of the COVID-19 after the company sent its employees home. Just 2 years ago, the company had been flourished with profits. Now his company’s internal culture was being laid bare online. He was heard saying in the recording that “It’s been the hardest 3 months of my life”.
On July 23, at another all-staff meeting, Everlane leadership came up with completed investigations and confirmed many allegations.
The people who investigating found that the leaders contravened employees’ personal space by touching them, and used insensitive terms when referring to people of color.
It was also confirmed that there was a lack of consistency in promotion policies and no formal process is present to bring forth harassment or discrimination.
This meant that what was being called “Radical Transparency” wasn’t actually getting practiced inside the company itself.
The hope of resurrection
With such a great teardown of the internal affairs, Everlane was bound to make changes to bring back hope and correct its mistakes.
The chief creative officer, Alexandra Spunt who was highly criticized by the employees was announced by Everlane “will not be leading the creative team” and will be “advising the senior leadership team as needed.”
To The Times, Michael said that the company had “urgent work to do to rewrite Everlane’s code of ethics.” Next year, it would be adding a black member to the senior leadership team, opening a seat for blackboard members, teaming with racism accountability organizations, and running an anti-racism program for the entire company.
Everlane said that the organization didn’t know which employees were part of the union during the layoffs. The layoff was only done amid the economic pressure of the pandemic.
With his conversation with The New York Times, Michael gave the statements like “I wish we had done things differently in the past.” He said, “We have no idea how to control it. We have no idea how to have a conversation with each other about it”. He said, “I am trying to figure out that right line of how to be as human as possible, while also running a business.”
Our final understanding
Most companies fail while committing the mistakes that lead to their demise. What Everlane did wasn’t a loss that was limited to profits and the company. It’s a big question now whether the company would be able to earn back what could have been its most precious and valuable product – its image.
The worst part of the story is that the mistakes involved hurting public sentiments. Such mistakes are not easy to be mended with better business strategies. Trust once broken can never gain its original shape back.
What we can learn from the story of Everlane is that with the great ideas in mind and the fast-growing business, one can never underestimate the power of society. It’s people who decide the flight and fall of a company, and not the marketing and growth strategies.
We, just like the rest of the world have no idea if Everlane would be able to gain its authenticity and respect back.
The vision and the steps taken by the company for its consumers are one of a kind. But, whether the steps towards better work culture and a healthy mindset would be as effective or not? – Only time would tell.