How much does it really cost to produce a T-shirt? In most cases, you’ll never know, but EVERLANE wants to change that.
EVERLANE was launched in 2011 as an online clothing retailer with transparent pricing. Instead of just a sticker price, clothes sold through EVERLANE include a breakdown of the production costs. The company wants to educate consumers by letting them know where they source their materials from, how much they cost, and how much the company makes.
Their radical approach was the brainchild of Michael Preysman. It apparently struck a chord with consumers, as the company now generates over $40 million in revenue. The success of the company may surprise some, as they mostly offer no-frills, modern designs. The clothes available from EVERLANE can resemble the simplistic items that you’d find at Old Navy or Gap..
So, how did a clothing retailer with minimalist designs succeed in a brutal industry that has pushed out similar companies? Here’s the story of how Michael Preysman rethought retail and succeeded:
From Computer Science to Finance
Michael Preysman didn’t always follow the latest fashions. He’s a Sunnyvale, California native who prefers utilitarian styles over flashy patterns. His educational background is also far removed from the apparel industry.
Before launching EVERLANE, Preysman studied computer science and economics at Carnegie Mellon. After college, we went on to work in finance. At the age of 26, he started his clothing company with his college friend, Jess Farmer. Farmer handled the technical side of the startup while Preysman focused on the products and marketing. No one at the company had previous experience producing clothes.
So, what led Preysman and Farmer to enter a business with limited knowledge? They noticed a problem and wanted to provide a solution.
Giving Consumers More Affordable Options
Preysman is not the first consumer to notice that clothing retailers dramatically mark up their prices. A T-shirt that costs dollars to produce may cost $55 or more at your local clothing store. According to EVERLANE, most retailers mark up their products five to six times the initial costs. EVERLANE has a markup of just two to three times the true cost of the product.
The first shirts released by EVERLANE cost a fraction of the price of the typical shirt. They cut out the costs by taking the business entirely online. While boutiques charged $50 to $60 for a basic T-shirt, they could charge $15.
The company started with just 1500 T-shirts and an invite list. Within five days of promoting the shirt on Tumblr, the invite list had over 60,000 signups. The understated styles and low prices resonated with people. By 2013, the company had over 100,000 customers.
Offering Consumers More Transparency
Along with high markups, there were other aspects of the modern apparel industry that frustrated Preysman. Most people do not know where the clothes that they wear come from. The farms where the materials are sourced and the factories that produce the clothes are often overlooked.
Preysman wanted to pull back the curtain on how the supply chain works in the apparel industry. He decided to create a company that offers complete transparency. Customers can learn more about the factories where the clothes are produced and view a complete breakdown of the costs.
On the company’s website, you can find a list of factories that EVERLANE works with. The company explains how they found each factory, where their materials come from, and how many employees work at the factory.
When you browse the company’s products, each listing includes a breakdown of the costs to make it. You can view the cost of materials, hardware, labor, duties, and transport to understand the true cost. EVERLANE then compares its markup to the markup of the traditional retailer. For example, Their Men’s Base Layer Long-Sleeved Shirt has a price tag of $68 and costs $25.09 to make. Other retailers charge as much as $125 for comparable items.
Who Designs Clothes for EVERLANE?
The clothes offered by EVERLANE are affordable and simple. They typically feature muted colors and basic designs. The first T-shirts were designed by Preysman, Farmer, and early employees at the company. There were a few failed attempts, but they eventually settled on a few designs that ended up selling well.
The company slowly and methodically rolled out new designs. Preysman remained selective with the release of new products, limiting the selection to the most basic articles of clothing and accessories. EVERLANE eventually brought in a creative director. Rebekka Bay, a former Gap executive, joined the company in 2015. She helped lead the creative direction before departing a few years later.
After Bay’s departure, the team returned to its original, collaborative design process. Everyone offers input, including members from the marketing and customer service departments.
Deciding to Take Sales Offline
A few years after launching EVERLANE, Preysman stated that he’d rather shut down the company than open a brick-and-mortar store. The company was 100% online, which helped limit its overhead and allowed them to offer lower prices. In 2018, he changed his tune.
Preysman realized that he could reach additional segments of consumers through physical stores. In major metro areas such as NYC and San Francisco, trendsetters flock to boutiques and small storefronts. EVERLANE opened its first physical store in Manhattan and plans on opening more. On opening day, 75 people lined up to be the first customers.
Brick-and-mortar stores were not the only change to the company’s original vision. Preysman initially only wanted to offer products that cost $100 or less. The basics and accessories still cost less than $100 but the company also offers a wide range of products with higher costs, such as jackets and loafers.
As the company expands its product line and opens new storefronts, it hopes to attract a wider audience and penetrate the apparel industry further. Unfortunately, these plans were put on hold in 2020.
Adapting to a Pandemic
At the start of 2020, EVERLANE was focused on growth. The company was thriving and employed hundreds of workers in customer service and retail stores. The spread of COVID-19 ground everything to a halt.
EVERLANE retail stores were primarily located in major metro areas on the east and west coasts. Places such as New York City and San Francisco were among the hardest hit at the start of the pandemic, forcing them to shutter most of their stores.
The pandemic hit at the worst time, as a large group of EVERLANE employees had recently worked with the Communications Workers of America to organize a union. In March 2020, the group asked the company to recognize its union, which coincided with the lockdowns in major parts of the country.
In turn, they laid off & furloughed several hundred workers, including almost every member of the proposed union. The layoffs included 42 remote customer service workers and 180 part-time retail employees. 68 full-time retail employees were furloughed.
The company faced criticism for its layoffs, especially due to the timing of the union proposal. However, Preysman pressed forward. EVERLANE was just one of the thousands of businesses that laid off and furloughed employees.
Despite the challenges of the pandemic, the company continues to thrive. The company has focused more on its roots, reaching consumers directly through its online storefront.
Breaking New Ground in the Apparel Industry
EVERLANE also continues to release innovative new clothing products. In October of 2020, the company unveiled the ‘Forever Sneaker’. The Forever Sneaker is fully recyclable and sourced from eco-friendly materials, such as recycled cotton and canvas. The company also partnered with a recycling company to eliminate post-consumer waste. They then purchases carbon offsets to address any carbon emissions that were not eliminated during the manufacturing process.
With the Forever Sneaker, EVERLANE has created one of the lowest-impact shoes ever. It also looks great and comes at a reasonable price, due to the company’s commitment to limited markups.
EVERLANE also released a line of face masks. Each mask is made in Vietnam in a factory that is carefully vetted by the company. For each mask sold, they donate 10% of their profits to the ACLU.
If you browse Instagram, you’ll see that EVERLANE remains a popular brand. The Forever Sneaker and face masks are just a couple of examples of the eco-friendly products that the company has released in recent months.
Consumers Want Truth and Responsibility
In the end, Michael Preysman has helped prove several valuable points about marketing. He understood that consumers want the truth. He also knew that a growing number of people only want to buy products from socially responsible companies.
EVERLANE gives consumers complete honesty by breaking down the costs of their products to reveal the profits they gain from each sale. Preysman only works with factories that meet strict standards when it comes to the treatment of employees and the environment.
Other companies are already trying the same approach. There are zero-impact footwear companies and clothing brands dedicated to using sustainable fabrics. Even major brands such as Nike, Adidas, and Converse are starting to get in on the act, releasing sneakers made from recycled materials.
EVERLANE still has the name brands beat in one area — price. With affordable high-quality clothes, they stand a good chance of sticking around.
Stephanie is the Marketing Director at Talkroute and has been featured in Forbes, Inc, and Entrepreneur as a leading authority on business and telecommunications.
Stephanie is also the chief editor and contributing author for the Talkroute blog helping more than 100k entrepreneurs to start, run, and grow their businesses.