Is it time for marketers to embrace radical transparency?
While many brands make a commitment to transparency, Everlane makes it a point of differentiation. The apparel brand, which only sells online, makes its production costs completely visible to consumers.
For example, an indigo texture pocket t-shirt on its website carries a price tag of $32, an estimated price at traditional retail of $80, and a “true cost” of $16. The true cost further breaks down into: materials, $6.12; hardware (zippers), 66 cents; labor, $6.00; duties, $2.11; and transport, 80 cents.
Michael Preysman, with a degree in computer science and some experience in private equity, founded Everlane in 2011 at the age of 25 after noticing the huge price markups on apparel at retail.
“At Everlane we reveal our true costs, and then we show you our markup,” the company wrote on its website. “In traditional retail a designer shirt is marked up 8x by the time it reaches the customer. By being online only, we eliminate brick-and-mortar expenses and pass these savings on to you.”
Everlane’s abstinence from advertising and discounting leads to further savings for consumers.
Everlane’s “radical transparency” also involves revealing which factory each item was manufactured in, why Everlane works with that factory, and details about its owner’s reputation. The factory in Ho Chi Minh City where the t-shirt came from was Everlane’s first Vietnam factory.
Mr. Preysman added the extra step of detailing production costs after realizing he had “nothing to hide” around such costs and it would best illustrate the value of Everlane’s products.
“From our perspective, it was like, ‘Hey, people are mature enough,’” he told Business of Fashion earlier this year. “People understand that you have to make a profit, so why don’t we just tell them?’ So we started with transparency on pricing.”
Everlane was valued at “north of $250 million” in a private-funding round last year and expects to hit $100 million in revenues this year.
- Everlane – company website
- Michael Preysman on Iterating Everlane and ‘Fixing’ Fashion Retail – Business of Fashion
- Online Retailer Everlane Wants to Raise New Money at a Valuation North of $250 Million – Recode
- Can Everlane Make Ethical Chic? – Bloomberg
DISCUSSION QUESTIONS: What do you think of the Everlane business model? Do you see such “radical transparency” in detailing production costs as a niche opportunity for a small online player like Everlane or a tactic other retailers should embrace?