Mass Customization: Indochino Update

After the last article on Indochino last May, Exciting Commerce decided to check up on recent news in an interview with CEO Kyle Vucko.

Indochino produces custom made suits in Shanghai and delivers internationally free of charge within 2 weeks of order.  Typical to leaders in the mail order business, they offer comprehensive customer satisfaction guarantees such as free alterations, free remakes and a return policy.

In a discussion with CEO Kyle Vucko, I asked about the costs of this service level. Vucko:

“The free alteration guarantee, free remake and money back returns are each about 3% of orders. This is actually very good, considering that typical return rates for online apparel run between 18 – 20%”.

When asked why Indochino enjoys half the average return rates of the industry, he commented:

“A custom suit is actually a very meditated purchase, not an impulse purchase which may be the case with other types of apparel. Plus, since we offer a custom fit and good quality control, customers are more likely to get what they expected.”

Meeting customer expectations seems to be supported by the fact that 40% of orders come from repeat customers.

Interestingly, Indochino seems to be not affected by the current financial crisis.  Vucko revealed that business seems to be actually improving, noting that last December was a new record month of revenues, beating the previous record month by more than double.

Vucko speculated that was likely due to the so-called “downgrading effect”.  In the current climate, suit buyers who might usually go to a personal tailor are more willing now to try out more economical online options.

Vucko also revealed some inside details on how his particular industry lends well to the mass customization trend – if you have the right connections.

“Indochino purchases material from end-of-roll suppliers at a very low per meter cost. The limited supply works to our advantage by adding an element of exclusivity to our products.  Each fabric delivery is only enough for about 10 – 100 suits.  The “units available” number displayed on the website is updated in real time and is directly linked to the amount of material we have left.  This has the additional effect of allowing us to change product styles on the website every week.”

To address scalability, Indochino taps into a network of freelance tailors who all basically operate out of the same neighbourhood in Shanghai.

When asked about his strategy for 2009, Vucko stated that he wants to put more focus on the service aspects of the company, such as offering more fashion and suit wearing education on the site.

Indochino was founded in March 2007 in Victoria, Canada by Kyle Vucko and Heikal Gani.
Financing has been covered by an initial angel round of 40,000 CDN followed by a VC round in January 2008 worth 250,000 CDN.  A 3rd round in the order of 1-2 million is planned for end of 2009 or beginning of 2010.

Comments

[Realist]

Seems like exactly the same thing as www.ModernTailor.com is doing except ModernTailor doesn't charge as much money.