Bonobos: a modern way to shop
With an emphasis on convenience and ease, Bonobos' operating model is perfectly designed to meet consumers' needs.
Founded in 2007, Bonobos is an online men’s apparel company specializing in well-fitting pants and “fuss free fashion” (Financial Times). Since their 2007 launch, Bonobos has earned a number of accolades, including “Best Men’s Pant” from New York Magazine, and grown to be the “largest clothing brand ever built online in the US”, according to their website. This success is attributable to a deep understanding of the needs of their core customer, and an operating model designed to best meet those needs.
Understanding customer needs:
The premise of the Bonobos model is based on the assumption that male shopping utility can be captured as follows (source: Lightspeed Venture Partners):
While women (according to co-founder Andy Dunn), are willing to spend time and endure hassle if style and trend are sufficiently high, men are primarily trying to optimize around fit while minimizing time and hassle. Their business model, therefore, is to provide well fitted pants for the modern man, and their operating model enables them to do this in a way that is convenient and efficient for their customers.
Bonobos operating model:
The Bonobos operating model is designed to maximize a customer’s shopping experience and drive value for the company in three ways.
E-commerce platform & policies: Sales of Bonobos clothing occur predominantly online. This benefits not only their customers, who are able to purchase clothing quickly and easily, but also Bonobos, given the low fixed costs and high margins of the online distribution channel. Further, Bonobos minimizes the hassle associated with online shopping for its customers by providing free shipping and free returns, on all orders.
“Guideshops”: Cognizant of the fact that most people want to be able to try on clothes before purchasing, Bonobos has “reinvented the retail store” (Bonobos.com) by having a small number of physical locations which they have branded “Guideshops”. These differentiate them from other retail competitors in a number of ways:
- Customer appointments: Rather than just stopping by, customers make hour long appointment with a Bonobos ninja (see below for more detail on “ninjas”), during which they are able to try on clothing with the help of a Bonobos representative. This not only improves the customer experience by resulting in less crowded stores and personalized service, but also benefits Bonobos by identifying the customers most serious about making a purchase, and enabling them to focus the effort and attention of their customer service reps on those customers.
- No physical inventory for sale: Once a customer has finished their appointment, they receive an email with the products they have selected and their size information. They can place an order in-store, or they can order products at a later date from home, but in either instance the transaction occurs online. While this is marketed as being in the customer’s best interest, as they are able to “walk out of the store with their hands free” (bonobos.com), it is hugely beneficial for Bonobos: first, it familiarizes customers with the online ordering process (making them more likely to make repeat purchases in the future); and second, it limits the inventory that Bonobos must keep in store since all they need is one size in each style for trial purposes.
- Reduced costs: Guideshops are incredibly cost effective. In addition to the reduced inventory holding costs mentioned above, they require less sq. footage than competing retail formats, reducing rent costs, and fewer sales associates, resulting in lower labor costs.
Emphasis on service: The third key feature of their operating model, is an emphasis on customer service, provided by highly trained “ninjas” (the name given to Bonobos sales associates). When customers arrive for their appointments, they are offered a beer, walked through the entire product line, and given tips on what looks best. This high level of service continues after customers have purchased products, as they are able to return clothing to Bonobos at any time, for any reason. This creates a huge amount of customer loyalty, and drives repeat purchases.
By isolating the biggest pain points of clothing shopping for men, Bonobos has designed their operating model around maximizing utility for their target customers. Fortuitously for them, many of the same initiatives aimed at reducing time and hassle, also reduce costs for Bonobos, creating value for the company as well as the customers.
Student comments on Bonobos: a modern way to shop
I did not know about the Bonobos “ninjas” and I agree that they are a big differentiator for the company. They accomplish two things by reducing hassle and providing great service. I think there is something to said for an e-tailer than can provide you with human interaction.
I think this is a very interesting business model because they are targeting men. What do you think of the likes of Trunk Club and Dollar Shave Club and other specialty men’s e-commerce platforms?
I definitely love the Bonobos model. I believe they went after men partially because the space is less crowded, but also because they are underserved. It is interesting how they are able to innovate by eliminating services we take for granted, like being able to go home with your clothes after you shop.
To my best understanding I don’t think Bonobos makes money. I believe they lose a lot of money on returns and the fact that guys don’t purchase at the same frequency as women. What’s more their guide shops while unique have been debatable in their ability to increase the velocity of purchase. As such bonobos has taken some drastic moves recently including launching a women’s line. All this is to say I wonder how we should define successful operating and business models? This model was innovative but the value it is adding may not be enough to a given consumer, or may not appeal to a wide enough base of consumers, to make it sustainable. So is this success?