Bonobos is an apparel retailer that predominantly sells business-casual trousers to male millennials via ecommerce. Conceived at Stanford Business School in 2006, the brand has rapidly gained traction in the US and expanded in subsequent years to offer shirts, ties, swimwear, outerwear, suits and accessories. In the coming year, the Company is on track to make over $100mm in annual gross revenue! 
The core of Bonobos’s business model is simple – targeting male millennial shoppers with a value proposition of great-fitting apparel and maximum convenience during the shopping experience at an affordable price. The CEO of the Company presented the following equation for male utility that defines the value proposition of the business .
The Right Fit: During their time at Stanford GSB, the founders of Bonobos realized there was a market inefficiency in men’s apparel. The current landscape of pants was dominated by skinny Euro-cuts and baggy pleated styles (referred to as “Khaki Diaper Butts” by employees of the Company) that rarely fit the physique of many young adults . To address this void, Bonobos crafted contemporary designs to cater to this underserved demographic. The Company was also willing to frequently go the extra mile to ensure the customers found the perfect pair of pants. Fit was often a key determinant for male shoppers in developing loyalty to the brand. As a result, Bonobos believed that focusing on this aspect of the product would lead to financial success due to repeated purchases from loyal customers.
Convenience: In the denominator of the “Male Shopping Utility” equation are the criteria of time and hassle. Unsurprisingly, men typically do not derive enjoyment from the process of shopping for new clothes. Many young male adults view the process of having to find the right fit and style of clothing through multiple visits to different retail establishments to be a harrowing experience. Bonobos aims to create a shopping experience that is quick, painless, and stress-free with a healthy dose of hand-holding.
With the challenge of appeasing the young male shopper, the Company has developed several distinct components to its operating model to achieve this goal.
Hassle-Free Service: Bonobos has tailored its operations to ensure maximum convenience during the shopping experience. At its core, Bonobos’s ecommerce platform allows men to avoid the need to physically visit a brick-and-mortar retailer to buy clothes. Bonobos has also invested heavily in customer service. As stated by CEO Andy Dunn, “the key to overcoming resistance to buying apparel online is to make the experience fun and convenient”  For all of its products, the Company sacrifices a percentage of gross margin to offer free and fast shipping and the ability to return merchandise at any time. To complement this, they have created a sizable customer service group– fondly referred to as “ninjas” – that are empowered to do whatever is necessary to assist customers in every step of the purchasing process. Each Ninja is given a full-scale handbook to learn the Bonobos culture and best-practices for building brand loyalty .
Vertical Integration: To build a sustainable model that provides quality product and high-touch customer service at an affordable price, the Company relies on a vertically integrated organizational structure. Bonobos exclusively sells product through its own branded ecommerce website, controls its own manufacturing process in Portugal with onsite quality control, and operates its own distribution hub in greater New York for delivering merchandise. Through this process, Bonobos is able to avoid selling wholesale to a 3rd party in the value chain, and can thus retain margins on its product. However, Bonobos has made slight compromises to this model in the recent past. In 2012, the Company signed a distribution deal with Nordstrom. In this case, product is sold to Nordstrom for a lower wholesale price in exchange for the increased distribution and awareness that the retailer provides .
Guideshops: Perhaps the most unique aspect of Bonobos’s operating model is the decision to pursue the Warby Parker approach of opening physical showrooms to complement the ecommerce platform. These stores, referred to as “guideshops,” do not carry physical inventory but allow customers to inspect and wear samples to find the perfect fit and style. The store experience typically involves an appointment with a Bonobos “ninja” who greets the customer at the door with a beer and provides one-on-one fitting and fashion advice. These shops further enhance the value proposition of convenience by removing the greatest pain point with ecommerce retail. Namely, consumers are able to evaluate product fit and feel before purchasing the apparel online. Moreover, without inventory, the Company can operate smaller and more profitable stores by saving on rent and inventory holdings costs. At one point, Bonobos had five guideshops that generated $1,000 in retail sales per square foot per year — only Tiffany’s, Apple and Lululemon exceeded or matched that performance .
Despite the clever decisions made by management to support its value proposition to customers, the jury is still out on whether Bonobos truly is a success. While revenue growth, customer satisfaction, and brand awareness have been impressive, the Company still has not been able to turn a profit. The management team expects to turn the corner from further refinements to the model and tailwinds from economies of scale. What do you think? Is Bonobos a success? Or is the jury still out?
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 Rusli, Evelyn. “Stores go Online to Find a Perfect Fit.” NY Times. April 11, 2012. http://dealbook.nytimes.com/2012/04/11/stores-go-online-to-find-a-perfect-fit/
 Lacy, Sarah. “Nice pants: Bonobos raises $30m off of strong growth and Nordstrom deal.” Pando. https://pando.com/2013/03/13/nice-pants-bonobos-raises-30m-off-of-strong-growth-and-nordstrom-deal/