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Indochino’s 45 Percent Annual Growth Proves Supply Chain Optimization Pays Off

Fashion might be abuzz with the casualization trend that’s seen yoga pants ascend to the status of everyday wear but Joseph Ford believes you have to scratch beneath the surface to uncover the true story.

“There’s a high-low that’s happening in the world of fashion that allows Indochino to thrive,” said Ford, who serves as the senior director of operations, global supply chain and customer experience, for the Vancouver-based made-to-measure suitmaker after stints in operations for Louis Vuitton, store development for Aritzia and European expansion for Gap, Inc.

As a 12-year-old company that has grown up out of startup status, Indochino credits its leadership role in the custom men’s suiting space to building out a proprietary tech stack and forging strategic partnerships, like the 2016 deal with China’s Dayang Group, which Ford says is directly responsible for the brand recently whittling down its delivery promise from three weeks to two.

Customer impatience probably plays a role as well. Indochino, where the choicest “luxury” suits tap out at just $499, finds its customer sits primarily in the millennial sweet spot of 25 to 35 years of age, from those just entering the workforce to men tying the knot and building out wardrobes. Millennials, infamously impatient and obsessed with instant gratification, aren’t reputed to be tolerant of lengthy shipping timeframes.

But for many men, the chance to purchase something unique to them is worth the wait. “Millennials really love the opportunity to create their own garment,” CEO Drew Green told Sourcing Journal, adding that young consumers have been “driving a transformational couple of years in fashion and apparel.”

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Whether they’re browsing for shows and movies on Netflix, shopping Amazon’s endless catalogue or searching on Google, millennial men have “grown up in a world where everything is personal and customizable,” Green explained. “The experience they’re accustomed to is ever more personal to their tastes. We’re an extension of that.”

Four years Indochino shipped 100,000 custom suits annually, a figure it grew fivefold by the close of 2018. Green credits Dayang, which purchased 18 percent of the company, for lending invaluable supply chain optimization expertise to unlock that meteoric improvement. In 2018 Indochino grew 45 percent from the prior year, Green noted.

Dayang’s investment in Indochino has helped the brand deliver on its promise of personalizing to customer desires, primarily by consolidating all of its manufacturing into a single source. Rather than the six factories that previously produced its suits and shirts, now just two facilities make these items simultaneously from hundreds of fabrics also stored in house. Indochino was adding time on the front end by managing so many vendors on the back end, which had the effect of elongating the production schedule, Ford explained. Now, after continuously iterating processes that see each of a suit’s three components finished simultaneously, Indochino takes just five days to make a suit from the moment the order’s received.

The company also saw an opportunity to improve on logistics. Though it had worked with FedEx for a decade, Indochino made the switch to DHL, influenced by the fact that it offers direct flights from the northern China manufacturing town whereas FedEx did not.

“It took two days just to get suits out of the country,” Ford added.

Ford described the changeover to DHL as a “heavy lift” but worth it. Indochino built an API that communicates with DHL the moment an order is ready to go to any of seven hubs in the U.S. Not only has Indochino trimmed delivery times from seven days down to three, but it’s also saved 31 percent on shipping costs, in a move Ford calls a “double win.”

Indochino customers can provide their 14 points of measurement through the brand’s website but those who visit one of the 38 showrooms typically for their initial 30-minute fitting in one of three basic suit profiles—slim cut, muscular or “rounded”—tend have a better experience and are happier with their finished garment. But from there, with fit profile in hand, these customers typically gravitate to e-commerce, making showrooms a highly effective and efficient customer acquisition vehicle. From 2015 to 2018, Indochino managed to slash the cost of landing new customers from $150 to $80, Green shared at the recent NRF Big Show.

This focus on efficiency carries over into production lines, where 10 Gerber Accumark cutters lay out pattern pieces for optimal fabric yield, Ford noted, and generates negligible waste. It takes 117 people each performing a specialized task to construct each jacket.

Indochino sees a major opportunity to expand its international operations from 3 percent of sales to 30 percent in coming years, Green said, growing an already robust Australian business to meet demand. In addition to new product launches in chinos and outerwear—spring trenches are under development, VP of design for product and store development Dean Handspiker noted—the brand has its eye on women’s suiting.

“It’s the number-one request I get,” Green admitted.

For now, the company is “kicking the tires” on the leap from men’s to women, Handspiker shared during Incisiv’s Unconference store tour at NRF. It goes without saying that women’s apparel is more complex than men’s; there’s little variation in men’s suiting jackets whereas women would likely want a couple dozen silhouettes, he explained, not to mention patterns and colors. Plus, the venture would require new expertise. Dayang currently manufactures women’s suiting on a made-to-order—not made-to-measure—basis. What’s more, an initial trial “didn’t go well,” Handspiker explained, largely due to the difference in body shapes, proportions and measurements of Asian versus North American women.

Indochino is also planning to introduce a shorter casual men’s shirt designed to be worn untucked and is considering adding shorts into the mix. “We see made to measure as being able to address everyone and every part of their closet,” Handspiker concluded.