The manufacturing group’s philosophy is to eschew mass retail and its massive MOQs, instead servicing brands it believes represent the business model of the future: direct-to-consumer.
On the heels of a November IPO with cornerstone investor Poolside Ventures (the investing body for Alibaba billionaires Jack Ma and Joseph Tsai), Lever Style is entering 2020 with a fresh infusion of funding and doubling down on its commitment to bolstering scrappy digital startups.
“With the retail world changing, and more than 50 percent of our portfolio being digitally native brands, we wanted a strategic partner with a lot of experience in e-commerce,” said Lever Style’s executive chairman, Stanley Szeto, of the new alliance with the founders of China’s online retail kingpin.
According to Szeto, the era of mass retailers, department stores and longstanding chains dominating the space is over.
“A lot of these digitally native brands and platforms are smaller—they’re not like Walmart, Macy’s or Gap,” he explained. “They tend to have a very specific consumer niche within the market—though it may not be big.”
These newcomers may never grow to the size of the industry stalwarts that have long ruled retail, but Szeto believes DTCs stand to pick apart their market share.
Working with this new class of ultra-specialized startups has changed the way that Lever Style manufactures its goods. While the company used to manufacture for massive brands like Banana Republic and Uniqlo—which placed product orders numbering in the tens or hundreds of thousands—it now partners with purpose-driven innovators like Bonobos and Everlane. Orders of more than a few hundred products at a time are considered large.
The DTC business model employs a high-mix-low-volume approach, Szeto said, and it allows them to be nimble in testing the consumer appetite for products before committing to large inventory quantities.
For Lever Style, the tactic “requires a different way of handling the supply chain, from the shop floor to the production floor.” Because of the quick changeover of styles, the company must “reduce the labor involved in arranging every order.”
Lever Style’s recent IPO will serve to help build out the infrastructure needed to simplify some of the operations that often bog down production.
“Whether the order is 100 or a million units, you still have to place orders on fabric and create invoices,” Szeto said. “So we’re looking at how to automate as much of that as possible to help people in the supply chain be more efficient in handling small orders.”
In addition to new IT solutions, though, Szeto insisted that streamlining physical factory processes is essential to “working smarter.”
Lever Style will also be making some acquisitions in 2020, Szeto said, starting with manufacturing bodies that specialize in new categories.
Most companies focus on specific products, like shirts, denim or active wear, he explained.
“We actually cover quite a bit of the entire wardrobe, but we’re looking into companies that make sweaters, for example,” he said. “We don’t have the technical know-how, but we want to get into all the product categories that our customers would want.”
Szeto will focus on “potential acquisitions to bolster capabilities” in categories that he feels are lacking, like athleisure and denim.
Going public has offered Lever Style the equity it needs to scale up, he added, and as the demand from DTC brands grows, so too will his business.
“In a world where everyone is talking about the retail apocalypse, we’re seeing that consumers still want to buy things,” he said. “Maybe not as much as before—or in a different context—but I don’t think retail’s going away.”
“There will be winners and losers,” he added. “We want to make sure our customers are among the winners.”