Apparel retailers think that they can save a lot of money by outsourcing their manufacturing operations overseas, but American Giant CEO Bayard Winthrop says that you can still produce goods domestically without having to jack up prices.
The fact is, American manufacturing isn't dead. There are many advantages to making products in the U.S.
"It's a fascinating time for American manufacturing," says Winthrop. "Suddenly there's this reassessment of cost structures. It puts back in the fold the ability to stay local."
Closing the Price Gap
American Giant is an apparel retailer that makes all of its clothes in California. It sells high quality basics for men — sweatshirts, t-shirts and knits. One of its strengths is its compressed supply chain, which allows it to keep prices down.
"There's a phenomenal disconnect between what the consumer pays and what's actually going into the product," says Winthrop. "Consumers who want to get quality American-made stuff are asked to pay premium for that. We're focused on closing that gap down."
Less Fear of Failure
Companies that manufacture locally take away the need to make long-term bets at scale. Without all that cash tied up, you're able to go to market and do it all over again without having to worry about expensive failures.
"What most businesses do is that they don't adequately monetize 'soft' costs involved with manufacturing in China," says Winthrop. "These are nuanced things like lead times, language issues and much more."
You avoid the many pitfalls of doing business abroad. The logistics of manufacturing a product in Asia and turning it around to get it into the market on time are tough, and when you're a smaller player, you don't have the muscle to demand too much from suppliers.
When you're dealing with long factory lead times and distance, it's a relatively common occurance that you'll have products get shipped off with the wrong zippers stitched on or any number of other issues.
"If you're not a huge brand who can swing a bat around, you'll end up having to deal with [manufacturing and shipping] problems yourself either by eating it or passing it on to the consumer," explains Winthrop.
Betting on Quality
As an exclusively e-commerce brand, American Giant doesn't have any brick-and-mortar stores. So, it has a variety of challenges to deal with in order to connect with customers.
Photography, product reviews, social network integration, referral programs—all of these things play a larger role for an e-commerce brand than retailers with multiple channels. They're fundamentally important, since they're the entire sum of the customer experience.
As for the American Giant brand, Winthrop isn't touting the 'Made In America' factor as its core. It's more of an "oh, and by the way sort of thing," he explains.
Instead, he's betting that quality will reign supreme. Winthrop spends much of his time and energy on grinding away at improving quality little by little. Every bit counts.
"At the end of the day what's going to shake out of the apparel space is going to be quality—whether that's a great sense of style or quality garments," says Winthrop.
"The bet we're making is that if you deliver on that core customer promise then that's going to win."
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