Start-up sells expensive jeans at low price

In the city where Levi Strauss created a denim revolution, a San Francisco start-up is hoping to change the way people buy jeans.
March 12, 2014 9:26:57 PM PDT
In the city where Levi Strauss created a denim revolution, a San Francisco start-up is hoping to change the way people buy jeans, one pair at a time.

"This is selvedge denim," boasted Josh Gustin from his San Francisco office. He is trying to turn the $6 billion denim industry on its head with his namesake brand.

"Our denim is really, really, classic, it's something that never goes out of style - you can wear forever," he said.

He's doing it by selling denim directly to consumers and bypassing retail stores.

"Gustin really started in 2005, I was getting my MBA at Cal, Berkeley and while everyone else was going off to their banking or consulting job," Gustin said. "I decided I was going to teach myself how to make the perfect pair of jeans."

The collection of jeans, shirts and leather goods is all made locally. Gustin says he uses high end materials from the finest mills around the globe.

"Everything is dialed in, from custom hardware, that's specifically designed for us, to chain stitched cuffs," he added.

Gustin jeans were a hit in retail stores, selling for more than $250 a pair. But Gustin thought that was too expensive. So he and co-founder Stephen Powell decided to change the way they were doing business.

"Our idea was that we would crowd fund everything," Powell said. "We wouldn't create a bunch of inventory like most brands do, and we'd sell directly at wholesale."

Gustin now sells those same pants online for wholesale to everybody. The price depends on the material, but the average pair costs about $100.

Gustin buys the fabric and then advertises it on their website. The crowd then decides if they'd like jeans made out of that fabric. People then commit to buy the item. When enough people commit, the order is made. The jeans shipped to consumers about six weeks later.

Consumers save money by cutting out the middle-man, the retail store. Gustin comes out ahead because every pair of pants they make gets sold.

"We always line up supply and demand, and there is zero waste, and there is a lot of savings in that," he said.

By switching to crowd-funding model, the company says its revenues have risen 40-fold in the last year. Because of the low overhead, they only need a handful of employees to keep things going.

"I own quite a few," laughs customer Yong-Soo Chung.

The San Francisco software engineer is among the growing league of Gustin fans.

"They have great jeans; they use all different kinds of fabrics," gushed Chung.

Because every pair of pants is cut to order the measurements are always the same.

"Once you know your size, you are pretty much set from then on, you have all the measurements, you have everything, you can just order it, and you know that it is going to fit perfectly," Chung said.

Because the company makes jeans to order, exchanges and returns are not encouraged. But the company promises they will work with every customer to make things right.

Gustin only makes menswear currently and does very little advertising. Their success has been largely built on word of mouth. The owners say it allows them to stay focused on their mission.

"We have a company that we love coming into work every day," Gustin said.

Written and produced By Ken Miguel


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