How Revolve Became a Billion Dollar Retailer

Want to know how to get influencer marketing right? Ask Revolve. The online fashion retailer has leveraged an influencer marketing strategy into great success. Revolve made $500 million in revenue last year and on June 7th, 2019 the retailer had an IPO. Following the IPO the e-tailers’ stock price increased by 50% to reach $27.01, valuing Revolve at $1.8 billion. How did Revolve get to this point? Like all successful companies Revolve started by solving a problem. It provided an online platform where customers could find in demand clothing at a time, back in 2003, when online shopping was less dominant. Revolve then paired savvy influencer marketing with a focus on millennials and generation Z to grow from humble beginnings in 2003 to a beloved brand by many customers and celebrities. Let’s take a look at some of Revolve’s keys to success.

1. Solve a problem. Back in 2003 Michael Mente and Mike Karanikolas noticed a high demand for 7 For All Mankind jeans in Los Angeles. They realized that while the jeans were popular customers could not purchase them online. The founders also saw that there was a white space within luxury eCommerce sales. In the IPO prospectus it states: “we believed that traditional retail was either too mass or too limited, struggled to consistently provide on-trend merchandise, and was failing to connect with younger consumers.”

“The Mikes” as employees call them, decided to solve the problem they uncovered by creating an online platform to sell clothing. Success did not happen overnight. Speaking about the early years Mente has said: "it was networking and hustling for access for many years". By 2007, after four years, their eCommerce site featured more than 1,000 brands. Revolve has also said that its business is about: “constant newness, with over 1,000 new styles launched per week on average, while mitigating fashion and inventory risk. As a result, in 2018, approximately 79% of our net sales were at full price, which we define as sales at not less than 95% of the full retail price, an increase from 75% in 2017.”

When the recession happened and luxury goods were not as highly demanded anymore, The Mikes decided to shift their approach to appeal to the millennial women who was looking for deals online. To understand their target customer, they spent a year gaining insights and finding ways to stay ahead of trends. This was followed by influencers coming into play during 2009. At the time, they were called fashion bloggers who would showcase the brands on their own websites.

2. Leverage social media influencers. 70% of Revolve’s sales are driven by influencers and the company has a network of over 2,500 of them. This network includes influencers with a small following to high profile celebrities like Kendall Jenner. Revolve even partnered with one of its influencers, Aimee Song to launch a capsule clothing collection in May of this year. Perhaps the use of influencers sounds like old news, but Revolve is one of the companies that pioneered the use of them in its marketing strategy. Prior to the launch of Instagram the company worked with fashion bloggers. This was long before it was popular to do so. The ability to foresee this trend before many other companies has enabled Revolve to have one of the best influencer marketing businesses in retail. Revolve has said: “we believe that much of our growth in our customer base to date has originated from social media and influencer-driven marketing strategy.”

According to the company its relationships with social media influencers only take up 21% of marketing expenses. However, Revolve may face a challenge since trust in influencers is going down.

3. Bridge online and offline. Revolve like many online retailers has realized that its success depends not only on great online marketing but also on in real life events. To further expand its reach, Revolve began participating in exclusive and well known parties and events, such as Coachella. Since Coachella is a prime location for social media influencers holding events at Coachella such as the #RevolveFestival as well as other events such as the Revolve House in the Hamptons which Kim Kardashian has hosted is a perfect fit for the company. Some of the influencers that work for Revolve are taken on sponsored trips where Revolve pays the influencers to wear clothing sold on Revolve while conducting various activities over the course of several days.

4. Take a data driven approach. Revolve also believes that one of its strengths is its technical know-how. The company has twice the number of data analysts than buyers. It has also invested in technology to create “trend-forecasting algorithms.” Speaking about its technology platform and forward looking algorithms the company has said: “data from a vast net of hundreds of thousands of styles, up to 60 attributes per style, and millions of customer interactions, creating a strategic asset of hundreds of millions of data points,” . Revolve has used this data to figure out what trends the company should focus on. An example of this is when Revolve’s data scientists found tie-dye clothing was a key trend and thus Revolve began to create more styles in tie-dye to appeal to customers.

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