The Pros and Cons of Bonobos‘ Ecommerce Model

When Bonobos first launched in 2007, the idea of selling $100+ pants to men on the internet seemed like a long shot. But by zeroing in on fit and customer experience, the digitally-native menswear brand has proven that guys are willing to buy more than just basics online—as long as the process is painless and the product is great.

Over the past 15 years, Bonobos has grown from a niche ecommerce player to a significant force in the fashion industry, with over $100 million in annual revenue and a devoted following of style-conscious millennials. Along the way, the company has pioneered a number of innovative tactics, from Guideshop showrooms to a hybrid wholesale-DTC model, that have since been widely imitated.

But as Bonobos has scaled, it has also faced questions about whether its approach is truly sustainable—for the business, for customers, and for the planet. In this article, we‘ll take a deep dive into the pros and cons of Bonobos‘ unique ecommerce model to help you determine if it could be a good fit for your own brand.

The Pros

A Relentless Focus on Fit and Service

One of the keys to Bonobos‘ success has been its singular focus on delivering great-fitting clothes and a top-notch customer experience. While most menswear brands cater to a relatively narrow range of body types and style preferences, Bonobos has made it a priority to offer an expansive assortment of fits and sizes. The company‘s pants, for instance, come in skinny, slim, athletic, and straight cuts with multiple inseam lengths, as well as extended waist sizes up to 54".

Bonobos backs up its emphasis on fit with world-class service aimed at making the shopping process as easy as possible. Instead of the standard S/M/L sizing, product pages feature specific garment measurements and size charts to help customers find the right fit. The site also offers free shipping and returns, with no minimum purchase required, to encourage trial and experimentation.

But Bonobos‘ service really shines in its brick-and-mortar Guideshops, where customers can book one-on-one appointments with knowledgeable style guides. These guides act as personal shoppers, helping clients select the best sizes and styles for their needs and placing orders for home delivery. It‘s a high-touch experience more akin to a luxury boutique than a traditional retail store—and it‘s proven to be a powerful differentiator.

According to CEO Micky Onvural, first-time customers who visit a Guideshop spend 50% more and are 2x as likely to make a second purchase compared to those who only shop online. By combining the convenience of ecommerce with the personalized service of brick-and-mortar, Bonobos has hit on a model that drives loyalty and repeat business.

Pioneering the Guideshop Model

Speaking of Guideshops, Bonobos was one of the first menswear brands to embrace showrooming at scale. When the company opened its first Guideshop in 2011, the idea of a store that didn‘t actually sell anything was still a novel concept. But Bonobos recognized early on that there was an opportunity to use physical retail as a way to acquire customers and drive online sales.

By focusing on service and experience rather than transactions, Guideshops allowed Bonobos to build a brick-and-mortar presence without the high overhead of traditional stores. The company was able to sign short-term leases on small spaces in high-traffic areas, using them as a marketing tool to introduce the brand to new customers. And because Guideshops don‘t carry inventory, they can showcase a wider assortment of product than would be possible in a traditional store.

The model has proven to be highly effective at driving customer acquisition and loyalty. According to Bonobos, first-time customers who visit a Guideshop have a 2x higher lifetime value than those who start online. And once a customer has been fitted in a Guideshop, they tend to stick with the brand for the long haul—the company reports a 50% repeat purchase rate.

The success of the Guideshop model has inspired a wave of imitators, from fellow digitally-native brands like UNTUCKit and Indochino to traditional retailers like Nordstrom and Macy‘s. But Bonobos remains the gold standard, with over 60 locations nationwide and plans to continue expanding its physical footprint.

Tapping into the Power of Walmart

In 2017, Bonobos was acquired by Walmart for $310 million, in a deal that gave the startup access to the retail giant‘s vast resources and expertise. While some Bonobos loyalists balked at the idea of their beloved brand being swallowed up by the epitome of mass-market retail, the acquisition has proven to be a boon for the business.

Under Walmart‘s ownership, Bonobos has been able to tap into economies of scale that were previously out of reach. The company has leveraged Walmart‘s buying power to negotiate better terms with suppliers and reduce costs, while also gaining access to the retailer‘s extensive fulfillment network. As a result, Bonobos has been able to offer more competitive prices and faster shipping times, without sacrificing quality or service.

The Walmart connection has also given Bonobos a much wider audience to market to. In addition to selling through its own website and Guideshops, the brand is now available on Walmart.com and in select Nordstrom stores, exposing it to millions of potential new customers. And with Walmart‘s backing, Bonobos has been able to invest more heavily in marketing and expansion, opening up new Guideshops and launching a women‘s line called AYR.

Of course, the Walmart acquisition has not been without its challenges, which we‘ll explore in the next section. But there‘s no denying that it has given Bonobos a significant leg up in an increasingly competitive market.

The Cons

The Walmart Stigma

For all the benefits of being part of the Walmart empire, there are also some significant drawbacks—chief among them the potential impact on Bonobos‘ brand image. Walmart is often associated with cheapness and mass-market consumerism, which can be at odds with the upscale, aspirational positioning that Bonobos has cultivated.

In the early days of the acquisition, some longtime Bonobos customers took to social media to express their displeasure, with comments like "RIP Bonobos" and "Bonobos just lost a customer." While the backlash seems to have died down since then, there is still a risk that the Walmart connection could turn off some of the brand‘s core audience.

Bonobos has sought to distance itself from its parent company in its marketing and messaging, emphasizing that it operates independently and has maintained its commitment to quality and service. But as the brand becomes more widely available through Walmart channels, it may become harder to maintain that separation in consumers‘ minds.

The Sustainability Question

Another potential pitfall for Bonobos is the growing concern among consumers about the environmental and social impact of their purchases. While the brand has taken some steps to address sustainability, such as using recycled materials in some of its packaging, it still relies heavily on a model of constant newness and consumption.

Like most fashion brands, Bonobos releases new products on a seasonal basis, with a steady stream of fresh styles and colors to entice customers to keep buying. This approach has proven to be effective at driving sales, but it also contributes to the industry‘s overproduction and waste problem.

According to a report by the Ellen MacArthur Foundation, the fashion industry produces 100 billion garments per year—enough to provide 14 new items of clothing for every person on the planet. But much of this production ends up being discarded, with estimates suggesting that up to 85% of textiles end up in landfills or incinerators.

As consumers become more aware of these issues, they are increasingly seeking out brands that prioritize sustainability and ethical production. A 2019 survey by CGS found that 68% of respondents consider sustainability an important factor when making a purchase, and 47% would pay more for a sustainable product.

For Bonobos, this shift in consumer attitudes could present a challenge. The brand has built its reputation on quality and service, but it has not made sustainability a core part of its identity. And while it has taken some steps to reduce its environmental impact, such as offering a denim recycling program, it has not set any public targets around issues like carbon emissions or water usage.

As the sustainability movement gains momentum, Bonobos may need to do more to prove to consumers that it is part of the solution, not part of the problem. This could involve greater transparency around its supply chain and production processes, as well as more ambitious goals around reducing waste and promoting circularity.

The Competition is Catching Up

Finally, Bonobos faces the ever-present threat of competition, both from established retailers and up-and-coming startups. When the brand first launched in 2007, it was one of the few options for men looking to buy stylish, well-fitting clothes online. But in the years since, a host of other digitally-native menswear brands have emerged, many of them offering similar products and experiences.

Brands like Everlane, Mack Weldon, and Rhone have built loyal followings by combining high-quality basics with a focus on fit and convenience. At the same time, traditional retailers like Nordstrom and J.Crew have upped their ecommerce games, investing heavily in digital marketing and fulfillment to better compete with online upstarts.

And then there‘s the 800-pound gorilla in the room: Amazon. The ecommerce giant has been steadily gaining ground in the fashion space, leveraging its vast customer base and logistics network to offer an unbeatable combination of selection, price, and speed. According to a 2018 report by Coresight Research, Amazon captured nearly 30% of the US online apparel market, up from just 20% in 2017.

To stay ahead of the curve, Bonobos will need to continue innovating and differentiating itself in an increasingly crowded market. This could involve doubling down on its core strengths of fit and service, as well as exploring new categories and collaborations to keep customers engaged. The brand may also need to invest more heavily in digital marketing and technology to better compete with Amazon and other ecommerce heavyweights.

Is Bonobos Right for Your Business?

So, given the pros and cons outlined above, is Bonobos‘ ecommerce model a good fit for your business? The answer, of course, depends on a variety of factors unique to your brand and market. But here are a few key questions to consider:

What is your value proposition?

Bonobos‘ success is built on a clear and compelling value proposition: great-fitting clothes with exceptional customer service. If your brand has a similarly strong point of differentiation—whether it‘s quality, style, price, or something else entirely—then a Bonobos-like model could be a good fit. On the other hand, if you‘re selling a commodity product or competing primarily on price, then the high-touch, experiential approach may not be worth the investment.

Who is your target customer?

Bonobos‘ core customer is the style-conscious millennial man—someone who cares about looking good and is willing to pay a premium for quality and convenience. If your target audience is similar in terms of demographics and psychographics, then a Bonobos-like model could be a good way to reach them. However, if you‘re targeting a more price-sensitive or traditional customer base, then a showroom concept like Guideshops may not resonate as well.

What is your margin structure?

One of the keys to Bonobos‘ success is its high gross margins, which allow it to invest heavily in customer acquisition and experience. According to a 2017 report by CB Insights, Bonobos‘ gross margins are around 70%, compared to an industry average of 50-60%. If your business has a similar margin structure, then you may have the financial flexibility to adopt a Bonobos-like model. However, if your margins are slimmer, then the high costs associated with showrooms and personalized service may be harder to justify.

What is your growth strategy?

Finally, it‘s important to consider how a Bonobos-like model fits into your overall growth strategy. For Bonobos, the Guideshop concept has been a key driver of customer acquisition and loyalty, allowing the brand to expand its reach without the high costs of traditional retail. If your business is similarly focused on rapid growth and market share, then a showroom model could be a good way to achieve those goals. However, if your strategy is more focused on profitability and efficiency, then a leaner, more streamlined ecommerce approach may be a better fit.

Lessons Learned

Ultimately, the Bonobos model is not a one-size-fits-all solution, but rather a set of principles and tactics that can be adapted to suit different businesses and markets. Here are a few key lessons that any brand can take away from Bonobos‘ success:

1. Focus on fit and service: By making fit and service the core of its value proposition, Bonobos has been able to differentiate itself in a crowded market and build a loyal customer base. Whether you‘re selling clothes or something else entirely, finding ways to deliver an exceptional customer experience can be a powerful competitive advantage.

2. Embrace showrooming: While showrooming is often seen as a threat to traditional retail, Bonobos has shown that it can also be an opportunity. By using Guideshops as a way to acquire customers and drive online sales, the brand has been able to expand its reach without the high costs of inventory and real estate.

3. Leverage partnerships: Bonobos‘ acquisition by Walmart has given the brand access to a whole new level of resources and expertise. While not every business can (or should) be acquired by a retail giant, finding ways to leverage partnerships and collaborations can be a powerful way to grow and scale.

4. Stay true to your brand: Despite the challenges of the Walmart acquisition, Bonobos has managed to maintain its core identity and values. By staying focused on what makes it unique—quality, fit, service—the brand has been able to navigate a changing market and continue to resonate with its target customer.

At the end of the day, the key to success in ecommerce is not to copy what others are doing, but to find what works for your specific business and market. By learning from the successes and failures of trailblazers like Bonobos, and by staying true to your own brand and values, you can chart your own path to growth and profitability in the ever-evolving world of online retail.