The daily deals model has been championed by the likes of Groupon and LivingSocial, which offer enormous discounts on a broad range of products, services and vacations. But it has also proved effective in several niche markets, including all sorts of apparel, from shirts (TeeFury) to hats (Hataday) to shoes (Shoe Privée).
Now the model is being tested underneath your clothes.
Richmond-based entrepreneurs Edward Upton and Michael Grider recently launched CheapUndies, the first deal-a-day site peddling nothing but upscale underwear. Basically, the duo haggle with designer brands to secure bargain prices on large quantities of closeout skivvies, which they then offer online for usually around 80 percent off the original retail price — but at any given moment, there’s only one deal for men and one deal for women, starting at noon every day and ending exactly 24 hours later.
“People shouldn’t have to pay outrageous prices for a nice bra or a pair of boxers,” Grider, 24, said in an interview. “We had seen this model work in various other industries, and we thought it could work here, too. So far, we’re really happy with the results.”
The origin of the site dates back to Upton’s teenage years, when he began purchasing overstock merchandise from a local Abercrombie & Fitch store and selling it for a profit on eBay’s United Kingdom site. Over the course of three years, after dropping out of high school, he says he made several important connections in the retail world, learned the ins and outs of e-commerce and saved up enough money to bootstrap his own venture — a risqué underwear site for men called Nuwear.
Upton, now 28, incorporated the business in 2006, selling his own line of intimate menswear alongside several designer brands on a self-built site, and a couple years later, he met his current business partner at a party promoting the company.
“Right away, I was intrigued by the business and asked Ed for a job,” said Grider, who at the time was in school at Virginia Commonwealth University. “He brought me on and I wound up dropping out of school about six months later to work full time on Nuwear.”
They continued expanding the site over the next few years, with Upton handling most of the administrative duties and Grider hunting for new products. But as they started purchasing and manufacturing more underwear, they found themselves holding more items that, for one reason or another, didn’t sell out quickly. They needed a way to purge those undergarments from their inventory, and around that same time, the daily deals model was catching fire on the Web.
Such was the inspiration for CheapUndies.
“We initially designed the site to sell excess products from Nuwear, but when we started talking about it with some of the brands we work with, they just thought it was a great idea,” Upton said. “Many of them actually approached us first about buying their closeouts and selling them on CheapUndies.”
Already, CheapUndies has offered deals from brands like Diesel, Vanity Fair, Betsy Johnson and N2N Bodywear, with Upton and Grider securing bargain-basement prices by purchasing huge quantities and then tacking on only a small amount to each deal, so the consumer prices remain exceptionally low. The plan is to make up for tiny profit margins by moving a ton of underwear every day.
By that measure, the business is already enjoying success, with sales increasing exponentially week-over-week ever since the first deal was offered in late January. That prompted the team to hire three new employees and purchase a 5,000-square-foot inventory warehouse just outside of Richmond (partly using capital from the sale of their old office space), which they plan to move into next week.
But Upton and Grider have already run into some self-described “growing pains,” struggling on occasion to secure deals with big brands like Calvin Klein, which they say typically want third-party vendors to purchase tens of thousands of dollars of excess inventory or nothing at all. Grider also noted that men’s sales have started to pick up dramatically but women’s items aren’t moving nearly as fast.
“We just need to bite the bullet and start advertising for the women’s market,” Grider said, adding that he has seen larger apparel sites have success offering women’s undergarments through flash sales. “The men’s market seems to be a little more affordable to reach through blogs and other promotional sites. We’re going to have to go after women, but to advertise in places like Cosmo, it’s so expensive.”
Grider and Upton plan to start reaching out to “mommy bloggers” and are currently considering working with a media relations firm, though they would prefer to keep their marketing efforts in house. They have also placed social media buttons next to each article of clothing online, hoping that both male and female visitors will promote the site by sharing their favorite deals with friends on Facebook, Google+ and Twitter.
However, among the things the entrepreneurs don’t expect to change are their location and their business model. Upton says the company will stay in the Richmond area for the long run thanks to the city’s laid-back culture and inexpensive property. Grider, meanwhile, says that while the pair will continue to pursue more popular brands and new consumer markets for CheapUndies, they’re determined to stick to the daily deals model as well as the overall culture and mission of the site.
“We’ve always sort of laughed about Nuwear, because it’s such crazy, intimate stuff,” Grider said. “But CheapUndies is just light and silly and fun, that’s exactly what the two of us are all about.”