As a business that’s been around since 1925, Hertling has endured its share of challenges. But even compared to world wars and recessions, the pandemic has been a stark inflection point. Now, after 96 years in Brooklyn, the American trouser maker is relocating its operations and workforce to Fall River, Massachusetts—a process that will cost it three weeks of production. To ease the transition, and Covid-19’s blows, Hertling is utilizing a tool that was once exclusive to scrappy upstarts on Kickstarter and Indiegogo: the crowdfunding campaign.
Through the end of March, Hertling is selling its stretch cotton chinos in five colors directly to consumers at wholesale prices, knocking the tag from $228 to $128 a pair. The catch? It’s a pre-order, capped at 100 pairs per color, with the finished product expected to ship mid-May.
In the view of Hertling CEO Justin Christensen, the arrangement is advantageous for all parties. “It’s a win-win for the company to have revenue to set up expected production for a certain amount of time, and it’s a win for the customer to have great value,” he says.
While it’s a revolutionary move for Hertling, crowdfunding is an increasingly popular lifeline for small menswear companies weathering a harsh retail climate. In June of last year, Maine footwear maker Rancourt began selling its most popular styles at wholesale prices online to avoid pandemic-induced layoffs. Rancourt’s plan was simple: Once any of the seven styles hit 150 orders, they’d enter production in a single batch and reach the customer in an estimated 8-12 weeks.
Instead of relying on retailers to place large wholesale orders, this setup puts a brand’s financial fate in the hands of individual shoppers. It also negates concerns about merchandise going unsold and, perhaps most essentially, provides a cash infusion.
Rancourt’s Hail Mary pass proved successful—maybe too successful. VP of brand management Kyle Rancourt had hoped for 1,000 orders but wound up with 3,600—about one-third of the company’s total production in an average year. As a result, some participants received their shoes four-to-six weeks late, but Rancourt preserved its 35-person workforce and even made several new hires.
“I think 99 percent of the people were happy, and we learned a big lesson,” Rancourt says.
The brand applied those lessons to a second round of crowdfunding in February, which was again intended to forestall layoffs. This time, the company imposed a cap on orders for each style, topping out at 1,200 pairs of shoes for the entire campaign. It also streamlined its e-commerce with a Shopify platform and utilized an app specifically designed for crowdfunding to more clearly communicate with customers.
The second campaign was so successful, and ran so smoothly, that Rancourt plans to make crowdfunding a regular part of its business. In the next six months, the brand will move away from a made-to-order model to one that utilizes two-to-three crowdfunding campaigns per year, allowing customers to pre-order best-sellers in a wide range of sizes at a lower cost.
On an industry scale, Rancourt sees crowdfunding gaining relevance with “a lot of different product categories and different brands” as brick-and-mortar retailers become a less reliable channel and e-commerce allows more manufacturers to connect directly with their final customers. “I think it’s the future,” Rancourt says.
Some clothing brands had converted to crowdfunding even before the pandemic. Gustin was founded in 2005 with a traditional retail model but became entirely crowdfunded in 2013; that switch allowed it to continue selling the same domestically manufactured tees, selvedge denim and more at a lower price point.
“We saw the inefficiency at every step of the retail model for fashion,” says Gustin co-founder Stephen Powell. “Brands have to guess what customers will want, make and hold a bunch of unsold inventory, then work with retailers who end up taking the majority of the retail price paid for the product.” Crowdfunding, he says, eliminates those roadblocks and “allows us to remove the waste from guessing what customers want, offer a better value and develop a closer relationship with our customers.”
Taylor Stitch operates a hybrid model: The California-based menswear brand sells its oxford shirts and bomber jackets through standard e-commerce, but also maintains a “workshop” where new products are introduced on a weekly basis and sold at a 20 percent discount during a 30 day, crowdfunded pre-order phase. Since introducing the program in 2015, Taylor Stitch has used it to launch 826 new products funded by over 43,000 customers.
In addition to its sustainability and cost-saving benefits, the crowdfunding model has boosted the brand’s soft power. “It’s a great sense of community building,” says Taylor Stitch CEO Mike Maher. “We have the workshop, and you see all the customers that come back and want to be a part of Taylor Stitch getting new products out. Those are our best customers.”
Crowdfunding has also been utilized by independent designers looking to build buzz while jumpstarting their brands. In February of 2020, F.E. Castleberry‘s eponymous brand launched its first foray into footwear by allowing customers to pre-order shoes through a Kickstarter campaign, which exceeded its $45,000 goal. For a young brand like Castleberry’s, crowdfunding facilitated growth that otherwise might not have been possible. “Such a proposition is invaluable, as it can drastically reduce the capital you need to bring a product to market,” Castleberry says.
The pandemic has proven that necessity is the mother of creative problem-solving. And if these success stories are any indication, the crowdfunding model in menswear may soon grow crowded itself.