In this episode of Add To Cart, we are joined by Greg Taylor, who has made it his business to ensure that no man – or woman – has to suffer the discomfort of conventional underwear’s main drawbacks – chafing, riding up and…dare I say it out loud…sweaty bits. Greg is the Founder and CEO of Step One, a brand that has reached cult status making comfortable, functional and ethical jocks. The company, valued at 60 million has gone from zero to six per cent of the men’s underwear market since it launched in 2017 and has recently expanded to make a range for women. In this chat, Greg shares the problem that led him on a journey into underpant design, the tricks he’s learned for making sure manufacturing is truly ethical and why he’s pretty happy he didn’t end up with free underwear for life.
“I figured if it all goes to shit, I’ll at least have good underwear for the rest of my life“Greg Taylor
Undies for life
“…I knew the moment that I went to the factory and I was trying these different fabrics and what have you. Then when I came up with the idea of putting the ultralight panels between the legs and I pulled them on and I went, wow, this was a product. And for me, that was the pivotal moment that I knew that this brand or this product would have success.
One of the funny things actually is I ordered 5,000 pairs and I remember ordering about half of them in my size, which is an XL. Because the factory checked several times, they’re like, oh yeah, Greg, medium should be the highest amount and then large and then extra large. Why are you ordering half in XL? I figured that if it all goes to shit, then at least I’ll have good underwear the rest of my life.”
“I went over to the factories myself in China and I went to some horrendous factories, Nathan. And whilst I was going through this journey I realized that I wanted to be proud of the product I made, but I didn’t want it to come from a place where you’d know that kids were working.
I went into lots of these different factories and I started learning little things, little tricks. So they’d have a row of machines. And you’d walk through the factory and if there was someone missing, a worker missing you’d start to think, why is the worker missing? And then I went over to the seat and I felt the seat and it was warm and I felt the machine and it was warm. And then I walked along a bit further and then saw another seat that was empty. And the seat was warm, the machine was warm, and I was like, there’s two workers missing here.
And I said to them, show me where these two workers are. And I looked around and there was a room down in the back corner. I remember this so vividly. I opened the door. And there were kids in this room that were obviously working in the factory. And this was whilst I was going through the process of finding a factory. And it just broke my heart like it literally did. Just seeing these kids that should have been at school and they’re stuck to this machine.”
CPA vs lifetime value
(Nathan) “One of the things that I did notice in your annual report was your cost to acquire customers. It has doubled essentially to about the $94 mark. What do you put this cost increase down to?”
(Greg) “There’s a number of things, obviously as more people enter the market it starts right at the top. So your CPA’s at $94, but you’ve gotta go all the way right back, okay, what are my CPMs? For a thousand people to see an ad, what are we paying? And that is more people are actually coming into eCommerce and buying online. There’s only so many eyeballs that ads can see.
Second, it then becomes about finding the balance between growth and profitability. So we have 60% repeat customer rate or near 60% which for an eCommerce brand, is quite phenomenal. And what that shows is, two things. One is that you’ve got a great product and you’ve given the customer a great experience. But it also shows that you’ve done the right things in terms of looking after the customer through the journey. We can still grow and we can still be profitable at $94.
I think it also comes back to the fact that underwear is a need, not a want. And I would hope that you’re wearing it, you don’t have to show me now! So it is a product that if you make a great product, people love it. You deliver on what you say you will and you give the customer good experience. So we still can run the business at a $94 CPA, be profitable, but we look at the long term value of that.”
Questions answered in this episode include…
- Why did you start an underwear brand?
- What’s the most important thing when ensuring your product is truly ethically made?
- What’s your approach to hiring staff?
Links from the episode:
- The Fable
- Shopify Plus (sponsored)
- Packleo (sponsored)
This episode was brought to you by…