E-commerce apparel company Bonobos is seeking some $100 million to expand its brick-and-mortar operations, sources told Reuters.
Bonobos is working with Citigroup on the new fundraising round, sources said; both firms declined comment, according to the report.
Unlike many startups, Bonobos generates a profit and enjoys $150 million in annual sales, raising about $127 million to date from investors including Accel Partners, Lightspeed Venture Partners and Nordstrom. The new round of funding would value Bonobos at about a half a billion dollars.
Bonobos co-founder Andy Dunn once famously said that the retail effort, which launched in 2007, was predicated on the idea that men don’t enjoy shopping and that all menswear would eventually be sold online. Since then, though, the company has opened close to 30 “guideshops” nationwide where shoppers can try on clothes to help them decide what to buy. Bonobos has also expanded its partnerships with other retailers, and recently said it has plans to open 100 stores of its own by 2020.
Physical stores and malls (their much-maligned partners in retail) continue to experience growth in sales per square foot, at least at the high end, according to business intelligence firm L2's Death of PurePlay Retail report released earlier this year. While internet darlings like eyeglasses startup Warby Parker and Casper Mattress are often considered examples of pure-play e-commerce's viability, L2 contends they’re likely to see entrenched success by opening stores, and investment strategies are proving it: Two-thirds of venture capital-backed e-retailers raised funds “with the explicit purpose of building stores,” L2's report says.
While it seems obvious that brick-and-mortar is not going away, L2 is going further and essentially saying that there ultimately is no such thing as “pure-play e-commerce” because successful e-retailers eventually open physical stores. That’s being proven even by the world’s biggest e-commerce company, Amazon, which is making a series of moves into opening physical stores, including bookstores, pop-ups and grocery stores.
Meanwhile, Trunk Club, a personalized online retailer led by Bonobos co-founder Brian Spaly and sold to Nordstrom in 2014 for $350 million, has yet to be profitable for the department store. Trunk Club is now charging a $25 at-home try-on fee and shortening the return window, according to a change in terms last month — a major departure from Nordstrom's otherwise generous terms including free shipping, free returns and no minimum purchases.