In the Competitive Online Fashion Arena, Revolve Is Dressed for Public Market Success

By November 8, 2018 February 22nd, 2019 The Weekly
Smartkarma Revolve online fashion platform

“What you wear is how you present yourself to the world, especially today, when human contacts are so quick. Fashion is instant language.” – Miuccia Prada

If that quote holds true, then Los Angeles-based online retailer Revolve is bilingual – skilled in the languages of both fashion and ecommerce.

The company, which targets millennials with its “premium lifestyle” fare, is suiting up for an IPO in the coming weeks to raise up to US$100 million, although it could end up doing better than that.

The online fashion dynamo is running on some very strong financials, as Insight Provider Douglas Kim indicates in his research on Smartkarma – Revolve has been profitable for most of its lifetime and generates positive free cash flow.

But there’s another key thread in its tapestry of success: Revolve was one of the first in online fashion retail to understand and harness the power of influencers.

“These are people who are literally our customer, people that literally shop with us, but who were advocating us and building audiences to share their perspective,” Revolve co-founder Michael Mente said in an interview last summer.

Revolve works with more than 2,500 influencers that help the company push its products to its target demographic. Its 2.6 million-strong Instagram page is eclipsed by the follower counts of some of its most influential ambassadors, like Chiara Ferragni with her 15.4 million electronic devotees.

In Style, Online

The company’s online savviness owes a lot to the tech and software business backgrounds of co-founders Michael Mente and Mike Karanikolas – an entrepreneur and a data scientist respectively.

The duo started the business in 2003, after the software company they worked for fell victim to the dotcom bust. Fast-forward 15 years and Revolve is riding a new dotcom boom fashioned after its own image. Company sales increased 24 percent year-on-year, while operating profit ballooned 82 percent to reach US$21.6 million in the first half of 2018.

And while most of its sales last year were located in the US, the company’s social media following is 40 percent international, notes Douglas Kim.

This presents plenty of opportunity to grow further beyond its home market. Of course that’s when things get serious: It’s going to run into competitors like British firm Asos, brands from Chinese powerhouses like Alibaba and JD.com, and a smattering of smaller brands in markets like Australia and Southeast Asia.

Not Too Far-fetched

Revolve shares some DNA with another notable online fashion brand that recently went public on NYSE.

British firm Farfetch, which focuses on luxury fashion ecommerce, gained a market capitalisation of US$8 billion. While its share price wobbled a little bit, it’s been back on the rise in the past month.

The connection to Revolve? Mente and Karanikolas were instrumental in the website’s growth in the US as part of a joint venture in 2010, although they’re no longer involved with the company.

That’s the good thing about an instant language – it transcends borders pretty easily too.

Want more IPO coverage? There’s plenty on Smartkarma. Also, dig deeper into the companies mentioned here by exploring some of the investment research network’s Insights listed below.


More Insights by Smartkarma

Sign up or log in to Smartkarma to read more.

Revolve IPO Preview (Part 1): Influence, Rinse, & Repeat
A detailed look into Revolve’s financials and its innovative influencer tactics.

Farfetch IPO: Tough Enough in Luxury E-Commerce to Fend Off Encroachment by E-Commerce Giants?
On the run-up to Farfetch’s NYSE listing, Insight Provider Daniel Hellberg examined the company’s numbers as well as the competitive landscape.


Get a Different Perspective

Sometimes, it helps to take a step back and take a wider look.

How Michael Mente Took Revolve From an E-Commerce Start-up to a Global Powerhouse
From US$50,000 to a potential US$100 million public listing.

Why Influencer Marketing is the Game Changer for Business
It’s the hot trend everyone should be following!

Influencer Marketing Is Bullshit
… or is it?


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