Our experience of working with one of the hottest retail brands and why gross margin can fuel your growth.
Hype & Vice is one of the fastest growing online retail brands, specializing in sports apparel for college students.
As we say to all of our clients, the only way to grow a healthy business is to focus on healthy gross margins. Nothing can be more important in an apparel company where manufacturing costs are critical to your success. Our target gross margin (blended works for us) for most companies must be north of 60%. If their margins are lower, we will continue to challenge the management team to focus on ways that will improve those margins. It can be with finding other manufacturers, materials, or operational efficiencies. The key is growing to a critical inflection point so that companies benefit from economies of scale.
In the case of Hype & Vice, immediately after completing the Y Combinator accelerator, the team was flush with investment cash but was struggling to figure out what was the most cost efficient approach to fueling their growth. Punch worked with the team in all aspects of a blended gross margin, cost reduction, and marketing spend.
Setting a healthy gross margin for each license, product line and inventory item, played a very important role in managing their growth.
Tracking customer acquisition and understanding their blended CAC and media spend was a challenge. Punch was able to provide a methodology and accounting process to track and report on these costs in a timely manner so that Hype & Vice could make the right decisions.
Hype & Vice wanted to report to their investors each month, exactly the progress that was made each month towards their top line and bottom line goals. Punch helped the Hype & Vice team create a 12 month budget and provided the methodology to track their progress.
Far too often, startups make the bad decision of hiring too much staff too quickly. And since payroll is the number one expense in terms of spend, Punch works with startups in controlling their hiring. Punch put in targets for hiring that were based upon revenue and other KPI’s.
Punch was instrumental in putting the proper cost management infrastructure into our operations. The Hype & Vice team quickly understood the importance of cost management and healthy gross margins.