When we discussed customer cost in class I immediately thought of the clothing company, Everlane, who I had just purchased a sweater from online a day before. In class, we had discussed how important pricing is for the differentiation of the product. In most instances, price is a reflection of the quality of the product. Usually, a lower price indicates lower quality or lower demand and subsequently a subpar product. Everlane takes this notion and turns it on its head.
Everlane sells quality clothing items online at a reduced price while utilizing unprecedented honesty in its marketing and web content. They call it ‘Radical Transparency’. They give in depth information on all of the factories and distribution centers they use as well as the cost at each step of their supply chain, focusing on the relationship they have with these companies and their focus on ethical labour practices. This is done for each product so when you are looking at one of their backpacks for example, you can see it was made in the Dongguan factory. You can also see the cost of materials, hardware, labour, duties and transport.
On top of all this, they show their markup and compare it to the ‘traditional retail’ markup. This is the part of the process that allows them to utilize price as an indicator of quality (the traditional retail markup) while still using lower pricing as a differentiator. While their backstory sounds quite altruistic, this is a genius marketing ploy that has worked in their favour.
We talk about how consumers are willing to pay higher prices for quality goods but they often don’t know the quality and cannot act out this rationality in the way they think they do. So for a company to not only showcase quality and be transparent in its pricing but to also do so at a reduced price for consumers is a surefire success.
They have room to grow in terms of environmental sustainability, but with a clear focus on radical transparency – they need to make sure that whatever they do, it is the correct path to take, as they cannot hide anything. No ‘Shaded Green’ for Everlane.
What do you think of Everlane?