From Finance To Fashion: One eCommerce Entrepreneur’s Unlikely Journey To Scale

06/03/2016 10:10 am ET

At the beginning of 2015, David Herzka spent the bulk of his day managing a private family investment fund in New York City. These investments ranged from public retail stocks to private start-up equity. However, Herzka didn’t just want to be the money-man who simply provided capital for businesses to grow. Instead, he wanted to become an entrepreneur himself. To scratch his entrepreneurial itch, Herzka launched David Fin, a boutique brand that sells premium silk ties.

Fresh ideas from a 2,000 year-old town

With Wall Street just a stone’s throw away, the native New Yorker was constantly surrounded by sartorial men wearing $399 ties to complement their $6,000 suits. But Herzka felt many of the most popular luxury brands were doing their customers a disservice.

Herzka was first inspired to sell ties after visiting a friend who lived in Como, Italy. According to The New York Times, the area has a long and rich history in the silk trade. “Since the turn of the century, Como, a 2,000 year-old Roman town on the southwestern shore of the lake of the same name, has been the center of Italy’s silk industry.” Deborah Blumenthal, the author of the article, adds, “Como now produces 85% of all the silk made in Italy.” With the help of a few friends in the silk industry, Herzka toured local mills and gained special access to factories and fabrics that were not accessible to the general public. At that point, he knew he had a unique opportunity ahead of him.

Creating a competitive advantage

When Herzka returned to New York City, the wheels were already in motion for him to start his own necktie line. Herzka claims the materials for David Fin ties are sourced from the same mills elite menswear brands like Brioni, Charvet, Ferragamo, Hermes, Stefano Ricci, and Zegna use. Herzka knew that competing with already-established players, however, would be difficult. So, to give David Fin a competitive edge, Herzka decided his brand would have three unique selling points:

  1. The ties would be hand-made in NYC to create local jobs and support local industry. Research shows that 40% of millennials prefer to purchase products from local businesses. Indeed, the “Made in America” label is both trendy and a hit with consumers.
  2. Herzka’s business model would be direct-to-consumer, allowing customers to get a better product at a better price too. Digital consultant Greg Randall believes a few advantages to going direct-to-consumer include the ability to accurately articulate your own brand story, to collect and analyze shopper data, and to build stronger customer relationships.
  3. A portion of all David Fin sales would also support social causes such as the Hiring Our Heroes initiative. In an article for Entrepreneur, Herzka writes, “At David Fin, we help American vets find a meaningful job through the organization Hiring Our Heroes. It’s been a cause close to my heart since a good friend experienced the harsh reality of returning home from Afghanistan and being unable to find work after bravely serving our country. Our brand is founded on the belief that every veteran deserves a job and a reason to put on a tie each day.”

Turning his hobby into his life’s work

For months, Herzka moonlighted as a fashion entrepreneur. During the day, he analyzed earnings data and conducted financial due diligence for potential investment opportunities. But by the end of 2015, sales of David Fin products began to show real signs of promise. It became clear that he could generate the best returns on his time if he reallocated all his energies towards growing his fledgling start-up.

Herzka credits the early success of the business to word-of-mouth. Herzka shares, “Word of mouth has been huge and truly validates our product. Once people try our ties, they love it.” This is evidenced by the company’s impressive 2% return rate. By comparison, other merchants average a 4.96% return rate, according to Internet Retailer. To further scale the business, Herzka launched a website and partnered with local tailors who preferred to stock David Fin ties over their own white-labeled products. To-date, the company has sold thousands of ties and donated nearly $10,000 to charity to help U.S. veterans find employment.

Integrating offline and online strategies to scale

When Herzka claims that customers fall in love with the product as soon as they try it, he means it. Often, he will travel around New York and to nearby cities to host trunk shows which he has themed, “Knots ‘n Shots.” Herzka says, “We get an invite to an office and come with whiskey in hand and ties to create a cool and relaxing vibe for employees at the end of a long, hard day.” In addition to on-the-spot sales, this fuels online purchases too. Herzka shares, “Our most successful marketing tactic has been getting customers to feel our product and knot it once with a collared shirt.” And although some guys may be hesitant to pull out their wallets when they first encounter a David Fin tie, they almost always visit the website later to place their order. For reference, another menswear brand, Bonobos, got its early start selling its colored chinos and khakis through trunk shows around college campuses. Today, that company is worth an estimated $285 million.

In parallel with the trunk shows, David Fin regularly works with Instagram influencers to promote its products. More recently, the company has begun testing paid display ads too. In the near future, Herzka looks forward to piloting three new growth programs:

  1. Distribution partnerships with non-traditional storefronts. Recently, David Fin teamed up with John Allan’s NYC grooming club to host a “Knots ‘n Shots” event which drew more than 200 attendees.
  2. Corporate gifting initiatives. Herzka believes, “Our price point allows corporations to affordably gift our product to customers and employees. They especially love that it is locally made and gives back to charitable causes.”
  3. Fully customizable wedding ties. This is an especially attractive market because research reveals that groomsmen spend more money on weddings than bridesmaids do. “With our customer wedding tie line, you can customize groomsmen ties from A-to-Z,” explains Herzka. “While some companies that currently offer this put limits on the style or fabric you can choose, we guarantee premium quality materials and wholly custom colors and designs without any limits. We’ll weave the fabric in Italy and even monogram the finished ties.”

For Herzka, the company’s next big milestone is to hit $1 million in annual sales, a goal he expects to reach within the next 12 months.

Parting words of wisdom

While Herzka has been fortunate enough to build a sustainable business, and can afford to pay himself a salary, he also knows there is still a long road ahead. For aspiring entrepreneurs though, he shares two pieces of advice:

  1. “Understand your customer.” What is especially important is understanding how shoppers normally use or engage with the product you sell. With that, you can adjust your messaging and value proposition to align with their actual needs.
  2. “Speak their language.” As the owner of a product-based business, it is important to be able to communicate technical specifications to your suppliers but to also be able to translate those very deliberate product designs into benefits consumers can understand. Herzka notes, “One can get carried away with details that the end consumer doesn’t understand or care about. Therefore, it is best to put yourself in the consumer’s shoes.”

This post originally appeared on Receiptful’s eCommerce Success Academy and is republished with permission. 

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Danny Wong is the co-founder of Blank Label, an award-winning luxury menswear company. He also leads marketing for Receiptful, a platform to supercharge all customer interactions for eCommerce stores, and Tenfold, a seamless click-to-dial solution for high-performance sales teams. To connect, tweet him @dannywong1190, message him on LinkedIn or reach out through his website. For more of his clips, visit his portfolio.

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