Online retailer mixes social conscience with marketing
MINNEAPOLIS — Scott Gabrielson thinks the most important thing in selling a business is being able to tell a good story.
So far, so good.
His company, Oliver Cabell, is a startup online retailer operated from the Twin Cities that is profitable a year after it launched with sales of upscale travel bags.
The success story is a surprise even to Gabrielson, 30, but one that gained the attention of angel investors and allowed him to secure a $1.2 million round of financing led by a Midwestern tech entrepreneur.
Next, the company will launch a shoe line in November.
Oliver Cabell was born of a rebellious spirit with a social conscience. The name won’t ring any bells to the public but it will remind Gabrielson and his eight employees of the mission.
The North Dakota native and University of Minnesota business school graduate was earning his MBA at Oxford University when he heard the famous story about the raucous night of partying spent by actors Steve McQueen and Oliver Reed. McQueen played a character named Martin Cabell in “Never Love a Stranger.” Reed played Bill Sikes in “Oliver!”
But Gabrielson’s rebellion is more in the conventions of modern retail manufacturing.
After working in investment banking and nonprofit finance, he headed to England in 2014 to study and plot out next steps. During his studies, he traveled to China where he saw luxury goods produced in substandard factories. Fresh in his mind was a 2013 fire at a textile factory in Bangladesh that killed hundreds.
Costs: The markups on luxury products, Gabrielson discovered, were enormous, the quality questionable and the “made in” labels could be gamed. He learned that retailers can claim a product is made in any country if only a small percentage of the work is done there, for example, adding a trinket or buckle.
“These brands were the pinnacle for what quality stood for,” he said. “But the factories were extremely poor. The more glue is used, the lesser quality the product. There was a lot of glue.”
He decided he would build a company that produced goods in reputable factories in Italy and elsewhere that were fair to workers as well. To get people’s attention, like some other young upscale brands, Oliver Cabell would be transparent in the costs so people know exactly how much it cost to get a zipper or buckle or what the import duties were.
“These suppliers, we knew what they cared about, that they cared a lot about what they were making,” he said. “There was a deeper meaning to what their company stood for.”
Oliver Cabell wants to build a business similar to brands like eyewear company Warby Parker.
“The millennial generation was not really relating to these luxury heritage brands,” he said, offering opportunities to new companies that appealed to a sense of affordability and sustainability.
Selling directly online allows Oliver Cabell to control the brand, including communications with customers. Showing the breakdown of costs was part of that communications plan.
“With that, we had a great reception,” Gabrielson said. “We sold out of our products.”
Expansion: The company started with bags because it was on a “bootstrap” budget and did not have to pay for sizing. It makes sense now to expand from bags to footwear because the Italian factories make both, he said.
Shoes also will allow the company to sell more products to each customer and try out its next marketing strategy.
“People tend to buy one wallet, not necessarily buy one in multiple colors,” Gabrielson said. “Footwear commands a higher percentage of discretionary income.”
If people like a particular shoe, he said, they may buy it in two or three colors. So the strategy will be to introduce a new shoe style every week starting in November.
“We think (younger consumers) categorize things in three layers,” Gabrielson said. “First is liking it. Second is really on price. Third is intangible elements. Quality is at the top of the list, then they consider social good. Missions and values are important, too.”
If all goes well, the company will continue to pour profits back into the operation and look for another round of financing, hire more people and build up its website. “We’re not ready for a storefront,” he said.
Gabrielson chose the Twin Cities for his company base because it was familiar to him but also because the economics worked.
“From a fulfillment standpoint, we are in the middle of the country,” he said. “We can reach both coasts with shipping in two to three days.”
There’s also less competition for workers than in fashion centers like New York City or San Francisco.
“It has a vitality that is different from the coasts,” he said. “We can tell a story. Being in New York doesn’t make us unique.”