PARTY TIME: Mai Lee, center, tries on clothes at a party produced by Bungalow Clothing. With her is Amanda McConnell, Bungalow’s vice president of product.

PARTY TIME: Mai Lee, center, tries on clothes at a party produced by Bungalow Clothing. With her is Amanda McConnell, Bungalow’s vice president of product.

RETAIL | TECHNOLOGY

Bungalow Clothing Gets Funding by Mixing E-commerce With Old-School Retail

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THE ENTRY: A screen shot of the Bungalow home page. Consumers must fill out a questionnaire on style preferences before they can participate on the site.

The executives of online shopping site Bungalow Clothing believe there is a new way of building an e-commerce business, and it means taking a page from one of the oldest playbooks in retail.

The classic retail strategy is the trunk show. It also has been called the Avon Lady party or the Tupperware party. According to Rob Wright, the Los Angeles–based co-founder and chief executive officer of Bungalow, these gatherings are the best way to find the customers that contemporary retailers love—the ones who have the means and the interest in spending a lot of money on clothes.

Bungalow’s unique business model will also answer a question as old as e-commerce, Wright said. How do you inject a lively boutique experience into something circumscribed by a computer screen?

Bungalow’s different angle on e-commerce recently caught the attention of some high-level tech people including Tony Hsieh, founder of Zappos.com. Hsieh’s Vegas Tech Fund participated in a round of funding that raised around $1.5 million.

After Vegas Tech invested in Bungalow—which sells high-end contemporary brands such as Iro, Paige, Haute Hippie, Halston, Ella Moss and Rails Clothing from its Las Vegas headquarters—Bungalow’s sales force increased from about five people to about 20. Wright forecasted the sales team will eventually grow to 100 nationally and internationally.

The company will eventually look for another growth round of venture funding.

Peer pressure

Bungalow recently put its Tupperware strategy into play at a party in Santa Monica, Calif. Mai Lee, an executive director of the nonprofit Helping Young People Excel, was invited to the party but had no plans to make a big purchase.

But Amanda McConnell, the party’s host and Bungalow’s vice president of product, insisted that Lee try on a T-shirt dress by French brand Iro. Soon, Lee found herself making a $120 purchase.

“If you are by yourself, you wouldn’t do it,” Lee said of the purchase. “You’d walk away.”

But with a chorus of friends egging her on and telling her the dress was cute, it was hard to resist.

Gina Katz, a Los Angeles–based saleswoman for Bungalow, said that the social aspect of the party is the best way to welcome a new customer because the new customer’s first Bungalow experience is not sitting in front of a computer alone but rather shared with friends at a lively shopping party.

“It’s an experience showing up here with your girlfriends,” Katz said. “It’s unavoidable that someone will pick up an item and say, ‘That’s adorable.’”

Before a party, guests fill out a questionnaire on their style preferences. At a party, a Bungalow stylist puts together an array of clothes for the individual shopper based on her questionnaire.

The customer typically makes purchases from that array, which is called a “dressing room.” If the shopper joins Bungalow, she will be sent a box of new clothes every 30 to 90 days. The shopper also can attend as many live parties as she wants.

Other e-commerce companies such as Stella & Dot, Cabi Clothing and Ava Gray Direct use the trunk-show strategy.

Even though Bungalow is an e-commerce site, it was founded on dissatisfaction with e-commerce. Many e-commerce customers make purchases from fashion sites only to return them after trying them on.

Maybe the customers will ask for an exchange. Maybe they will demand a refund. Wright said that when his wife, Wendy, shopped this way, he had heart attacks when he saw how much money was charged to a credit card for the sake of trying on clothes in a residence instead of a physical store.

He and business partner Jon Snyder brainstormed about how to make Bungalow different. Unlike other e-commerce stores, Bungalow would not charge for goods. Rather, it would only charge when goods were purchased.

Bungalow protects itself from fraud and theft by employing a traffic manager who investigates social-media profiles of the women who seek to become members. If a Facebook profile or a LinkedIn profile looks like it was started last week and has no followers, reportedly the typical hallmarks of a fraudster, Bungalow will not do business with that person. Also, customers must submit a credit card number before a stylist will send goods. If goods are taken and not returned, the credit card will be charged.

For the two Bungalow founders, this was their first fashion venture. For fashion expertise, they recruited Meital Bronstein, who formerly ran a chain of high-end bricks-and-mortar boutiques under the Talulah G nameplate in the Las Vegas area and Newport Beach, Calif.

After the boutiques closed in 2009, she produced parties where she sold contemporary looks in the Las Vegas area. She was friends with Snyder, and in 2013 they started collaborating with Wright on the idea for Bungalow.

Many support the idea and others have suggestions. Chelsea Matthews, chief executive officer and founder of We Are Matte Black, a digital marketing and brand strategy firm with offices in Los Angeles and London, believes the juxtaposition of live trunk shows and regularly scheduled clothes deliveries is compelling. She thinks Bungalow gives fashion shoppers what they want and in a manner they want it.

“Millennials [the generation that reached young adulthood at the turn of the century] have a real ‘come to me’ attitude—just look at the Ubers, the Yummy.coms and the Postmates of the world,” she said. “Platforms like Bungalow Clothing are no different,” she said.

For Kelsi Smith, who works with fashion bloggers to create custom programming for brands at her Los Angeles–based StyleSmith company, Bungalow needs to provide a la carte ordering instead of just curated packages by a stylist.

Bronstein said it was possible to request a single item from the site, but it won’t be shipped unless the shopper fills out a questionnaire about her personal preferences.