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1Mby1M Deal Radar 2010: Blacksocks, Zurich

Posted on Wednesday, Aug 4th 2010

Blacksocks is an e-commerce site that delivers high-end socks for men by “sockscription.” Customers can select the quantity and frequency to receive socks automatically or order individual pairs from a selection of five styles: calf-length business socks, business light (made from a lighter cotton), knee socks, sport socks, or cashmere socks. The company also carries ski socks.

The Zurich-based company was founded in 1999 by Samy Liechti, a Swiss Web entrepreneur who was working for a marketing firm. He was asked to attend a business dinner with Japanese clients. After dinner they all went to a tea ceremony, and the custom was to remove one’s shoes. Liechti did and was embarrassed to see two mismatched socks, one with a hole in the toe and one more worn than the other. A young, time-starved executive, Liechti realized there was never a convenient time to buy socks, and he knew he was not the only one. So he created Blacksocks to eliminate the hassle of buying socks. With the “sockscription service,” socks are sent automatically to customers every three or four months.

In 1999, when Blacksocks was launched, e-commerce was in its infancy. Only 11% of people were online and of that group, only 10% made online purchases. So the challenge was getting people to first log on to the site and then make a purchase. The company targeted the tech community – early adopters – in Switzerland, Germany, and France, and they quickly became brand ambassadors, writing about the socks and the service. That became a solid base from which to grow the business. Prices range from $10 for a calf-length pair to $175 for six deliveries of three calf-length pairs.

There was little competition from socks sites in 1999, and since then many copycat sites have come and gone. In 2005, Blacksocks was the recipient of the Copernican Awards, recognizing companies for great customer experience. The presentation of the award in New York City resulted in some good press coverage including a Forbes piece, “Men in Black.” Additional worldwide media coverage came in 2007 when Paul Wolfowitz, then chairman of the World Bank, visited a mosque and had to remove his shoes. Both of his socks had holes. Blacksocks sent him a sockscription and subsequently received a letter from Wolfowitz and notice from blogs such as Gear Patrol.

The target customers are men in their thirties to fifties who regularly wear black socks – lawyers, Wall Street executives, business owners, and others. The company estimates the market potential for high-end socks to be 5 million customers. At present, there are 50,000 customers in 75 markets. In 2009, Blacksocks opened a U.S. office to grow and expand the business in North America, providing a U.S. landing page, an office for returns, a 1-800 number, and a marketing arm. Blocksocks believes the market potential in the United States is enormous: Sixty-five percent of all socks sold in America are black, and an increasing number of people are shopping online.

Blacksocks is running a Google AdWords campaign in the United States to attract traffic and customers. Right now the investment is larger than the return – about two for one – with the hope that customers will become repeat and long-term buyers. Blacksocks’ customers in North America are from all over the country – representation is a little heavier on the East and West coasts; however, there are customers from forty-five states and three Canadian provinces. In Europe, there are several marketing partnerships including a Miles & More airline redemption program with Lufthansa; featured products on corporate Intranet sites; joint promotions tied to movie premieres where Blacksocks customers gain access to sneak previews; and more.

The business was initially financed with $50,000 from Liechti. No investor money or outside financing was ever needed. Total global revenue is between $4 million and $5 million. Blacksocks plans to grow the company through its AdWords campaign and an expanded product line. It recently introduced men’s undershirts and underwear in black, white, and gray made from high-quality Pima cotton, a species of cotton that produces unusually long and silky fibers. Just this month, Blacksocks introduced gray, navy, and red socks in the calf length.

With growth in the United States in its infancy, Blacksocks has no plans to sell or leave the market. Both the Swiss and U.S. owners are dedicated to building up the business worldwide for an undetermined number of years.

Recommended Readings
The 1M/1M Incubation Radar: Altitude Fasique
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Hey, CEO! Do You Know How To Dress?

This segment is a part in the series : 1Mby1M Deal Radar 2010

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