Hypebeast Offers Publishers a Blueprint for Wholesale Commerce

Publishers intent on owning the relationship with their audience might be overlooking a key opportunity: commerce. Hypebeast, an independent fashion publisher that covers the streetwear world, launched retail clothing market HBX in 2012, in the hopes of adding a fresh revenue stream by capitalizing on its readers’ affinity for luxury clothing. In 2020, HBX generated $29 million in revenue (down from $35 million in 2019) by selling haute couture mainstays like Thom Browne, as well as exclusive collaborations like the upcoming Dr. Marten x Jean-Michel Basquiat boots. Prior to the pandemic, HBX had generated a compound annual growth rate of 49% over the last four years. For reference, BuzzFeed generated $57 million in commerce in 2020. While HBX represents 33% of the publisher’s $86.7 million revenue, it also acts as a vehicle for the publisher to capture valuable first-party data from its shoppers. With the disappearance of third-party cookies looming, publishers have hastened their efforts to fine-tune their systems for gathering first-party data. Rather than own all the data from their commerce operations, publishers like BuzzFeed and Vice Media have primarily used affiliate links or licensed products. Such a strategy allows publishers to reap the benefits of commerce without shouldering the risk, but it also fractures the relationship between brand and consumer. The success of HBX demonstrates that, in certain cases, publishers can benefit by cutting out the third-party retailer completely, owning every juncture of the buying process from discovery to purchase. “If we send people to other retailers, we get a commission, but we're not building that database of customers. We're just giving it to somebody else for X percentage,” said CEO Kevin Ma. “We think it's important for us to build our own database.” How Hypebeast uses customer data On Hypebeast and HBX, readers and shoppers alike are encouraged to create a personal profile, which the publisher then connects, allowing it to observe the links between what you read and what you buy. Hypebeast then uses these customer insights to promote new products, inform advertising campaigns and influence purchasing decisions. In the fall, the publisher will use the data to introduce new gamification and personalization efforts to increase audience retention. The Hypebeast model also benefits from the scarcity mindset that pervades the streetwear universe. New releases come in “drops” and have limited inventory, meaning aficionados mark key dates on their calendar, need the latest information and gravitate toward buying from trustworthy sources. Using its database of customer information, Hypebeast serves as both informant and dealer, sending reminders about exclusive drop dates and then selling the coveted merchandise, said Krista Corrigan, a retail analyst at Edited. “The streetwear universe is a unique space. The products they sell are sought after by a passionate group of customers who are concerned with finding where they can purchase certain clothes,” Corrigan said. “Hypebeast is able to serve as a source of information, as well as provide them with the ability to purchase the end product.” Why wholesale works for HBX The precarity of the streetwear industry encouraged Ma to operate business as a wholesale effort from the beginning, because the structure gave Hypebeast more control over its product. The 121-person HBX team curates all of its stock six months in advance, choosing items from more than 300 brands––up from 20 at its initial launch. It also controls the fulfillment, warehousing, shipping and customer service, putting the anxious minds of its clientele at ease and encouraging repeat patronage. To further boost customer loyalty, HBX introduced a tiered VIP system in 2019, to which it plans to add a host of new features to this fall. The system will incentivize purchases by giving customers more perks, such as early access to new products and free shipping, as they surpass spending milestones. HBX can offer these incentives thanks to its wholesale model. Hypebeast also plans to introduce gamification components to its ecosystem, such as giving fans points for reading articles that they can convert into currency at Hypebeans, the brand’s Hong Kong coffee shop. In an effort to broaden its value to readers, the brand also began selling lifestyle goods in late 2018. Since then, the category has seen sell-through hitting up to 40% in 30 days after product launch and an average of 90% of inventory sold at full price, according to Isabella Hillen, director of strategy, HBX. The brand also plans to open its first brick-and-mortar store by the end of this year, adding another touchpoint for its gamification system and a new space for brand activations, marketing and in-person incentives. “The line between shopping, entertainment and social sharing is getting blurrier by the day,” Hillen said. “Basic shopping is not enough anymore––it's the fun experience they have that keeps our community coming back.” Instagram Just Made It Easier to Shop Your Favorite Looks From Influencers