How This T-Shirt Company Competes on Philosophy, Not Price

Last Updated Jan 13, 2011 8:41 PM EST

By Phil Tepfer, Co-founder, LiveProud Groups, Boston
My business partner Charles Bogoian and I wanted to create sailing apparel that could still be worn around town. We found a great market in sailing teams, yacht clubs and regatta, but we had a dilemma: As a small company, there was no way we could compete on price with big clothing brands like Fruit of the Loom or Hanes.

So we changed our product line completely, focusing on eco-friendly apparel and manufacturing practices, and have seen our sales soar ever since. Here's what we did to set ourselves apart -- without selling ourselves short.

No way to compete
When we launched our initial product line, SailProud, in March 2008, we only offered T-shirts. They were made from a blend of cotton and polyester, like most tees, but they were designed for dual purposes: sailing and going around town. Sailing teams liked our brand, and wanted to buy our shirts wholesale to embellish with their own logos. That's when we ran into a problem.

Teams wanted to sell their shirts for $10 each, but our wholesale prices were $10 or $12. Embellishment would cost another $3 or $4. The teams complained that they could buy a Hanes tee for $1.25. Clearly, we needed to make our prices more competitive.

We don't have the huge scale that allows us to negotiate deep discounts with manufacturers, so we knew that we'd never be able to drop our prices as low as our customers would like. Instead, we took a different route entirely and did something that the big brands weren't doing.

From garbage to glamour
In talking with a few West Coast sailing teams, we discovered that their prime concern is the Great Pacific Garbage Patch, a massive concentration of waste and pollutants that's estimated to be as large as the continental United States. They are passionate about keeping the world's oceans clean, and asked us if there was anything we could do with our products to help the environment.

Although we cared about the environment as well, we weren't sure what our company could do to make a difference. But after some research, we came across a manufacturer who created upholstery from recycled bottles. We told them we'd pay for their time to develop the material into T-shirts. We loved the finished product, and so did our customers -- the shirts sold out in less then an hour. We figured, we might just be on to something here.

Growing green
Through 2009, we ramped up our research and development and taught ourselves what it means to be a green company -- to actually help the environment through our products, rather than just create products that don't actively hurt it. We make our clothes in the USA, with materials -- like old cell phones and keyboards -- from landfills. We measure the environmental impact of absolutely every element of the product supply chain, and we educate our customers about how supporting companies like ours will make an environmental impact.

The clothes aren't cheap. Our new eco-friendly production methods are far more expensive than our old methods. Our wholesale T-shirts now cost $13 as opposed to $10. Some items retail as high as $90. Our higher prices have alienated some of our old customers, but many have stood by us with the understanding that they're using their dollars to impact positive change.

The shift to green has opened our product lines up to a large niche consumer base, and we've moved beyond sailing apparel into yoga and biking gear. As with sailing, both disciplines have many practitioners who are concerned with the environment and willing to pay more for eco-friendly products.

Our green focus has proven to be a winning strategy: We've gone from $110,000 in revenue last year to the mid-six figures for 2010. By opting out of the clothing price wars and building a company focused on recycled materials, we've gained a customer base that's more focused on ethics than cost -- and we're learning more and more about how to serve them as we go along.

Phil Tepfer and his partner founded LiveProud Groups during their senior year of college, using $25,000 borrowed from family and friends as startup capital.
-- As told to Kathryn Hawkins

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