You’re the Boss: Building a Web Business Brick by Brick

Courtesy of Any Old Iron.Andrew Clancey (left) and Christopher Melton: A store can lose money, but help the brand.

Someone strolling the Lower East Side of Manhattan is liable to spot a flier plastered with the face of a pugnacious Boston Terrier. That’s Monkey, the nominal guard dog of Any Old Iron, a year-old men’s clothing store that has quickly become a destination for shoppers, as well as a fixture on the local party scene. But what even most fans of the store don’t realize is that Any Old Iron is, in a sense, a gateway to a Web site.

A lot of companies these days are founded as Web businesses, and many physical stores end up growing substantial Web sales over time. What’s a bit unusual about Any Old Iron is that the company’s Web site has been intended as the main engine of the business from day one — even though almost all of the investment and attention has been focused on the store. “Our strategy is to build credibility and cachet through the store,” said Christopher Melton, an arts-oriented entrepreneur who helped found the company last year along with Andrew Clancey, a celebrity stylist. “We plan to open a second store in L.A. and then two more stores in other locations. And then from there it’s all Web.” Indeed, the Manhattan store isn’t even expected to be profitable on its own. In a sense, it’s a loss-leader — the rent money is really an investment in Web advertising, said Mr. Melton.

He had observed that some of the big, high-fashion retailers operated small stores in SoHo, a chic shopping area where sky-high rents make it difficult to turn a profit. So why bother? Because the SoHo presence serves to build the brand in the eyes of the fashion-conscious and pays off for the companies in increased sales at other locations and on the Web. “A store may lose a lot of money,” said Mr. Melton, “but it helps make the brand’s whole system profitable.”

Why couldn’t a tiny start-up think the same way? As it turns out, Mr. Melton and Mr. Clancey had a role model. Friends of theirs in Britain started a couple of small clothing stores in fashionable areas outside London and parlayed the attention they got into success on the Web. So Mr. Melton and Mr. Clancey opened up Any Old Iron to offer men’s clothes from British fashion labels that connote a “distinctly English sartorial dandyism,” as the company’s promotional literature puts it (the store’s name comes from an old English song). It’s a niche they have pretty much to themselves.

Step one in their scheme was building up the cachet of the store. To do that, the entrepreneurs used their fashion-celebrity contacts and party-throwing capabilities to establish the shop as a place to be seen on weekend evenings. They’ve struck up relationships with other shops and restaurants in the area to steer customers each other’s way and have won precious spots on the places-to-shop lists wielded by influential concierges at nearby hotels like the Thompson Lower East Side, boosting out-of-town shoppers to 40 percent of their walk-in business.

Part of the store’s appeal is the flair of the four employees. To keep them feeling the spirit without busting the bank, Mr. Melton trolls the online service MarketSharing — a Groupon clone that sells stuff for small-businesses — to find discounted group-bonding activities like dodge ball and local cruises. “The cheesier the better,” he said.

Meanwhile, Mr. Melton and Mr. Clancey are slowly moving toward building their Web business. But after putting up an edgy first iteration of their own site, Mr. Melton and Mr. Clancey were approached by Farfetch, an online retailer that showcases the goods of various high-fashion boutiques. They jumped at the chance to be one of the featured retailers — the store strategy was paying off! — and revenue from Farfetch quickly dwarfed those from their own site, even bringing in sales from places like Qatar. But Farfetch takes a hefty cut, and now Mr. Melton, after letting his own site languish, is eager to improve it and drive more traffic to it. “We don’t have to let Farfetch offer everything we offer,” he said. He and Mr. Clancey have budgeted $15,000, tops, for a site redesign. And they want to bring in a consultant to help explore search-engine-optimization strategies to improve their placement in searches. “We’re just limited in how much we can spend on this right now,” said Mr. Melton.

Besides bringing in more traffic, Mr. Melton wants to bump up the sales conversion rate for the site from the roughly 5 percent it averages now. One way to do that, he thinks, is to work in more images of and references to the store, so that people who come to the site after visiting the store will recall the experience and slip more easily into buying mode. He also plans to integrate information about the labels and designers throughout the site so that the products are tied to stories and the site feels more personal.

Finally, he wants to keep the site feeling fresher by showcasing new merchandise. To that end, he and Mr. Clancey are switching to iPhones to take advantage of apps like Kyte that will let them snap a picture of a new shirt or shoe when it comes in the door and post it to the site with a tap on the screen. “It doesn’t get easier than that,” said Mr. Melton.

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