Eric Markowitz | Inc.com staff

How American Giant Hacked the Supply Chain

Here's a short video explaining how American Giant is cutting out the middlemen and leveraging the Web to deliver what its customers want.

 

For years, it was cheaper to produce goods overseas. But Bayard Winthrop believes that's changing, in part because of one big culprit: The Internet.

"There's a general growing comfort level with not only consuming online but buying things like shoes and apparel online," says Winthrop. "I think one of the reasons we're so excited about what we're doing is that we're in a new time now in that for the first time you can begin to really assess the non-manufacturing related costs. Even two years ago you couldn't do that.

American Giant does not have a store, and it does not distribute through retailers. By offering customers a direct-to-consumer model, the company eliminates a variety of overhead costs including retailers, staff, rent, utilities, and more.

"By cutting out these extra steps in the supply chain, we get to keep manufacturing jobs here in the U.S.," the company's promotional video explains.

Ultimately, Winthrop beliveves in American-made quality, and he believes that the average customer is beginning to seek it out. The comapnies that don't adopt to these strategies, he says, will stand to lose.

"We believe that the companies caught in the middle that are baked into old-world distribution models are going to be in tough spot because they're unable to shift to the direct to consumer model, and yet that's where the consumers are going," he says. "Consumers are so attuned to quality and so attuned to value."

Eric Markowitz reports on start-ups, entrepreneurs, and issues that affect small businesses. Previously, he worked at Vanity Fair. He lives in New York City. @EricMarkowitz