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American Giant was drowning in a river of digital praise.
Last December, Slate tech writer Farhad Manjoo published a story about the company's signature product -- a heavyweight hooded sweatshirt -- calling it the "greatest hoodie ever made." Orders flooded in -- so many that American Giant couldn't keep up with the demand.
As Christmas came and went, the orders kept rolling in, and the struggle to fill them continued. Unlike the massive multinationals making billions from fast fashion in sweatshops in Bangladesh, American Giant is selling an American-made ideal as much as a sweatshirt. It is making clothes you don't wear for a season and shove to the back of your closet. It's making durable, well-designed, good-looking sweatshirts you can wear for a decade and then pass down to your kid, the way American clothes used to be made -- and they don't cost much more than the disposable crap we've accepted as the standard for affordable apparel.
After nine months, however, American Giant says it's reached a turning point. As of today, the company says, thousands of sweatshirts on backorder -- many paid for by customers months ago -- are headed out the warehouse door. What's more, it says, you can now go to the American Giant website, order a hoodie in one of four colors, pay $89 plus tax, and expect it to ship within days.
At least for now.
The mini-saga of American Giant's struggle with success offers an object lesson in what happens when internet-fueled demand clashes with the constraints of manufacturing a physical product -- especially when the promise behind that product is durability and craftsmanship, and the decimated American apparel manufacturing base is being tapped to fulfill that promise.
The digital economy, with its downloadable products, has created an expectation of instant gratification. But as American Giant's experience shows, the laws of physics and economics can force even the most in-demand online businesses to slow to a pre-internet pace.
Bayard Winthrop, American Giant's CEO and founder, started his business with a deep belief in the power of the internet to enable radical vertical integration. He already had experience using online sales and marketing to connect directly with customers, most recently as the head of Chrome, best known for its messenger bags.
The key concept behind American Giant was taking the cost savings accomplished by cutting out various middlemen, especially in distribution and marketing, and putting those proceeds into the product. In practice, this means you can get American Giant sweatshirts and t-shirts only from the company's website, and advertising only comes by word-of-mouth, generated mainly by positive press and social media.
"Consumers are moving very quickly ahead of brands in their desire to connect directly with brands and bypass traditional distribution systems," says Winthrop. Online commerce makes what Winthrop calls this "rapidly flattening consumer environment" possible. In the space created by that possibility, he says, brands have room to make more compelling products -- not just cool stuff, but stuff people feel they can believe in.
"In our case, the American-made quality and value story was something that consumers really wanted and that the marketplace wasn't solving at all," Winthrop says.
The only problem: People wanted American Giant's products so badly that the company's physical capacity to make them was torpedoed. I ordered an American Giant mock neck sweatshirt -- the hoodless version of the famous hoodie -- in early May. I was told not to expect the backordered item for more than a month, and I paid $79 plus tax to essentially hold my place in line (the mock neck now retails for $89).
When the sweatshirt didn't arrive within the promised time, I started receiving emails explaining that difficulty finding factories that could meet the company's quality standards required pushing back the delivery date. The latest message said my sweatshirt would ship around September 25.
At the beginning, American Giant relied on a single factory just outside San Francisco. Starting at the end of last year, the spike in demand swamped that facility's capacity. As Winthrop searched desperately for other factories, he says he ran headlong into the hard reality of the apparel industry in the United States.
"The American apparel knitwear industry, whatever's left of it, has been consumed by a race to the bottom," he says.
According to Winthrop, the workers who have the skills to handle American Giant's stringent specs -- and the factories capable of monitoring and enforcing those quality standards -- are in short supply. Faced with this talent shortage, American Giant had to make a choice: Make customers wait for months, or compromise quality in order to crank out clothes faster. Despite mounting anger among customers on social media, the company opted for the go-slow approach -- a strategy that can carry heavy costs. For example, Winthrop says that, just six weeks ago, 1,600 sweatshirts that had come off the assembly line were rejected because of stitching glitches.
American Giant is in a somewhat unique position to eat the cost of such rigid dedication to standards thanks to the deep pockets of its main investor, former PepsiCo CEO and chairman Donald M. Kendall. Kendall, now in his nineties, has been a mentor to the 44-year-old Winthrop since the younger man was a teenager growing up in southeastern Connecticut, the son of a wealthy father who was divorced from Winthrop's not-wealthy mother, with whom he lived. Winthrop describes Kendall as more than angel investor in American Giant. He calls him a financial "backstop."
"For the last 40 years we have focused on grinding away at the costs in the manufacturing process to support expensive distribution. American Giant has flipped the model," Kendall said in an e-mail to WIRED.
"Any time you have an opportunity to eliminate layers of costs between manufacturer and consumer and use those costs to deliver a superior product, that is threatening to old models."
Even as antsy customers fumed, orders kept arriving. Winthrop says that even during the height of summer, as many as 300 orders for the heavyweight sweatshirt came in daily. But he believes American Giant has hit a tipping point, at least for the moment. The company has expanded its operations to five factories -- one in the Los Angeles area and four around Raleigh, North Carolina, the mid-20th century heart of quality American apparel manufacturing.
Yet even as American Giant has finally found the factories it needs to meet the demand stirred eight months ago, the company doesn't know if it will be enough. If demand this upcoming Christmas is ten times greater than last year's, American Giant can handle it, Winthrop says. If demand is ninety-five times greater, the long waits could be back.
"It's sort of like trying to predict the Cabbage Patch craze," Winthrop says. "Is it going to last for a month or years?"
