Indochino 2014 - Challenges Ahead

Tuesday, January 28, 2014

2014 will be an interesting year for Indochino - we have yet to see their first collection of the year, but there are already plenty of topics to cover. I've heard a few rumours about additional taxes on Indochino suits for the last few weeks and decided to look into the topic more closely. The whole taxation part is tricky, but one thing becomes clear: Indochino has to charge customers with additional tax in at least some of the US states where they previously held one of their Traveling Tailor events. Customers in California are hit with a 8.5% sales tax according to Rick Squires on Twitter and customers from NY also mentioned having to pay additional tax. The tax amount is calculated automatically at checkout, I didn't see any tax being calculated for NY, but changing the address to CA showed a tax of approximately 6%. Premium suits suits thus now cost around $740 for Californian customers, up $50 from the $699 shown on the website. 

While it's clearly not in Indochino's interest or fault to charge taxes, they are obliged to do so by law and the company is clearly not willing to carry the additional burden. Customers certainly won't be pleased to  see their purchases increase in price. Overall, 2014 will prove to become a challenging year for Indochino for a number of reasons:

Indochino puts an end to free shipping

Indochino just recently has stopped shipping all orders for free and now charges a flat rate of $20 for all orders below $150. While understandable from a profit perspective, this move will leave a few customers to pursue other options - essentially, buying a cheap $79 or $99 Indochino shirt suddenly become 20% more expensive and the purchase of a single shirt at a low price was often the entry ticket for new customers. Indochino is also further saving shipping costs by decreasing packaging size - luckily the suits are packaged in a way to minimise wrinkles and this cost saving measurement does not have a noticeable impact on customers. 

Competition is becoming fierce

Competition is growing from all directions. Suitsupply just introduced half-canvassed suits starting from just $399 - Indochino's entry price today is $449 without tax and while Suitsupply does not offer MTM at these prices, their modern cuts and overall convincing product range is definitely tempting. Other online MTM companies such as Black Lapel, InStitchu or Dragon Inside are fighting hard for their share in the market and by now product quality is pretty much on the same level across these brands. 

Promotions will become more regular again

There are first signs that Indochino is feeling the competition at their heel. They are heavily advertising their referral program and promotions have become more regular again with suits available from just $249. It seems once again buying an Indochino suit at a good price will mean waiting for the right promotion. 

New 2014 Collections will lead the way

Despite the afore mentioned challenges, Indochino of course has a lot to be proud of and still stands out as the leading online MTM tailor by a long shot. The new collections in 2014 will have a great impact. Product quality is definitely on the highest level ever with components being sourced from premium suppliers incl. Helsa shoulder pads or real Bemberg lining. Indochino as a brand is also stronger then ever and the widely successful Traveling Tailor events are by now an industry benchmark for pop-up stores. 

Originally introducing a new collection every month, Indochino has now adapted a more seasonal approach and the Spring Collection 2014 should be here within a few weeks. Last year gave us a number of cotton/wool and linen/wool suits and half-lined blazers from $429, let's see what is planned for this year - I certainly believe Indochino has something special up their sleeves. 

What's your take on the issue? Will the prospect of paying a few percent more influence your purchase decision? What do you expect from Indochino 2014?

Additonal reading on the California sales tax: