How to Build A Billion-Dollar DTC Brand: The Story of Spanx
Spanx is one of the world’s largest direct-to-consumer (DTC) fashion brands. It was founded by the remarkable Sara Blakely.
Headquartered in Atlanta, Georgia Spanx is located in more than 50 countries across the globe. It has been one of the leading underwear brands in the world. The company is driven by Sara’s mission: “To help women feel great about themselves and their potential.” And it is always at the forefront of innovation in the fashion industry.
And so it should be. It was built on a product that would change the fashion industry forever (you really couldn’t make this up.)
In March 2012, Sara was featured on the cover of Forbes after becoming the world’s youngest self-made billionaire. She was also one of TIME’s 100 Most Influential People. In 2013, she committed to giving over half of her wealth to charitable causes. And in 2014 she visited the White House where Lady Michelle Obama told her “We all wear them [Spanx] with pride.”
On October 20th, 2021 news came out that Sara had sold the majority stake of Spanx to Blackstone for a company valuation of $1.2BN. Now she’s the Executive Chairwoman for Spanx.
There’s not a lot more an entrepreneur can achieve. So how did she do it all with Spanx?
Cutting A Hole in the Fabric of Fashion
One night getting ready for a party, Sara was faced with the age-old question so many people have to answer, “What shall I wear?”
This time when she asked herself, she identified a problem she and many others faced. That is, traditional clothes at the time weren’t shaped to fit people, so they were uncomfortable and didn’t look so good.
She had a pair of expensive control-top pantyhose hanging up in her wardrobe and in a moment of genius, she decided to cut holes in them for her feet and wear them under a dress.
While she wasn’t the first person to do this before, she had the vision for the business behind the product.
Leggings were born, and Sara got to work building a billion-dollar brand from scratch.
Testing the Product
When starting a DTC brand, many entrepreneurs usually do market research to find a product that already fits the market. Creating a whole new product is another story. You don’t yet know if there’s a market for your product.
Identifying a problem as a consumer and inventing a solution is a difficult undertaking, but amazing products have been created this way.
After Sara had her moment of genius, she tested the product with her family and friends. They all loved the product. That was enough feedback for her to commit to a year of building a prototype.
Manufacturing An Industry-Shaking Product
Sara contacted hosiery mill brands that sold the closest relatable product to leggings to see if they’d help her manufacture it. All of the brands turned her down, except one.
When Sara went to the factory for this brand, she instantly saw the problem with its product—all of the manufacturers for its female product were male.
When they were making the product, they took the same size waistband and put it on every pair. This made for poorly-fitting clothing.
Just testing the products on people with her friends and family was innovative as most of the industry didn’t do this (that’s why there were male manufacturers producing female clothing.)
The hosiery industry was using the same-sized waistband for all hosiery products to cut costs. Sara’s product solved this problem by creating various waistbands to suit different sizes.
The brand bought into Sara’s product as a solution to the problem and she was able to take it to the market.
Building a Defensible and Long-Lasting Brand
Coming up with a name for your product is one of the most important activities you’ll do for your business.
The best brands have names that give a feeling to the product. It has to be relevant and there has to be a connection, without it being obvious. For example, you wouldn’t call your camera brand “Cameras” because it wouldn’t be distinguishable.
When researching potential names for her industry-shaking product, Sara had to think of a word that has an impact, grabs attention, and illustrates change.
Because Sara’s vision for Spanx was so big, she spent a year and a half ideating the name. She looked at the world’s biggest brand names for clues and noticed that Coca-Cola and Kodak, two of the largest brands in the world at the time, both use a strong “k” sound. Apparently, the founder of Kodak liked the sound of the letter “k” so much they chose a name that uses it twice.
This might sound frivolous, but words invoke feeling. For example, you’ve probably met someone who doesn’t like the word “moist”. It could be because the word is associated with something unpleasant (for “moist” this could be feeling damp and wet), but regardless words make us feel certain ways.
Sara took the fact that she also liked the “k” sound into consideration. Plus, during her research, she found that made-up names were the most successful for brands and they’re easier to trademark, so she landed on the name Spanx.
Trademarking her brand name early on protected it from small competitors who look to leech of bigger brands.
Happy with a secure name, Sara moved on to product design.
Packaging also tells the story of a brand. You want your brand story to be consistent wherever your brand is seen; in the packaging, the product design, marketing, the models you work with, website design, and everywhere else.
Your packaging also has to be unique so consumers can identify it.
To discover how to make her brand stand out, Sara looked at the current brands in her niche. She noticed her closest competing products were mostly packaged in beige, white, or grey colors.
Because Spanx was a breakthrough brand, it needed a breakthrough color to represent it, so Sara chose bold red as its color.
Once she had her bright brand, she was ready to go out and get it the attention it deserved.
Spanx’s Evolution As a Fashion Trend-Setter
Sara was always thinking big. She knew she had a product that could change the industry, so she thought it deserved center stage.
Back in the year 2000 when Sara was still a solopreneur and fax salesperson working to get Spanx off of the ground, she sent a basket of Spanx products to Oprah Winfrey. With the products, she’d written a card telling the story of leggings and her plans for her business.
Oprah’s production team got back to Sara. They told her that not only did Oprah like the product and wanted to promote it, but she also wanted to travel to her house to interview her.
Sara landed a TV appearance and a celebrity endorsement in one go—the ultimate platforms for any marketing promotion.
Other celebrities also shared how they wore leggings. Spanx had made noise, but Sara wasn’t done.
She knew that to thrive in the fashion industry, you need to be on top of trends, and not just fashion trends.
Sara was a forward thinker not just for her product, but for her market. She wasn’t just looking over her shoulder to see what her small competitors were doing, she was looking at the market temperature overall that affects the entire industry; influences like political movements, culture shifts, language changes, and economic events. Big things affect our whole lives, not just business.
You can see this marketing and business direction when you look at how the Spanx website had evolved over the years.
The Evolution of the Spanx Website
Around the late nineties to the early noughties, ethnicity was top of mind for everybody. Yet, a lot of fashion brands were modeling the same human profile.
Being conscious of human sentiment at the time, Sara decided to use graphic models—in place of human models that she couldn’t afford at the time—that fit a variety of profiles (screenshots taken from Wayback Machine)
This inclusive marketing will have been well received by consumers and it opened up a wider market for Spanx.
Ten years later, Spanx caught on to a huge fashion invention—remember jeggings?
Keeping on trend with clothing is also a must for fashion brands to stay in the game. That’s why Spanx plastered jeggings front and center on its website.
Notice how the photos of the model skating in jeggings capture the biggest selling point of the product—flexibility. Jeans aren’t the most comfortable legwear, so when flexible leggings that look like jeans came on the scene, consumers went crazy.
Six years after jeggings, consumer sentiment began to focus on body shape design. Again, Spanx takes full advantage of this trend by making shape the main focus of its website.
Notice how the site also uses conversion rate optimization (CRO) elements to convert as many site visitors into customers as possible.
In 2019, CRO was a big focus in the online business world. Website design capabilities were getting highly advanced and brands were using them to create seamless website experiences that not only make it easier for visitors to purchase products, but to convince them to do so with powerful psychological elements like pop-up boxes and interactive design.
Another thing you might have noticed with this site is the use of “Herstory” over “History” for the title of the About Us page (shown in the top right-hand corner).
In the late noughties, female entrepreneurs were getting more visibility as more people wanted to be inspired by them, especially since we’re in an entrepreneurial age.
Entrepreneurs are the new celebrities. They get huge followings on social media and their business events sell out entire stadiums. People love the appeal of the independent self-fulfilling lifestyle of an entrepreneur. They want to choose their destiny and connecting with successful entrepreneurs helps them do that.
Consumers care who they buy from and want to hear the stories of those who created the products they’re buying. They care about their character and what they stand for.
The use of “Herstory” tapped into this market sentiment as the population wanted to hear from the people behind brands.
At the time of writing, the site is again on trend with the latest fashions and market cultures.
It’s focused on the Christmas shopping season, which is top of mind for the consumer market.
Flare jeans are all the rage right now as the 70’s disco look is back in. Leather leggings are also worn everywhere.
Further down the site, you’ll see Spanx capturing different physical profiles, which is a big trend right now.
Plus, Spanx is now empowering female entrepreneurship through its products with female business attire.
Finding Talent to Grow the Business
No entrepreneur can grow a billion-dollar business on their own. When Spanx was gaining ground, Sara looked to hire a linchpin partner to help Spanx reach its potential.
Sara met Laurie Ann Goldman who at the time was working at Coca-Cola. Laurie was looking for a Spanx product and the two exchanged contact details.
Laurie believed in the product and Sara’s mission so much, she left her job at Coca-Cola to become Spanx’s CEO—but she took her experience with her.
When she came into Spanx, Laurie implemented the philosophy that was key to Coke’s success: think big, start small, and scale fast. She prioritized product quality over profit margins as she believes the product is what makes a brand scalable or unscalable.
Building the business model around the main product grew it into one of the biggest brands in the industry.
Selling Spanx For $1.2BN
On October 20th, 2021 Blackstone announced it was buying the majority stake in Spanx for a company valuation of $1.2BN.
According to Blackstone’s Managing Director, Ann Chung, the acquisition was tactical to take advantage of Spanx’s ecommerce sales power, the technology it uses for its products, and the opportunities available for Spanx’s growth.
Sara remains at the company as its executive chair and majority shareholder and will continue to help Spanx push the industry forward.
According to The New York Times, at the time of sale, the company’s revenue was estimated at between $300-$400 million, which was not much higher than in 2011. Yet, despite the sales of shapewear falling 24% year over year at the time of the sale, Spanx was still worth $1.2BN thanks to Sara’s abilities and drive to build it into not just a massively profitable business, but one of the top brands in its industry.
We don’t sell billion-dollar brands like Spanx, but if your DTC business is earning between five and six figures per month in average net profits we can help you make your own life-changing exit.
We have teams dedicated to every stage of the selling process, from preparing your business to sale, to marketing it to our buyer pool which has a collective liquidity amount of over $7BN, to migrating your business over to the buyer and collecting your funds.
The process starts by just taking 5 minutes to share some high-level business details with our vetting team who will review your business and start getting you listed on our marketplace. Start the process of selling your business here.