In 2000, when many of the early dot-coms were imploding, Greg Selkoe created an e-commerce site that was years ahead of its time. Its focus? “Verge Culture,” a convergence of hip-hop, pop art, skateboarding and electronic music subgroups that often followed small up-and-coming brands and lent big companies some street cred. His company would give these consumers access to fashion that was hard to find outside of New York or L.A and build on their unique brand loyalty.
Today, Karmaloop is a 170-employee company with offices in Los Angeles and New York – and a subsidiary in Europe. The site attracts four million unique visitors a month and is on track to do $160 million in revenue this year. Despite its growth, Karmaloop stays true to its indie consumer by offering limited quantities of products that, in many cases, are exclusive to the site.
Of course, communicating with this audience is an art unto itself. Selkoe, 39, favors a grassroots marketing approach – working with 200,000 brand ambassadors who promote Karmaloop via social media, pop art, even fortune cookies.
Entrepreneur spoke with Selkoe about how his branding embeds itself into a culture.
Entrepreneur: Using stories and videos to build brand loyalty is de rigeur today, but it was a pretty novel approach 14 years ago. How did that factor into the site’s success.
Selkoe: We were one of the first websites to combine content and e-commerce. People said ‘what are you doing?’ They didn’t believe in putting content on e-commerce sites because they thought it distracted people. We now know that content showed our authenticity, that we were really a part of the market we were selling clothing to.
Entrepreneur: The very people you’re selling to are also the trendsetters who eschew anything that seems too mainstream. Can you tell us more about them?
Selkoe: These are the influencers, the people who help set trends for their peers. They are very fickle and hard to reach. But when you do reach them they are very brand loyal. It’s this group that has helped build brands like Apple and Red Bull and Nike. They’re not afraid of the size of a corporation, but they only want to buy products that are different and unique. They’re not really defined by race, ethnicity or geography, and in the past that’s was how marketing firms broke things down in this country.
Entrepreneur: Given how hard they are to pin down, how do you connect with them?
Selkoe: Our main outlet is our Karmaloop representative program. We enlist our customers to promote Karmaloop any way they want. They each have a unique rep code, and when that code is used the buyer gets a discount and the rep accrues points toward product. The reps do a lot of really interesting things, like making fortune cookies with Karmaloop codes and distributing them to Chinese restaurants. Our reps are highly engaged in Karmaloop lifestyle, and they drive about 25 percent of our sales.
Entrepreneur: A lot of companies would cringe at the notion of giving outsiders free reign to promote the brand.
Selkoe: I hear that a lot. People say ‘Aren’t you afraid to put your brand in the hands of the consumer?’ I understand that with a lot of brands that wouldn’t work, but with Karmaloop it does. It makes them feel empowered and more connected to us.
Entrepreneur: How important is that connection?
Selkoe: One of the reasons we’ve been successful is because of this incredible two-way dialogue we have with our consumers. For example, my personal cellphone number is on the website. We’re not one of those nameless, faceless companies where you can’t reach the CEO.
When I pick up, customers are completely shocked. A lot of times people just want to see if it’s real.
Entrepreneur: Now you can have that dialogue via social media. Do some platforms work better than others?
Selkoe: We’re on most platforms, including Facebook and Twitter. We also reach people through things like Snapchat, which a lot of companies haven’t figured out. We basically use gift codes and contests that drop off, so people have limited time to get them. We also do silly stunts and live streaming stuff that’s popular. Part of why our audience likes us is because of some of the off-the-wall stuff we do.
Entrepreneur: What doesn’t work when marketing to your kind of influencer?
Selkoe: Print advertising and television advertising don’t work. Stuff that’s patronizing, that tries to directly incorporate the culture into the advertising doesn’t work. It comes off as phony and contrived.
Entrepreneur: What’s your strategy for videos, blogs and other content?
Selkoe: The content that works for us ties back into the product somehow. Usually there’s product that has some relationship to the story. Content is a big part of what we do. It’s our competitive advantage. If someone wanted to duplicate what we do, they’d have to understand the culture well enough to gives audiences what they want.
Entrepreneur: Could Karmaloop’s success eventually turn off your core consumers?
Selkoe: As I mentioned, Apple, Red Bull and Nike are among the brands our consumers love the most, and you don’t get any bigger than that. Our consumers are happy that we’ve been growing. As long as you’re original and leading, not following, this is a group that isn’t afraid of size.