College entrepreneurs grow Chesapeake-themed line of preppy apparel
By Lloyd Batzler and firstname.lastname@example.org
May 04, 2016 | 3:52 PM
As players on Towson's Calvert Hall College High School rugby team, Kevin Ames and Matt Wilmer saw firsthand the grit and teamwork it takes to win.
Now seniors in college, the 21-year-olds are advancing on another rough-and-tumble playing field as founders of an apparel and accessories company, Chesapeake Collection LLC, which aims to fill a void in the mid-Atlantic for a distinct "preppy casual" brand.
Incorporated in late 2014, the company's first sales rollout of T-shirts imprinted with its stylized, blue crab logo, came last year at the Towsontown Spring Festival.
Their business, which they say is profitable, has all of the trappings of an entrepreneurial startup in the e-commerce era: Tax registration papers list Wilmer's Cockeysville house as the corporate office. One third of the Ames family's two-car garage is taken up with plastic bins of neatly folded inventory and the dining room of the immaculate house, in a wooded neighborhood due north of Loch Raven Reservoir, is the fulfillment center where orders are prepared for shipping. Finnegan, the Ames' Bichon-Shih Tzu mix, keeps watch on the activities.
The partners used $10,000 — saved from summer jobs doing landscaping and hauling, and an investment from their parents that has since been repaid — as seed funding. They haven't taken a salary, plowing profits back into products and overhead expenses, Ames said.
The company's first eight months of sales topped $40,000 — a raindrop in the barrel of what government analysts estimate is the nation's $250 billion-a-year fashion industry — and the partners are plotting steady growth.
"We're being shrewd about who we are," said Wilmer, who is majoring in marketing and business administration at Loyola University. "We're growing at a pace that is healthy."
A new spring line will include T-shirts with unique graphic artwork, such as Maryland's state fish, the rockfish, and a schooner, a sailboat that used to ply the bay, as well as neckties and belts. Shirts list online for $22 to $38, adult caps for $24; pricing for belts and ties hasn't been set.
"They are true bootstrap entrepreneurs," said John Zuknick, who runs the University of Baltimore's Center for Entrepreneurship and Innovation, which is not involved with the company. "They find creative ways to make it work."
The apparel industry has grown increasingly cutthroat and pitfalls are many, including fierce global competition, fickle consumer spending habits, the ability to accurately forecast fashion trends and supplier pricing fluctuations for everything from raw cotton to fuel for shipping, according to industry analytics.
"For this model to work, it's all about marketing," Zuknick said. "They're basically building a brand. You don't build a brand overnight."
Advances in e-commerce technology have made it easy for digital-generation businesses to ramp up quickly, using off-the-shelf products and services. The company's website and transaction service is handled by Squarespace Inc., itself a 2005 startup by a University of Maryland student. Credit-card sales at festivals are processed on a smartphone using Square Inc. software.
About a quarter of Chesapeake Collection's sales come through its website portal. Analysts expect retail web sales to grow at a compounded 10 percent annual rate for the next two years, with consumer electronics and apparel remaining the most popular segments, as traditional in-store shopping lags.
At the same time, online sales "cannot yet deliver the level of impulse purchasing that in-store shopping can," according to a report by NPD Group Inc., a marketing data and advisory firm, and Chesapeake Collection needs bricks-and-mortar and sidewalks.
The bulk of sales are made in-person — at festivals and fairs, at three specialty retailers in Cockeysville, Annapolis and Easton, and promoted through a network of more than three dozen student "brand ambassadors" at 23 high schools and colleges in nine states, Ames said.
"Connection with the customer is something we take very seriously," said Ames, a mass communications major at Towson University. In addition to the website, the business is promoted on social media's Twitter, Facebook, Instagram and Pinterest.
"These two kids have a decent business," said Gilbert P. Cohen of Cohen's Clothiers, a 112-year-old retailer in Cockeysville. "If this brand grows, they have to develop it."
Cohen, a third-generation proprietor, learned of the company when customers "asked for the product in the fall and I had no knowledge of it. We decided to try a bit of it and it started to sell. During the fall and winter, we did a nice business with them."
Ames and Wilmer declined to provide specifics on sales and profits. So-called operating margins in the U.S. branded apparel segment have hovered in the 15 percent to 20 percent range for much of the decade, but can top 50 percent, according to government estimates and industry reports.
The East Coast's leading standalone purveyors of nautical-preppy clothing, apart from major department and youth stores, are Vineyard Vines, of Stamford, Conn., and Southern Tide, of Greenville, S.C., based on sales volume and retail outlets that carry their wares.
Both privately held companies started small – Vineyard Vines was founded in 1988 by two brothers who were tired of the New York City grind and Southern Tide is the 2006 child of a University of South Carolina biology major who wanted a better polo shirt, and designed one. Industry estimates now place Vineyard's revenues above $300 million with Tide's eclipsing $21 million.
Ames and Wilmer saw an opening with a clothing theme tied to the Chesapeake Bay, the East Coast's largest estuary with a watershed covering six states, the District of Columbia and nearly 18 million people — a lot potential customers.
"When we started, we wanted to compete with Vineyard Vines," Wilmer said. "We've based our designs off the flavor Vineyard Vines brings."
Chesapeake Collection's pricing, however, was set below comparable Vines products and the pair is striving to offer better or comparable quality.
"Quality is of utmost importance," Ames said. In the search for suppliers, the entrepreneurs had to go to manufacturers in Mexico and Haiti for T-shirts. "We couldn't find anything in the states that could provide the quality."
Ties and belts are coming from a company in New Hampshire that has produced "insignia products" favored by the yachting set since 1967.
"Vineyard Vines and Southern Tide products are bought by people who want the brand," Cohen said. "Will they be receptive to [Chesapeake Collection]? That's hard to say."
The company also promotes the work of the Chesapeake Bay Foundation and is dedicated to contributing 2 percent of its proceeds to the advocacy organization.
Although the Annapolis-based nonprofit conservation group does not endorse products, it welcomes exposure. "We look for some alignment between what the business does and what we do," said John Surrick, a foundation spokesman. "We look at up-and-coming businesses."
Friends and family
A network of friends, high school and college classmates and parents, brothers and sisters have been vital in building the business, and serving as a focus group, offering feedback on styles, colors and fabrics, the partners said. A family friend, who is a patent attorney, advised on incorporation and trademark issues. Graphic designs are outsourced to local artists.
An early design and marketing consultant posted on her blog: "I remember sitting in the Wilmer family's kitchen debating possible names until everything sounded like a blur. I got routine emails from Matt, asking for my opinion of logos [that] looked nearly identical except for a few hairline changes that made a monumental difference. Should the crab have eyes? How can we make it classy and fun, yet not too cartoon-esque? Matt and Kevin went through numerous manufacturers, comparing fabric samples to their favorite worn-in T-shirts to determine what they wanted to use in their product."
The consultant did not respond to a request for comment.
"A lot of business, it's about who you know," Ames said.
"It has been a fun, family business … it's everything we embrace — hard work, creativity and ingenuity," said Gary Wilmer, Matt's father. "The community support has been amazing."
"All of us, especially in the beginning, would work hard — a tag team," said Jeanne Ames, Kevin's mother. "The two families sat down and figured out how to do it. We help them to roll shirts for fairs, to steam the shirts, to run to the post office for deliveries."
The parents also carried a uniform message: Stay focused and finish college.
"We told the boys … we don't want them to grow too big, too fast," Jeanne Ames said. "If there is something we think is risky, we'll tell them."
"It's hard doing this; we're college students," Kevin Ames said. "Balancing this with our lives, our studies, our friends."
Ames and Wilmer estimate they routinely spend five to 10 hours a week on the business, more during busy times.
"Just like anything else in parenting, you have to give them some rope," Gary Wilmer said. As businessmen, "what they are learning is not theory, it's real world. It will look good on their resume. Now an employer will say, 'You guys have taken initiative.'"
Ames and Wilmer have heeded the guidance, not rushing in to add new products, ensuring high quality merchandise and pondering how they can manage a growing concern.
"Our biggest motivation is our dream to be our own bosses and own this company," Matt Wilmer said.
"We want to be as big as possible," Kevin Ames said. "Who knows what the future will hold?"
Longtime retailer Cohen said he would offer this advice on future growth: "Be slow. Be steady. Sell to the right stores, do not sell to stores that are like a boardwalk shop at Ocean City."