Stories

Oct 31, 2022
CUTS Clothing Masters Sport of Business with Happy Returns Experience

CUTS Clothing
CUTS Clothing is tailor made to be comfortable yet look professional.

It was 2015 when Steven Borrelli landed his first job in a marketing agency, just after graduating from college. During one of his client meetings, his boss promptly sent him home asking him to change into something that was more appropriate for the “formal office setting.”

This sparked an idea -- athleisure was never meant for the workplace, but Steven believed he could still enjoy work clothes that provided comfort, versatility and good quality. He had issues identifying a brand that fit what he was looking for and so he took matters into his own hands.

Barely a year later, the young entrepreneur launched a crowdfunding campaign to manufacture a fabric that would be wrinkle-free, skin-soft, and tailored for a flattering, polished, office-appropriate fit.

Steven would then take that fabric and create a fashion line called CUTS Clothing, tailor made for people who wanted to be comfortable yet look professional. Today, he is CEO and founder of the brand, which has become a nine-figure business, with 40 employees helping to run the online shop. Their products also appear in luxury retail stores such as Nordstrom.

CUTS Clothing
Carter Shae, CUTS' Chief Financial Officer

“Neither of us came from a fashion background but we knew what our customer wanted” explained Carter Shae, CUTS’ chief financial officer. He had known Steven since high school in Washington state and joined his venture shortly after Steven launched the crowdfunding campaign. They were both business grads and wanted to explore a new work life on their own terms.

“Two big things contributed to our early success,” Carter said. “The first was brand positioning.  Being a new business, we had no customers, but we always said: ‘we are the customer.’ We made is clothes that we would want to wear in the workplace, to some extent, was the secret sauce in the beginning.”

The second factor was the fabric that Steven had spent the year researching and self-financing before turning to crowdfunding to expand the idea he had conceptualized. The greater CUTS team then spent the next three years refining it.

“Our Pyca Pro fabric, made of our proprietary blend of fabrics, is still a best seller today and keeps people coming back. The feedback is that this fabric is one of a kind and there is nothing else like it in the marketplace,” Carter said.
 

PayPal’s Happy Returns Contributed to High Customer Satisfaction

CUTS Clothing
CUTS launched a woman's workleisure line in May.

Not surprisingly, with the rise of people working from home these past few years, demand for the brand grew.

“On Zoom, the t-shirt or polo became the standard overnight,” he said. “The pandemic just poured gas on the trajectory we were already on.”

The company launched a woman’s workleisure line in May, a move Carter said was perceived as risky but something CUTS’ existing customers had been asking for for a long time.

Aside from mastering comfortable, suitable work attire, the company had to navigate the other challenges that came with operating a successful clothing business – figuring out how to give customers an opportunity to return items in a way that was quick, convenient, efficient, and affordable.

According to a 2022 study commissioned by PayPal titled, “Returns Happen,”  78% of survey respondents state they are less likely to shop with a retailer after a poor returns experience. Furthermore, 87% of consumers see free returns as an important purchasing factor.

“We’re competing with [tech giants] who have paved the way for e-commerce and set the bar high for returns. It’s almost a requirement to have a seamless and relatively inexpensive or free returns process. Especially with clothing that customers can’t try on, can’t touch and feel, it’s critical to offer that service in order to have a reasonable conversion rate,” Carter said.

 

Having a strong customer-focused return experience was a priority for the company who at that point had managed to retain a 50% repeat customer rate. On top of that, seven to 10% of their customer base report “bracketing” their purchase which means they buy multiple sizes at once to ensure a proper fit.  

“It’s one less barrier to give a new brand a try,” he said.

Carter came across Happy Returns, a PayPal Company, early on. With Happy Returns, customers didn’t need to deal with the hassle of printing out a shipping label, packaging, or waiting in line at the post office. They simply could return it to any one of 5,000 Return Bar locations in the U.S. Their refund would be initiated immediately.

With Happy Returns, customer satisfaction at CUTS was high, with the company reporting a 92% Net Promoter Score from their shopper survey responses, with most saying they would recommend it to someone they know. About 75% of CUTS’ customers were choosing to use the Return Bar, saving the company money on their pre-paid return-by-mail option. Moreover, the company found that the lifetime value of their customer was also leading the industry with more than 10% of their base purchasing more than $1,000 at CUTS.

CUTS Clothing
CUTS switched back to Happy Returns and never looked back.

The “Returns Happen” survey found a similar public sentiment. According to the survey, 54% of consumers surveyed prefer in-person drop off at a store. It also found 79% of consumers try to avoid mail-in returns whenever possible.

While the company was satisfied with how Happy Returns was working with their consumer base, Carter thought he would keep his eyes open for other platforms that could provide a bit more of a cost saving. CUTS stopped using Happy Returns for three months while it worked with other return platforms.

“(Having a new returns partner) just didn’t pan out,” Carter said. “We saw our 30-, 60-, 90-day Lifetime Value numbers drop by about 40% in those months where we were using the other returns platform. Our feedback from customers was not good -- they were having a hard time exchanging and customers were voicing their frustrations. We were all-hands-on-deck to address customer inquiries.

“We switched back to Happy Returns,” he continued. “It was an easy decision based on all the data and our customer feedback.”
 

‘The Sport of Business’

The leadership team at CUTS is now focusing on building a broader, more engaged community where they can connect with their customers outside of the transaction experience. Aside from a company newsletter, CUTS’ CEO Steven is launching a podcast where he will interview people who are at the top of their game in The Sport of Business, a term CUTStrademarked to encapsulate their brand ethos.

“We want to be a destination for not only fashion, but for the sport of business – the relentless pursuit of a passion in any arena,” he said. “CUTS gives people the confidence to tackle the day and excel in their field.”
 

These results may not be typical and may vary substantially by business. This content is provided for informational purposes only. You should always obtain independent business, tax, financial, and legal advice before making any business decision.

 

Modern Enterprise

The Modern Enterprise series explores the issues and opportunities shaping today’s most successful companies. Read about innovations that change the competition, new ways of doing business that consumers have come to expect, and hear from a variety of industry leaders on their decisions and the lessons they’ve learned. Sign up for the newsletter here. For more on how PayPal can help your company, visit PayPal for Enterprise  

 
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