The Rebirth of a Dead E-Commerce Site

Opinion: Here's the tale of how an outsourcing trend is bringing back a defunct Web site to seek revenge on Target, Sears, Kmart and Marshalls.

Back in May 1999, near the height of the dot-com insanity, one of a host of media darlings was an underwear sales dot-com called Sending boxer shorts to various reporters, this dot-com was written up in BusinessWeek and the New York Daily News, and it made Time Magazines picks for the best e-commerce sites.

All this for a company that—at its height—had six employees and barely broke out of six figures of annual corporate revenue, according to then-CEO Jeff Johnson. But none of that mattered.

The Web was then seen as the great equalizer, allowing tiny garage players to compete on an equal footing with multibillion-dollar commerce giants. The owner of Calvin Kleins underwear unit offered to buy for $3 million, Johnson said.

Well, the dot-com bubble burst in mid-2000, and by May 2002, closed its doors. A brief run for a briefs company. Those times are gone, many concluded, and its back to big business—the pre-Web ways.

One of those apparel mavens who knew the good old ways was Jack Stone, whose parents started his company—Stone International—back in 1933. After Underneath.coms demise, Stones private-label underwear business, based in Columbia, S.C., picked up and he found himself selling $60 million worth of underwear to other old-fashioned, nonvirtual outfits including Target, Sears, Kmart and Marshalls. (No Wal-Mart, and Stone said that was quite deliberate.)

Fast-forward to 2005. Brick-and-mortar retailers have fallen in love with another Internet technology and have found themselves being able to communicate and share data with global partners—even tiny ones—with never-before-experienced ease.

/zimages/5/28571.gifTechnology is also helping with clothing on top of underwear, as a Philadelphia technology company demonstrates with its laser-fitting devices. To find out more, click here.

In rapid succession, Stone saw those prized retail accounts decide they could outsource their underwear business to Asian companies for a tiny fraction of what his American workforce demanded.

What did Stone do? He made some calls, found Underneath.coms Johnson—doing entirely unrelated work—and made him an offer: Come back to the underwear biz and relaunch, this time bankrolled with Stones non-Web-earned dollars.

If retailers such as Target and Sears could use direct deals with cheap overseas labor to cut their costs, Stone figured that he could use the Web to cut his. Can an older and wiser Web site beat the big boys this time?

When Stone saw the direction the retailers were moving in in 2004, he started planning his next moves. The first thing he did was invest in fellow South Carolina company Byte Software, which specializes in apparel software, particularly EDI and other supply-chain magic. Johnson dubbed the combo "the South Carolina cluster."

That software allowed Stone to "manage at an SKU level apparel all through the supply chain," but it didnt give him the connection to the consumer, which was his end-run plan against the retailers. If they bypassed him and went straight to his stitchers in Asia, hed bypass them and sell his popular underwear lines straight to the retailers consumers.

Stone saw a resurrected as his ticket to those consumers.

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