Dorm furnishings retailer Dormify has raised a $3.45 million Series A funding round that was led by unlikely source: apparel retailer American Eagle Outfitters Inc.
However, the investment isn’t as unexpected as it may seem at first glance. American Eagle and Dormify have had a wholesale relationship for the past three years. The relationship began when American Eagle’s underwear brand Aerie began selling Dormify products on its e-commerce site. The following year, Dormify products moved under American Eagle’s flagship site ae.com to its “apartment” category. This continued in 2018, plus Dormify created a few exclusive styles for American Eagle, says Dormify co-founder and creative director Amanda Zuckerman.
The relationship works well because Dormify’s product aesthetic and target shopper is similar to American Eagle, Zuckerman says.
“Our audience is so similar to American Eagle in customer base, and it puts Dormify in front of a wider audience, which is awesome for us,” Zuckerman says.
The back-to-school season is Dormify’s peak season for the year, and sales increased 80% from May to August 2018, compared with that time period last year, Zuckerman says. She attributes part of that growth to Dormify’s site redesign in the spring, which helped improve its conversion rate, she says.
Dormify plans to use the recently raised capital to fuel its growth, including hiring employees and injecting capital into its pop-up shop initiatives, Zuckerman says. Dormify plans to hire four to six employees for its marketing, operations and product teams, adding to its current team of 14 in its New York City headquarters.
The retailer also plans to add another pop-up location next year, which Dormify operates during its peak back-to-school season in mid-May through the end of August. In 2018, Dormify had three locations in New York City, Chicago and Bethesda, Maryland. Dormify is exploring the possibility of adding two pop-up shops next year, one on the West Coast and one in the South.
The retailer’s pop-up shops tend to generate sales both in store and online in the store’s geographic location. For example, sales in the Chicago region increased 260% in the 2018 back-to-school season compared with 2017, when Dormify did not have a pop-up location in Chicago. Just looking at online sales in the Chicago region, those increased 122% year over year during the 2018 back-to-school season.
Even though online is Dormify’s “core business,” the stores allow shoppers to touch the products, which is a big benefit as a home décor brand, Zuckerman says. Plus, shoppers spend more per order in person compared with the average order value online, Zuckerman says.
Dormify is working to see how it can translate the key benefits of store shopping to online, she says. One way is via live chat, in which shoppers can chat with a Dormify stylist through its on-site live chat. The retailer also plans to launch more features on its site, but Zuckerman would not disclose any specifics.
Dormify also has a brand ambassador program—a referral-based program of which 7,000 high school and college-aged students are a part. Ambassadors have a unique link that they can share with friends, and purchasers receive 20% off and ambassadors receive $20 in Dormify store credits when a shopper checks out with that link. Dormify also treats its ambassadors like a focus group and surveys them for feedback on new products.
For example, Dormify learned from its ambassadors that many shoppers loft their bed. However, Dormify’s nightstands were a traditional height and weren’t functional with a lofted bed. As a result, Dormify created a nightstand with longer legs and higher drawers that would work with a lofted bed.
“We’re learning challenges that our audience runs into, with decorating a small space and trying to maximize the small space they are given,” Zuckerman says.
After back-to-school, the Christmas and Hanukkah holiday season is Dormify’s next-largest sales season, Zuckerman says. Right now, Dormify is hosting its 12 Day of Dormify holiday social media event, in which shoppers tag friends on Domifmy’s Instagram posts for a chance to win a free Dormify product.
American Eagle is No. 64 in the Internet Retailer 2018 Top 500.