Red Dress Boutique
DEAL
EPISODE SUMMARY
🕓 Air Date: October 17, 2014
Asking For:
$600,000 for 5%
Investor:
Mark Cuban, Robert Herjavec (50/50)
Deal:
$1,200,000 for 20%
PRODUCT SUMMARY
The Red Dress Boutique is an online women's retailer known for offering fashionable, affordable clothing with a personal touch.
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Background Story
Red Dress Boutique, headquartered in Athens, Georgia, is the brainchild of the dynamic entrepreneurial duo, Josh and Diana Harbour. The journey began in 2010 when Diana, driven by a passion for making fashionable clothing accessible, approached Josh with a groundbreaking idea. Fresh out of college and working mundane cubicle jobs at a credit-card-processing company, the couple decided to take a bold leap into the unpredictable world of entrepreneurship. Quitting their jobs, selling their house, and armed with a six-figure loan they weren’t sure they could repay, Josh and Diana dove into the venture.
To make ends meet, they rented an air mattress and sought refuge with Josh’s college buddies for an entire year. The Red Dress Boutique emerged from Diana’s vision to create a fashion destination where women could find trendy outfits without breaking the bank. Diana’s background in electrical engineering and Josh’s experience as a tech entrepreneur provided them with a unique skill set to navigate the challenges of the fashion industry. Their gamble paid off as the business quickly gained traction, establishing itself as one of the fastest-growing online women’s retailers in the country.
The founding couple’s approach goes beyond merely selling clothes; they infuse a personal touch into every aspect of their business. Diana’s knack for identifying new and upcoming designers combined with her dedication to customer satisfaction sets Red Dress Boutique apart. Their story is a testament to the transformative power of passion, risk-taking, and a relentless commitment to creating a brand that resonates with women seeking affordable yet stylish fashion options.
The Product
At the heart of Red Dress Boutique’s success lies its standout product, the embodiment of affordable and fashionable clothing with a personal touch. The boutique offers a diverse range of clothing and accessories, updated daily, with approximately 80% of the merchandise retailing for under $50.
Customers experience a curated shopping journey led by Diana Harbour, who scours for new and emerging designers to bring the latest trends to the forefront. The website showcases a user-friendly interface where visitors can easily navigate through the collections, curated outfits, and accessories. The products cater to women who seek high-end looks without the hefty price tag.
Each order from Red Dress Boutique is not just a purchase but an experience. The founders go the extra mile by packaging every item as a present, complete with a handwritten thank-you note. Additionally, to enhance the customer experience, matching jewelry is included, ensuring that the buyer receives a complete, coordinated outfit.
The Red Dress Boutique’s commitment to affordability, style, and personalized service is reflected in its online platform. Customers can make purchases directly through the website, creating a seamless shopping experience. With prices kept below $50 for the majority of items, the boutique positions itself as a go-to destination for fashion-forward women looking to express their style without breaking the bank.
How It Went
The company’s position before Shark Tank
Red Dress Boutique stands as a flourishing entity in the competitive landscape of online women’s retail. With a robust financial performance and strategic partnerships, the company has carved out a prominent niche. The company’s financial health is impressive, with gross sales reaching $8 million in the previous year and a projected $12-15 million for the current year. This growth trajectory showcases the brand’s resilience and consumer appeal.
Strategically, Red Dress Boutique has formed key partnerships with major retailers, amplifying its market reach and establishing a solid presence in the fashion industry. The boutique collaborates with recognized wholesalers in the smart home industry, ensuring a diverse and high-quality inventory that resonates with its customer base. Speaking of customers, Red Dress Boutique has successfully captured the attention of fashion-conscious women seeking affordable yet trendy options. With a user base ordering six to seven times a year, the brand has fostered a loyal customer following.
The company’s focus on social media marketing has resulted in a significant online presence, boasting 127,000 Instagram followers and almost a million organic Facebook followers. Funding for Red Dress Boutique primarily comes from its founders’ initial investment and organic growth, fueled by the company’s increasing profits. The financials indicate a healthy net profit, with a projected $2 million in net profit on a $13 million revenue. The company is currently seeking additional capital, as evidenced by their pitch on “Shark Tank
The Negotiations:
In the intense negotiation on “Shark Tank,” the founders of Red Dress Boutique, Josh and Diana Harbour, presented a compelling pitch seeking $600,000 for 5% equity in their flourishing online women’s retail business. The Sharks were immediately captivated by the couple’s story and the remarkable growth of their company. The negotiation dance began with Josh and Diana outlining their impressive sales figures, projecting a revenue of $12-15 million for the current year.
Mark Cuban and Robert Herjavec saw the potential in the business and decided to make a joint offer of $1.2 million for a combined 20% equity stake, with each Shark taking 10%. However, the founders countered, suggesting a more balanced equity distribution – 10% for each Shark, totaling 20%. This proposal aimed to maintain fairness in the ownership structure. After some deliberation, Mark and Robert accepted the counteroffer, solidifying a deal at $1.2 million for 20% equity, with both Sharks contributing $600,000 each. The negotiation showcased the founders’ strategic thinking and their ability to navigate a challenging negotiation environment.
Mark Cuban’s expertise in the tech and online space, coupled with Robert Herjavec’s strengths in analytics and enterprise information, made them an ideal duo to guide Red Dress Boutique to the next level. The successful deal marked a significant milestone for the founders, who expressed gratitude for the Sharks’ faith in their business. The negotiation not only secured crucial funding but also brought valuable mentors on board, setting the stage for Red Dress Boutique’s continued success in the competitive world of online fashion retail.
