Branding From Scratch
Turning an unsexy business into a hot dotcom.
Eighty miles east of San Francisco sits a desolate 250,000-square-foot warehouse, home to Payam Zamani's young dot-com. The sole clue to its digital being -- seen only by passing semis -- hangs on a wall outside, stretched across a temporary banner. The dusty, windblown sign reads purpletie.com, and it symbolizes Zamani's attempt to recreate what Starbucks did for coffee and Blockbuster for videos.
Zamani has set his sights on, of all things, dry cleaning. About as unsexy a business as you can create. But it really could have been anything. His passion is launching avant-garde startups in industries that, until he came along, had yet to be "dot-conomized." "I've never been in the dry-cleaning business," he says. "But I know what a good dry-cleaning result should look like."
Forget hangers and spot removal, though. Zamani's story is much more interesting. This is about being one of the first to build a consumer-oriented dot-com brand in the post-euphoria era. He's learning from the mistakes that have plagued others, including his last company. He's building out slowly, he's not going to compete on price, he's not planning any Super Bowl ads (yet), and he is looking to be profitable before expanding further and exploring an IPO.
And as his personal history proves, Zamani is not to be under-estimated. It wasn't that long ago that the 29-year-old entrepreneur didn't even speak English. A native of Iran, he followed his older brother Frank and fled, because followers of their Baha'i religion were treated as second-class citizens. They landed in Modesto, Calif., seeking a better life.
Zamani's entrepreneurial streak dates back to a summer college program, in which he operated a student-run painting firm at the University of California at Davis. Thus hooked, he scrapped his pre-med track to team with Frank after college and start a dot-com. The business, Autoweb.com, was one of the first online car hubs, helping consumers create a haggle-free car purchase with research tools, upfront pricing, and a dealer reference.
Zamani, as CEO, built the business to include almost 4,000 dealer franchises by the time he stepped down in January 1999 to let a more experienced exec take it public. As Lawrence Lepard, a partner with Geocapital Partners and an Autoweb investor, says of the Zamanis: "They were hungry to prove themselves. I mean, they walked out over the desert to escape Iran, put themselves through school It was clear they had grit."
Now, fueled by frustration over spotty shirts, Zamani is applying his grit to grit, tackling not only the $32 billion dry-cleaning industry but also a U.S. culture so overwhelmed by mind-spinning marketing messages that developing name-brand recognition is increasingly hard. Autoweb never established itself as the leader among car-buying sites, so Zamani knows challenges lie ahead. But he's betting millions of his own dollars (along with a few of Chris Kitze's, vice chairman of Web portal NBCi) he can pull it off. At least he has a plan.
The Autoweb experience holds many lessons for Zamani, first of which is that he needs to own his customers. That site handed over the customer to the dealer to close the sale, thereby giving up control of its brand to dealers with varying commitments to service.
This time, Zamani's doing it all himself. If he doesn't perfect PurpleTie's basic service of convenience -- a working e-commerce hub that "offers the best cleaning service out there on a consistent basis," he says -- Zamani has nothing to brand. Rather than make deals with local cleaners and encounter the same issues he did with Autoweb, he's building his own tech infrastructure to take customer orders online, schedule pickups, clean the clothes, and deliver them at the appointed time -- the next day. Zamani can't promise same day service, which could be a problem as he stresses convenience. But that emphasis does let him focus on profitability: He has no plans to undercut mom-and-pop cleaners' prices to edge into a market.
But first, Zamani has to learn how to do everything except the Web part. To that end, he has pieced together a smorgasboard of directors and advisers whose expertise ranges from toxicology to Web building. Sid Tuchman, a dry-cleaning guru most noted for his own entrepreneurial spin at trying to nationalize a chain, provides cleaning advice. Zamani has hired laundry consultant Philips and Associates (who aid Disney parks and Opryland) to help build PurpleTie's 24 industrial-strength processing centers. For logistics, former UPS executive David Kallery will oversee the system that will let customers track their garments online and schedule pickups. As COO, Kallery will also unleash the fleet of vans that will shuffle garments to and fro.
Designing the system is easy; achieving the name recognition that will lead people to say they need to "PurpleTie" their clothes is where the work comes in. Zamani has hired four marketing mavens, including Peter Sealey, a former Coca-Cola exec, to help. The strategy: old-fashioned word of mouth.
First he's going to hit you where you live. "Eighty-five percent of dry-cleaning revenues come from the top 25 markets," says Zamani, "and luckily, those markets have the highest Internet usage as well." By pinpointing cities with the highest density of dry-cleaning and Net usage, Zamani already knows where PurpleTie will fly, tagging the areas by zip codes.
Within these locales, Zamani expects the product to do some marketing for him: "Because of the way the clothes look, because the packaging will be so amazing it's really the best way to promote it." But just to seed the market, he'll offer the thumbtacked zip codes direct marketing incentives through U.S. mail and e-mail. Click on the PurpleTie link at the bottom of an e-mail, for instance, and receive a coupon for dollars off your first order -- only the first time, though. Zamani wants to avoid the trap that has snared so many e-tailers whose customer lists are loaded with bargain hunters. Branders warn, though, that cutting prices, even once, could cheapen the brand. "Once customers get a sniff of you lowering your price, they'll wait for another price drop before buying again," says Rob Frankel, author of Revenge of Brand X.
Zamani's awareness campaign and customer acquisition strategy extend far beyond coupons. He wants to get customers when they least expect it. Buy an Armani suit, for instance, and notice that a second tag touts PurpleTie as the best way to launder it. Or find a PurpleTie postcard with your new dry-clean-only skirt in the bag. "I truly believe in guerrilla marketing," says Zamani, who won't elaborate on the status of these kinds of deals. He'll also try and drum up business at the workplace. Zamani is making deals with companies to reach employees directly, delivering clean clothes cubeside instead of curbside through his PurpleTie @Work service. Zamani has so far persuaded nine firms to sign up prelaunch, including Lucent's division in Pleasanton, Calif., and a host of dot-com startups.
But Zamani's most talked-up strategy, his pride and joy, involves the PurpleTie minivans. Whether or not he succeeds with the labels and bag inserts, Zamani's mini-vans are a perfect platform for guerrilla marketing. With little desire to enter into that discredited staple of dot-com branding -- the in-your-face radio, TV, and billboard ad campaign -- and without the terrestrial advantage of thousands of stores, the vans are Zamani's not-so-secret weapon to remain ingrained in people's minds. "Think Ryder trucks," says Kevin Starace, chief strategy officer of dot-com ad agency Eisnor Interactive. "I would be content with a mobile presence. It might not be as reliable as Starbucks' position on every corner, but it certainly can be a luxury from a marketing standpoint."
Yet all of these efforts at generating buzz are also PurpleTie's biggest risks. "Dry cleaning is a relationship business," says David Uchic, director of the International Fabricare Institute. "For every unhappy person, five others will know it." Uchic is thinking of the historically fragile bond between dry cleaner and customer, but in PurpleTie's dot-com case, death from a soiled reputation could come as rapid-fire as sending e-mail and posting rants on Internet message boards, tarnishing PurpleTie's image in cities where it has yet to open.
This leads to what many think will be PurpleTie's Achilles' heel: betting its success largely on technology. "You can have the most sophisticated logistics for handling and cleaning garments," says Manfred Wentz, executive director of the International Drycleaners Congress, "but there's still a lot of manual work -- pressing, finishing, proper cleaning -- to be done to satisfy the customer." At least the shop on the corner provides an extra layer of assurance through human contact: A customer can literally point out a stain to the cleaner.
You may soon find out who's right. The San Francisco PurpleTie should be up and running by the time you read this; Zamani will move into four more markets in 2001, and he plans to be in all top 25 markets -- PurpleTie-speak for national -- within three years. Zamani, meanwhile, has already sunk $20 million into his processing plant and the minivans. But he wants to go slowly, to show the ability to make money before expanding beyond dry cleaning. Norm Turner, one of the first car dealers to sign up with Autoweb, sums up: "I can remember that sometimes Zamani's ideas were ahead of the industry's ability. But he may be the player to bet on."
©Copyright 2000, FSB (Time Inc.)