Tipsy Elves is a holiday-themed clothing company that was founded in 2011 by Nick Morton and Evan Mendelsohn. Its main headquarters are in San Diego, California, in the U.S. The company sells holiday apparel and clothing through their stores, online vendors, and website. Upon getting a $ 100,000 investment in the Shark Tank program, they opened a seasonal clothing store that has been working very well (DuDell, 2016). Tipsy Elves has created a global and worldwide business that specializes in developing tacky designs.
One of the fashion trends that characterize Christmas is the famous ' ugly sweaters '. They are called ugly because for the most part, they have too large Christmas motifs like reindeer or snowflakes, or three-dimensional elements like gift boxes that do not stylize our looks. Also, some of them are oversized and this is not something that many people like. However, Tipsy Elves released some sweaters that can be worn during the Christmas season and that is not ugly at all (Feloni, 2015). Their ugly Christmas sweaters have won several awards. The demand for conversational throwback merchandise has been on the rise and Tipsy Elves has capitalized on that to increase its market share. The prices range of the sweaters is between $40 and $60 (Tipsy Elves, 2020). The sweaters are soft and are made from a high quality acrylic material that ensures the cloth does not shrink even after being washed. As of 2019, the lifetime sales of Tipsy Elves amounted to $125 million (Grant, 2019). It is expected that this year alone, the company will sell about 6 million sweaters (Grant, 2019).
Management's Estimate for Tipsy Elvis Market Share and Industry Rank
Regarding the analysis of the Fashion market in America, Tipsy Elves, as of 2018, was ranked number 621. Consequently, the company accounts for about 0.1% of all eCommerce net sales in the Fashion market industry (Grant, 2019). Some of the top stores globally include Amazon.com, Macys.com, and gap.com among others.
The market share of Tipsy Elves is expected to keep growing over the next three years. Statistics indicate that since the time the company was founded, there has been a growth in sales over the years. By 2023, total sales will have amounted to between $125 and $150 million (Mouton, 2018). The sales will be boosted by the diversification strategy that the company has taken. Although the Tipsy Elves started as a seasonal company where they sold most of their products during December (the peak period), it now has products that can be sold throughout the year.
Growth and Profitability History of the Industry and Company
When the company was founded, it sold more than 1000 sweaters totaling to about $370,000. All these sweaters were sold through their websites. In 2012, the total sales increased to about $1,000,000. In 2014, the total revenue of the company was about $12 million. In 2018, the company's total sales were more than $70 million.
Future Prospects of the Company
When the company started, it used to sell 100% Christmas sweaters. However, the company has now diversified and sweaters account for only 1/3 of the total company sales (Grant, 2019). The company now sells retro ski suits, button-down shirts, swim trunks, Halloween costumes, LGBT clothing, Hawaiian shirts, and patriotic clothing among others.
The company wants to expand beyond Christmas products and being a seasonal business. The launch and introduction of new collections will boost sales further and ensure that the sales curve is much more balanced (Resnick, 2018). Expansion into new markets will require the company to scale and increase their customer engagements in different ways (Mouton, 2018). Tipsy Elves wants to stay ahead of the trends, as such, the company takes advantage of multiple vacations throughout the year and the college football season.
Major Factors behind the Company's Assumptions
For Tipsy Elves, it is all about innovation and ensuring that they give their customers different products to wear during the festive period. The company is intent on putting an innovative and alternative spin on the existing traditional Christmas clothing. Although the operational and growth plans of the company are not only strategic but also strategic, their clothing products are liked by younger audiences since they eliminate the stuffiness and seriousness of the holidays (Chen, 2018). The company is not only intent on designing memorable and creative clothing but also ensure that it is there during a person's greatest moment, be it a get-together, a family trip, or different celebrations.
Exposures by celebrities and partnerships have contributed to the success of the company. Ryan Reynolds, Hugh Jackman, and Jake Gyllenhaal are some of the celebrities that have embraced the Tipsy Elves concept (Parker, 2019). Another reason that contributes to the success of the company and its expected future growth is that it donates sweaters and other clothing to children and also donates part of their profits for noble causes. Tipsy Elves has partnered with Stand Up to Cancer and it donates $2 for every sweater sold. Moreover, Tipsy Elves has pledged about $100,000 to the company. All these charitable donations to noble causes make people love the company more.
According to the well-known TIME magazine, the tradition of ugly sweaters began at the end of the 19th century, but it was a couple of decades ago when the boom of the ugly Christmas sweater became popular and popular. The big break was in 2001 when corporate parties and family gatherings "required" that guests bring a different sweater, either with deformed Christmas trees or embroidered embossed to celebrate the December season. After everyone arrived at the celebration, the person with the most original and eye-catching sweater would win a prize for wearing it on that day. The concept of ugly Christmas sweaters is an increasingly popular custom at this time. Betting on Christmas and holiday periods is a winning movement. Appealing to the feelings of consumers has been done for decades in neuromarketing. At a time when everything is "magic and happiness", any brand can connect with its consumers and that is why Tipsy Elves makes more sales during such periods.
Ugly or not, it is certain that Tipsy Elves products sell massively and their market share is bound to increase. In 2012, two authors, Brian Clark Howard and Anne-Marie Blackman analyzed why people love such. According to them, people like these clothing and sweaters because they are very funny. One cannot have a bad day if he/she wears a sweater with bells, pompoms or a blinking tree. Tipsy Elves has excellent cash flow and an incredible business model. The company has great potential growth, and it will keep growing even in the future. In the next 5-7 years, Amazon will be valued at more than $150 million. The market cap of Tipsy Elves is currently almost $80 million, and it will keep increasing and the potential for growth is even greater. The cash flow of the company has also been increasing over the years as well. The company has also been re-investing cash into the business, and this will enable it to grow further thus generating more value for the company.
Chen, C. (2018). This quirky 'Shark Tank' alum makes ugly Christmas sweaters you'll actually want to wear. Retrieved from https://www.businessinsider.com/tipsy-elves-ugly-christmas-sweater-profile-2018-11?IR=T
DuDell, M. P. (2016). Shark Tank Secrets to Success: How to Propel Your Business from the Tank to the Bank. Disney Electronic Content.
Feloni, R. (2015). How an ugly Christmas-sweater company became Robert Herjavec's best 'Shark Tank' investment. Retrieved from https://www.businessinsider.com/tipsy-elves-shark-tank-success-story-2015-12?IR=T
Grant, C. (2019). How Tipsy Elves built a $125m ugly Christmas sweater empire. Retrieved from https://thehustle.co/tipsy-elves-christmas-sweater-125m/Mouton, J. (2018). Case Study: Tipsy Elves. Retrieved from https://blog.snapengage.com/case-study-tipsy-elves/
Parker, S. (2019). Tipsy Elves Co-Founder Talks Impressive Growth Thanks to 'Shark Tank'. Retrieved from https://www.tvinsider.com/828991/shark-tank-tipsy-elves-net-worth-update/
Resnick, N. (2018). Tipsy Elves: How Two Friends Grew a $50m Business Selling Holiday Sweaters. Retrieved from https://www.sourcify.com/tipsy-elves-how-two-friends-grew-a-50m-business-selling-holiday-sweaters/
Tipsy Elves. (2020). Retrieved from https://www.tipsyelves.com/
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