Luxe cashmere label Naadam is the latest transparent retailer

Founded by friends Matt Scanlan, Diederik Rijsemus and Hadas Saar — former head of global knitwear at Li & Fung and knitwear designer at Vera Wang — Naadam sells cashmere t-shirts and sweaters, among other items, and claims to offer “Loro Piana quality at J. Crew prices” because it’s able to control a majority of the supply chain process.

It sources cashmere directly from Nomadic goat herders in Mongolia, spins the yarn through its own Italy-based processing company and then sells clothing direct to consumers online. “We cut out the middlemen,” said Matt Scanlan, Naadam CEO. He estimated the company makes 30 to 50 percent in savings because it sources cashmere from the herders themselves, and not through traders or distributors, who typically put a mark up on the product. He also owns the business which processes the yarn.

“We have transparency and the right price for luxury quality, which is exactly what this millennial demographic wants,” said Scanlan. “They’re shopping online, comparing prices online and they don’t put up with bullshit if they think something’s too expensive.”

Naadam’s origin story is the stuff of “Eat, Pray, Love” fairytale: After a backpacking trip around Mongolia, which included living with the nomadic goat herders for three weeks, Scanlan and Rijsemus decided to start a non-profit organization, the Gobi Revival fund, to help herders with animal insurance, breeding programs and veterinary expenses. From there, the idea to actually buy the cashmere and create products was born.

It’s that story and the manufacturing process Naadam uses to resonate with millennials, and it mirrors what other fashion brands are doing. Online only retailer Everlane, for example, shows consumers the cost of labor, materials, and logistics that go into making their products along with the final cost of an item. Leather goods designer brand Oliver Cabell also breaks down the cost of making a designer bag to show how it can sell a bag at $200 to $300, compared to traditional retail prices of $900 to $1800.

The idea of transparency may be daunting for some companies, but Brooke Blashill, svp and director at Boutique@Ogilvy, a communications strategy agency for retail, fashion and e-commerce clients, recently told Glossy, consumers aren’t looking for perfection. “Brands have been nervous about exposing themselves as working toward sustainability because if they’re not totally there, they think it makes them look bad,” said Blashill. “but customers now are willing to go on a journey with a brand, provide feedback and see what changes.”

Naadam wasn’t always as transparent, or as cheap — its products initially sold for between $425 and $1500, until it was able to control more of its supply chain. Its CMO, Jessica Kia, said it developed transparency over time in response to consumer demand. “Whenever we shared information on social media that exposed transparency we were met with a positive response. Millennials can be quite precious with their spending habits.”

The company’s strategy for growth is focused on building social followers using storytelling and paid social advertising on Facebook and Instagram, where it has 20,700 followers. “We build social followers based off customer based data, particularly off Facebook,” said Kia. “While we’re not necessarily out there trying to convert every single person we come into contact with, we are scientific about who we expose our story too.”

Indeed, how brands weave transparency and sustainability into their storytelling is just as important as actually doing it, according to Nathalie Huni, a creative director at Huge. She said for those who get the balance right, it’s a win win.

“Right now there’s a shift back to lifestyle and it’s a secondary question people ask about how it’s made and if it’s sustainable,” she said. “It shouldn’t be the entry point into what attracts people to the brand.” Naadam, she added, has struck the right balance with telling its story.