When Drew Green took over as CEO of e-commerce menswear company Indochino in November 2015, he set a goal of 150 showrooms by 2020. The Vancouver-based made-to-measure apparel firm currently has less than a third of that number and has no plans to make up the difference in the next year.

But Green isn’t fazed. “We feel good about where we’re at,” he said in an exclusive interview with The Logic.

Indochino now has over $100 million in annual revenue, and will make more than 500,000 garments this year, according to Green. He believes his firm’s brick-and-mortar stores give it an edge over Amazon and other e-commerce platforms, while its supply chain is strong enough to directly challenge retail giants like Walmart-owned Bonobos. Green also discussed when he thinks Indochino will go public and identified a number of markets to which the company plans to expand. First off, Australia, which the company announced Wednesday as its first expansion outside North America.

University of Victoria classmates Kyle Vucko and Heikal Gani started Indochino as an online custom suit shop in 2007, and the company opened its first brick-and-mortar showroom in 2014. Green is a former advertising technology executive and e-commerce entrepreneur whose first Canadian startup, Shop.ca, ultimately went under. But he’s set ambitious goals for Indochino. One of his first wins after taking over from Vucko was a $42-million strategic investment from Dayang, a Chinese garment-maker, for a reported 21 per cent stake—one of the largest-ever funding rounds for a Canadian e-commerce company to that point.

Indochino now has 43 tailor shops, with another 13 on their way.

The company consciously chose to slow down new store openings to focus on the bottom line. “We wanted to scale the business profitably … instead of just growing and taking market share,” Green said.

In 2015, Indochino was losing about US$8 million annually, according to Green. In response, the company cut production costs and sped up delivery by shifting more manufacturing to Dayang, one of the world’s biggest suit-makers. Green said two-thirds of that money remains unspent, partly because Indochino’s margins have are on pace to have risen by more than 50 per cent since 2014.

Indochino projects that 2019 will be its third consecutive year of positive earnings before interest, taxes, depreciation and amortization (EBITDA), a measure of operating profitability.

Its revenues have also been rising steadily. The company said sales rose 43 per cent for the 2018 fiscal year compared to the year before. “We just saw this opportunity to basically be a very high-growth company, but to do it profitably, and to be able to make decisions without the stress of constantly raising capital,” said Green.

Indochino still plans to get to 150 showrooms, although it wouldn’t share a new timeline.

Canadian e-commerce platforms have struggled in recent years. Shoes.com—run by Roger Hardy, whose Clearly Contacts was sold for $435 million—went out of business in January 2017. Cymax launched as an e-commerce furniture marketplace for consumers but has since retreated to focus on the office market. And, Green’s own Shop.ca filed for bankruptcy in 2016, although he left his role as CEO in 2014; he has since bought the brand back and re-launched it as a deals website.

“Everyone in retail competes with Amazon at some level,” said Green. “It’s very, very hard to compete with them on a multi-brand platform such as a marketplace.” That was the model for Shop.ca and Shoes.com.

Green believes Indochino is better placed to compete because it’s a more focused brand, and its showrooms provide a better customer experience than e-commerce-only companies can. “We launched [physical] retail because we felt that that could differentiate us further from an Amazon,” he said.

A bricks-and-mortar presence also helps with customer acquisition, which becomes “really, really costly” for online-only retailers as they grow, according to Green. “It reaches a point where it’s almost impossible to scale the business because it’s too expensive,” he said.

According to the U.S. commerce department, e-commerce and other non-store selling accounted for 12 per cent of retail and food sales in the first quarter of 2019. Online-only brands are leaving a large part of the market unaddressed, Green said.

Showrooms contribute 70 per cent of Indochino’s revenue, chief revenue officer Peter Housley said in January. The company’s physical locations are cheaper to run than traditional clothing stores. Most customers book appointments in advance, so staffing can be adjusted accordingly. And, there’s very little inventory on hand—every garment is made after the order is placed.

Indochino has also moved into new categories of menswear. In September 2018, it launched chinos and a limited run of coats. Last month, it added casual and short-sleeve shirts. “And in a month we’ll launch shorts,” said Green. Indochino has also tested a womenswear line internally, and the CEO said he’s regularly asked when the company will launch one, but it’s focusing on menswear for now.

New categories also mean new competitors, including some of the world’s biggest retailers and apparel companies. Green said customer feedback, not Bonobos’ success—Walmart bought the company for US$310 million in 2017—drove the decision to add chinos. “It is sort of the casual uniform for men across North America,” he said, adding that the company had also considered jeans.

Indochino beats made-to-measure competitors on price and off-the-shelf rivals on fit, Green said. “Our chinos are less expensive than Bonobos or Everlane or Banana Republic or the Gap,” he said. “They’re better-fitted obviously, and to me, they’re better quality.” In the U.S., Indochino’s chinos are US$79, the same price as Bonobos’ lightweight option but cheaper than its regular styles; most Banana Republic pants are US$98, while Gap’s khakis are slightly cheaper than Indochino’s, at US$60.

Bonobos now has 61 brick-and-mortar locations in the U.S., and a branded store on Jet.com, its parent company’s e-commerce platform for wealthier customers.

In 2017, Bonobos founder Andy Dunn said he chose to sell his company to Walmart rather than take it public because he saw mid-sized retailers struggling to compete with multi-billion dollar brands like Nike or Chanel. He also wanted to avoid the kind of pressure to rapidly grow store count and sales within its physical locations the likes of athleisure company Lululemon and luxury brand Michael Kors faced.

Green first publicly discussed the prospect of taking Indochino public the same year, shortly after Canada Goose raised $340 million in a March 2017 offering and Aritzia, another Canadian garment retailer, brought in $400 million in October 2016. He said the company does envision an IPO “at some point.”

Indochino has a financial profile similar to what outerwear brand Canada Goose had three or four years ago and to Lululemon’s financial profile in its initial years on the public markets, Green claimed. “Given our size and scale and … the economics that we’ve been able to drive in the business, we could be public right now,” he said. But “it won’t be this year, and I doubt it will be in 2020.”

The company’s domestic revenues have tripled since 2015, Green said. One major driver was newspaper publisher Postmedia, which provided $30 million in advertising in exchange for what Green said is a small stake in Indochino. Green has done this kind of deal before at Shop.ca, with Toronto Star publisher Torstar in 2012.

Shop.ca reportedly failed because it couldn’t reach the scale necessary to make a profit on the thin margins of an online marketplace and spent millions on marketing and sales—60 per cent of revenue in 2013. Third-party merchants unfamiliar with shipping online orders and poor product quality also reportedly led to poor reviews.

Indochino sees room for growth overseas. The United States currently accounts for 75 per cent of its revenue. And, while customers can order from anywhere, the company has not marketed itself overseas; just three per cent of sales come from outside North America.

“We chose Australia, frankly, because that’s most of our international business right now,” said Green. The company now offers pricing on its site in Australian dollars, and is beginning to market itself to shoppers starting Wednesday. It will focus on online orders for the first six to nine months, before opening showrooms. “We’re going to target our retail locations based on the consumer data we get,” said Green—a strategy the company has successfully used in North America.

Local rival InStitchu already has nine showrooms in Australia and one in New Zealand. It also has Dayang’s backing—the Chinese firm invested US$2.5 million in February 2018. But Green said Indochino’s scale will allow it to compete. “In Australia, there’s been no made-to-measure company that can deliver the garment within two weeks,” he said. “So automatically when we launch, we’re industry-leading from an experience standpoint.” InStitchu takes about three to four weeks to deliver.

Indochino’s cost structure also allows it to keep prices low, “better than InStitchu or other competitors in market,” Green claimed.

The firm’s international plans include Japan, a market Green has talked about wanting to expand to for years. The country would likely be its first Asian foray, and it’s home to the company’s strategic investor Mitsui & Co. China, the United Kingdom and Germany are also targets. But Green said none of those launches are imminent.