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The lingerie brand challenging Victoria's Secret

Starting a small business is intimidating enough. Add to the equation that you'll be competing against lingerie powerhouse Victoria's Secret — which accounts for a whopping 62 percent of the market — and it could be downright terrifying.

But Morgan Hermand-Waiche, a Harvard graduate who founded online start-up Adore Me four years ago, saw it as an opportunity.

Similar to the backstory of Victoria's Secret, which was dreamed up when founder Roy Raymond was out shopping for his wife, Hermand-Waiche first got the idea for Adore Me while searching for an anniversary present for his girlfriend.

He was struck by how expensive such a tiny garment could be, and how few sizes were offered. After speaking with his family, friends and professors, Hermand-Waiche realized that a lingerie brand built on the concept of inclusivity "could really become a business," he said.

Adore Me founder and CEO Morgan Hermand-Waiche.
Adore Me
Adore Me founder and CEO Morgan Hermand-Waiche.

After raising $500,000 in funding while still on Havard's campus, his idea came to life.

"We really cover the full spectrum of sizes … [and] we're also inclusive through our price," Hermand-Waiche said. "We finally made high-quality lingerie affordable for everyone."

Less than five years later, Adore Me is ranked 14th on the Inc. 5000 list of the fastest-growing private companies, with a reported three-year growth rate of more than 15,000 percent and $16.1 million in revenue.

Designed by former Victoria's Secret Creative Chief Helen Mears, each of Adore Me's products are made exclusively for its website, with 30 to 40 new products launching each month. Bra sizes range from 30A to 44G, with bra and panty sets priced at $39.95 or $49.95. But its merchandise isn't limited to innerwear — Adore Me also sells sleepwear, corsets and swimwear.

Because its product range is so extensive, the site encourages shoppers to answer a seven-question style quiz and relevant sizing questions, to create their customized style profile. By doing so, Adore Me is able to generate a customized "showroom" for each shopper, which learns a customer's preferences the more they browse and buy.

For frequent buyers, Adore Me also offers a VIP membership that gives shoppers a free bra and panty set every six orders, and $10 off each set. Members have to visit their personalized showroom between the 1st and 5th of each month to indicate whether they will make a purchase or pass; if they forget, they will be charged a $39.95 in the form of a store credit that can be used on future purchases.

This custom model has helped Adore Me not only attract but retain customers three and four years later, Hermand-Waiche said. It's managed to do so all the while fighting against Victoria's Secret's extensive marketing budget and economies of scale, which enable it to produce high-quality products at a moderate price.

IBISWorld analyst Britanny Carter said Adore Me's decision to operate exclusively on the web helped it level the playing field in terms of production costs. But running a brand online only also presents its challenges — including the all-important issue of fit.

"That's one of the reasons why Victoria's Secret is doing so well," Carter said. "You can go and try on the items in person."

Hermand-Waiche contends that Adore Me's free shipping and exchange policy gave shoppers confidence to purchase from the site when it was still in its infancy; now, he has customer reviews on his side. The brand has just a 6 percent return and exchange rate, carrying approximately 50 different sizes for each design.

That roughly 70 percent of its shoppers are millennials, who are used to buying apparel online, doesn't hurt; nor does the fact that Adore Me caters to a broader range of body types, thereby making it relevant to a larger consumer base.

Whereas the average woman's bra size over the past two decades has increased from 34B to 34DD, according to IBISWorld, Victoria's Secret only cover sizes 30A to 40DDD.

"We don't leave anyone on the side," Hermand-Waiche said.

Having raised $11 million in funding to date, Adore Me is looking to expand beyond its digital-only roots through a partnership with a yet-to-be determined department store. Hermand-Waiche said that "every single department store is chasing us," and odds are "very high" that it will close a deal soon.

IBISWorld's Carter said such a partnership would be good for both parties. Whereas selling Adore Me products would help department stores connect with millennials — a group they are "really struggling" to target — it would also make it cheaper for Adore Me to enter bricks-and-mortar.

"The risks are much lower when you're partnering with an existing retail space," she said.

Hermand-Waiche also envisions a day when Adore Me opens its own stores. Meanwhile, he said, "It's been a fun ride."