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While Gymshark didn’t become a brand valued at over $1 billion dollars overnight, the speed at which they’ve grown as a business, and taken over plenty of market share from their closest competitors, is something that could be extensively studied.
It’s a success story any aspiring entrepreneur loves to hear. Ben Francis started Gymshark (along with co-founder Lewis Morgan) by sewing and screenprinting the merchandise himself, building a multi-million dollar from humble beginnings in his parents’ garage. Some other notable businesses that started in garages include: Google, Apple, Amazon, Microsoft, Dell, Mattel, and Walt Disney.
Was the garage itself the secret, or was it the grit and determination to follow-through with an idea no matter the available resources?
We think it’s more about the who than the where. And in this blog, we’ll take a look at Gymshark’s humble beginnings as we uncover exactly how they built their business from the ground up, and how they continue to innovate along the way.
The Gymshark story starts with a gap in the market. Ben Francis couldn’t find the type of workout wear he preferred: fitted, lightweight pieces that were physique-enhancing. The kind of things bodybuilders (like himself) wanted to wear.
So he made them himself.
But like any brand that’s just starting out, money was tight. Ben was only 20 years old, and working out late at night after his university classes and job as a pizza delivery driver. To solve the funding problem, Ben and Lewis started the Gymshark.co.uk site as a company that dropshipped supplements.
The clothing was built around products they wanted to see in the market, and the marketing was slow (at first) and aimed at people in their target demographic: other lifters.
When Gymshark was first getting started, influencer marketing was picking up. So Gymshark found a bunch of bodybuilders (their “heroes”) and sent them products. Since they were great products, the influencers liked them. People like Lex Griffin, Matt Ogus, and Chris Lavado signed on as Gymshark athletes and became ambassadors for the product.
More people promoting the product meant more eyeballs on the product, and Gymshark’s brand and reputation started to reach further. They combined influencer marketing with attendance at the biggest fitness expos, like Bodypower in 2013, where they were able to connect with their community in person and “welcome more lifters into the family”.
Gymshark can credit a lot of their success to their focus on community-focused events. They said Gymshark is “by lifters, for lifters” - and they meant it. Since health and fitness accounts were a growing trend on social media at the time, this meant that Gymshark amassed a huge following of a young audience that was very dialed in to what Gymshark was throwing down. They built a cult following, then started disrupting the industry.
Armed with influencers wearing their products and plenty of engagement through social channels, Gymshark products started flying off the shelves. They outgrew the garage rather quickly, but refused to hand over control of the supply chain. In fact, one of their main mottos is to “own as much of the supply chain as you can.”
Other companies might be tempted to offload production, but not Gymshark.
Gymshark HQ is a 42,000 square foot facility just outside Birmingham, UK, and it features open-plan working spaces, areas for relaxation and team-building, and a state-of-the-art gym (naturally). The space is used to focus on testing new products and innovating on-site, which allows Gymshark to keep its edge in a market that continues to feature new contenders.
They grew insanely fast, however, and by this point have realized that warehousing and distribution weren’t their strong suit. They found a third-party logistics partner that allows them to concentrate on what they’re good at: designing quality products. The 3PL provider in Belgium, Bleckmann, has been supporting Gymshark’s rapid growth since 2017. This 30,000 square meter warehouse space in Belgium and UK will enable Bleckmann to facilitate a projected 50 million pieces sold by 2024.
That’s not enough, though. Gymshark also has a 3PL provider in USA (Advanced Handling Systems) that handles the North American demand for their items.
As the company grows, it continues to “grow in public”, being entirely transparent with how much money they’re making, as well as how much they’re spending, which is helpful for any apparel brand trying to learn something from the hottest fitness apparel brand out there.
In the UK, companies are required to release their financials, which gives us a lot of juicy numbers to investigate. This article by Drew Fallon summarizes it nicely, but we’ll pull some interesting ones to compare with a cohort of Triple Whale companies operating on as close to a similar scale as possible.
First off, revenue. Gymshark grew by 15% year-over-year compared to 2022, down from 21% in 2022. Some people might look at a 15% growth rate and be concerned, however when the revenue is over £500 million, it’s quite a large amount of growth.
Interestingly, only 3.6% of total revenue is dedicated to non-DTC revenue. So Gymshark is still going hard on direct to consumer sales, and isn’t expected to adjust that much in the future, even if wholesale revenue grew from £1.4 million GBP to nearly £8 million. Retail also grew by almost 600%, and more customers are definitely shopping at their flagship store on Regent street in London.
I know what you came here for. You want to know how much Gymshark spends on marketing.
Hint: it’s a lot.
In his analysis, Drew did some reconciliation magic to pull out their MER at around 2.32, which means that for every British Pound Sterling they put into marketing, they get £2.32 out.
Gymshark spends 43% of their total revenue on marketing.
Some Triple Whale brands that are in a similar playing field (greater than $100 million in annual revenue) had some differences in their stats, with a ROAS of 5.2 and marketing spend only representing 19% of total revenue, you can tell the Triple Whale cohort has a different marketing strategy. Big brands typically have a lot of repeat customers, which is why we can see a higher ROAS for these brands. But they’re pulling nearly flat year-over-year growth, where Gymshark is growing at 15% year-over-year.
If you look at Gymshark’s net profitability, it’s dropped from 9.1% to 4.1%, to 1.8%. If you’re evaluating that number alone, you might be inclined to say they’re doing something wrong. But, they’re just in a league of their own.
Taking a look at the overall data, “it’s clear that Gymshark had a ‘belt tightening’ year in 2023”. Many clothing brands that prioritize efficiency are instead looking for a healthy profit margin to enable sustained growth over time. Gymshark is betting on growing, being aggressive, and actively seeking out new customers as it expands its geographic reach. Our own John Coyle guesses that Gymshark might be acquiring customers at either a loss or break even, which means they’re betting on new customers turning into loyal ones.
Drew Fallon predicts that the most recent valuation will be a hurdle, and that the $1.4 billion valuation they received in 2020 might actually be lower in 2024. He also thinks this is the last low-profit P&L we’ll see before we see them generating significant cash flow, overall growth into omnichannel, and see Gymshark getting ready to IPO in about 2 years.
Gymshark’s astronomical rise to join top apparel brands like Nike, Adidas, and Lululemon utilized community building, listening to their customers, and creating innovative products that filled a missing gap in the market. As Gymshark continues to aggressively spend to acquire new customers, we’re excited to see how this company drives revenue at a breakneck pace. When the time comes to IPO, we wouldn’t bet against Ben Francis - Gymshark is a force to be reckoned with.
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