Image: Revolve’s SEC filing

Revolve Group is going public. The Cerritos, California-based online retail giant, which is reportedly worth upwards of $1 billion thanks to its stock of its own in-house labels and those from third party brands, filed documentation with the Securities and Exchange Commission on Friday signaling plans for an initial public offering on the New York Stock Exchange this upcoming summer. The number of shares in the currently TSG Consumer Partners-backed Revolve that will be sold and the pricing terms have not yet been revealed.

Founded in 2003 by Michael Karanikolas and Michael Mente, Revolve describes itself in its filing as “the next-generation fashion retailer for millennial consumers.” In addition to its “dynamic platform, which connects a deeply engaged community of millions of consumers, thousands of global fashion influencers, and more than 500 emerging, established and owned brands,” at the core of Revolve’s success is influencer marketing.

The filing states, “While our marketing competencies extend well beyond social media, we are recognized as a pioneer and a leader in social media and influencer marketing. We have built a community of over 2,500 influencers and brand partners, including many of the most influential social media celebrities in the world, whom we track and manage using our proprietary internal technology platform.”

Revolve’s widespread use of influencer marketing – namely, the use of key opinion leaders who are able to reach millions of consumers by way of their own social channels – supplants traditional advertising campaigns. As Los Angeles-based creative agency, Mistress, noted last year, “Rather than opt for the route of shooting traditional fashion editorial ads, Revolve began regularly hosting getaway trips from Palm Springs to Croatia, inviting influencers to relax, hang out and have fun while posting images of themselves wearing Revolve clothing (oftentimes with links to purchase the items) and the hashtag #RevolveAroundTheWorld.”

Revolve is well known to cover the travel expenses for its influencers in terms of its various annual activations, to provide “a sizable clothing credit,” and in some cases, pay appearance fees for influencers in exchange for social media promotion.

As Mr. Mente, himself, told WWD on the heels of the Coachella Music Festival in 2017, more than five billion press and social impressions were generated during Coachella, where Revolve outfitted more than 700 influencers. “That was thousands of outfits,” Mente said.

Despite the existence of these behind-the-scenes connections, the company’s large-scale reliance on influencer marketing largely comes without any consistent efforts to adhere to the Federal Trade Commission (“FTC”)’s mandatory guidelines, the ones that govern the disclosure of sponsored social media posts – from which a Revolve spokesman said earlier this year that it derives a whopping 70 percent of its sales.

The FTC requires the “clear and conspicuous” identification of any compensation at play or other “material connections” that the average consumer would not expect, and has held that disclosure should come by easily-understandable and identifiable language, such as #Ad or #Sponsored.

It is worth noting that while Revolve’s filing makes a brief mention of the FTC in terms of “risk factors,” it is limited to “any failure by us or our vendors to comply with product safety, labor or other laws, or to provide safe conditions for our or their workers may damage our reputation and brand and harm our business.” The filing does not make mention of potential investigation/ enforcement by the government agency as a “risk factor” in connection with its current business model.

It should prove interesting to see if the FTC decides to take action against Revolve in connection with its disclosure practices, as the agency has been paying an increased amount of attention to influencer marketing, and/or whether the risk of potential legal ramifications will impact the success of the impending IPO.

UPDATED (May 28, 2019): Revolve Group, LLC announced that it has commenced an initial public offering of 11,764,706 shares of its Class A common stock comprised of 2,941,176 shares of Class A Common Stock offered by REVOLVE and 8,823,530 shares of Class A Common Stock offered by certain stockholders. The initial public offering price is currently estimated to be between $16 and $18 per share. REVOLVE’s Class A Common Stock has been approved for listing on the NYSE under the ticker symbol “RVLV.”