In a recent Forbes article, Paul Armstrong profiled the rise of Kate Hudson’s fashion e-commerce newcomer Fabletics. In just three short years, Hudson’s company has grown into a $250 million business despite Amazon’s industry dominance, through a combination of premium customer service, data-driven decision making, and an innovative business model that blurs the line between online and brick-and-mortar.
When it comes to developing an e-commerce start-up, the question of how to position a new firm against Amazon is unavoidable. A big part of Fabletics success is their deep understanding of the new world of branding. Over time, the value of established brands has declined, with customers attaching greater value to attributes such as concierge-level customer service and customization. Fabletics has taken the trend toward membership models and used it to compete with Amazon, especially on the customer service front. Fabletics’ setup allows it to use data to maximize profits online and through its physical locations.
The company’s combination of online and physical presence is also unique. Their merchandising system closely correlates their online and offline offerings. For example, when customers try on an item, it goes into the user’s online shopping cart. Essentially, Fabletics is countering the showrooming issue by creating a flexible omni-channel model. This retail counter-attack is called “webrooming” and takes advantage of the inherent lack of convenience in online shopping. It doesn’t matter how the customer purchases the product, as long as they purchase it from them.
This kind of symbiotic relationship between offline and online has been the key to Fabletics’ explosive growth. Their data-driven approach means that they are able to sell to local markets by planning their stores in advance using online data. Similarly, many visitors to the store end up signing up for Fabletics’ online subscription service. The company already has sixteen stores from Hawaii to Florida in operation and has several more locations in the works.
Fabletics’ parent company, JustFab Inc., was founded by Kate Hudson in 2013 with partners Don Ressler and Adam Goldenberg. From the beginning, the company’s goal was to fill the need for luxury activewear at a more affordable price by leveraging a more innovative and efficient business model. By the end of 2014, Fabletics had already shipped one million orders and was shipping to most countries in Europe. They later expanded into Australia and Canada and opened their brick-and-mortar stores in late 2015, with additional stores planned in 2016.