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How to build a successful fashion brand

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The Online Fashion Retail Industry, particularly at the luxury end, seems to be doing well. Over the past few years, lot of money has been invested into fashion retail businesses like Moda Operandi ($46 million), Nasty Gal ($49 million), ShoeDazzle ($66 million), BeachMint ($75 million) and Gilt Group (whopping $236 million). Valuations of these companies might seem inflated, but these companies are growing fast with the help of clear revenue stream and a value proposition that’s beyond price advantage. But while some companies in Fashion technology are successfully raising more money and growing, there is another segment that’s struggling to survive. These businesses are stalling because of their inability to adapt to the shift in the media consumption behavior of the consumer.

Content is the new social currency
Today, we’re spending big chunk of our lives staring at our computer and mobile screens, soaking more information than probably our brain can process. The impact of this changing pattern in content discovery and consumption is big, especially in the fashion industry. Today, we’re what we share and this is what’s building identities of individuals and brands. If you can be the source of new fashion ideas and inspiration, you can be the fashion; people will follow you and buy from you. This article is for you, if you’re a Fashion start-up aiming to exploit the curated fashion opportunity. You will learn how to be unique and selective to draw people away from biggies like eBay & Amazon, but broad enough to scale and yet offer a luxury buying experience.

We will take a look at companies such as NastyGal, digital-driven fashion brands, selling clothing directly to the consumer at high gross margins, without fixed retail costs and above all - low customer acquisition cost because of Social Media. These companies are targeting the new age Internet generation while taking a dramatically different approach. They have re-defined fashion retail by mastering what runs the internet - 'the content'. They sell more than just clothes, they sell online fashion experience. With the power of curated content, these companies have become a stamp of approval for their customers for fashion discovery. These new wave fashion retail companies share a common trait; they are tech savvy and understand how to leverage the 'new' internet and especially social media as a marketing & distribution channel.

But first, let’s talk about the fundamental difference between the business of selling fashion and clothing. The business of selling clothes runs on the equation of need or demand; demand for 'nice' & 'affordable' clothes which can be bought conveniently from the comfort of home using the internet. On the other hand, the business of fashion runs on the ‘desire to be in vogue’. Both these businesses have different audiences and require different styles of marketing. Perceived value is essentially two of the major differentiating factors between both.

The key to building successful e-commerce businesses lies in creating a life time customer value so that customers not only come back for more but also share their experience with their friends and family on Social Media. In Fashion retail industry, brands set the foundation to build lifetime customer value on the things such as:

Perceived value
Personalized Shopping Experience
Honest, Openness & Realness
Fashion Supply Management
Involving their customers - Crowd-sourcing

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6/14/2016 6:05 PM
Great blog post!
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