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Apr 12, 2017

WWD Article on TechStyle’s FashionOS and Unique Approach to the Fashion Business

Athleticwear brand Fabletics merges fashion with custom-built technology in its “direct response advertising” model.

By Tracey Greenstein on April 12, 2017

Kate Hudson models a look from Fabletics.

Bespoke technology seems to be emerging as a panacea for fashion retailers’ growth and sustained success. And in lieu of New York, London, Paris or Milan, the future of fashion increasingly points to Silicon Valley.And some companies, such as Fabletics, see themselves as tech companies that happen to be in the apparel business.

The women’s online subscription retailer for athleticwear is owned by TechStyle Fashion Group, and is self-described as a fashion brand with “tech DNA.” The firm began as a joint venture between entrepreneurs Adam Goldenberg and Don Ressler, both cofounders and co-chief executive officers of TechStyle Fashion Group and Fabletics, who identified a gap in the market for affordable athleticwear.

Fabletics is also partnered with actress Kate Hudson, a cofounder, and the brand has grown to more than 1.2 million VIP members and 18 brick-and-mortar stores since its launch. Goldenberg told WWD, “Fabletics launched in 2013 to fill a void in the market and deliver a truly unique shopping experience to today’s modern, active consumer. The combination of our flexible membership model and FashionOS technology platform has enabled us to elevate customer satisfaction through rapid data-driven decision making that results in personalized selection and service. When you know what customers want and have the ability to leverage that data, it is so much easier to make them happy.”

Aside from data, old-fashioned merchandising also plays a role. Goldenberg and Ressler delayed the Fabletics launch by six months after receiving the first shipment of merchandise valued at $300,000; the quality did not meet the brand’s standards, so they wrote off the amount and perfected the product until it met expectations. “Our goal was to be the same quality as the leaders in the space at half the price,” Gregg Throgmartin, the president and general manager of Fabletics, told WWD.

To meet the needs of shoppers and create a personalized and customized experience, data technology is key. New members fill out a style and size profile that allows Fabletics to provide targeted product recommendations. A Fabletics membership is free to join, with one caveat: Members are asked to browse the web site the first week of every month to peruse new collections and shop or “skip,” a task completed by the press of a button. If a member “skips” anytime within the 1st through 5th of the month, they have essentially paid their “dues” by visiting the web site. Members who forget to skip are charged a $49.95 Fabletics credit with no expiration date.

Fabletics created its flexible membership model to avoid charging standard monthly or yearly fees. “The traditional retailer does not know how to get you into their store,” Throgmartin told WWD. “We went a different way and we changed the value proposition where we said ‘Look, it’s going to cost you nothing. The only thing that we ask of you is that you come to our site, the first week of the month, and either shop or skip,’” he explained.

The brand’s “direct response advertising” model allows Fabletics to focus investments on manufacturing low-cost, better quality products in place of heavy advertising spend. On average, most Fabletics members purchase three to five times per year, and 85 percent of sales are repeat purchases. More than 225,000 members have been referred by friends who are active members. “[The model] puts the burden on us to put compelling product in front of you each and every time,” Throgmartin said.

The Fabletics store at the Village at Westfield Topanga.  Howard Tucker

Fabletics says it better understands and serves its growing consumer base through FashionOS, the brand’s proprietary software suite. Comprised of five distinct platforms, the suite includes: Bento, its global membership e-commerce system; OmniSuite, its retail experience system; InHome, for personal styling and merchandising; Evolve, its global supply chain and fulfillment system, and Bond, for customer management.

OmniSuite’s function called “OmniCart” follows the consumer journey across all channels by tracking purchases, monitoring take back rates to fitting rooms, and logging personal notes regarding product preferences or sizes, among other features. OmniCart was named for its innate ability to “go with you wherever you go,” according to the brand, to increase the chances of closing a sale. Incredibly, businesses miss an average of $18 billion each year due to abandoned shopping carts, said in a report by CPC Strategy.

For its brick-and-mortar stores, Fabletics solely uses mobile devices. The brand noted that many competitors in the market still use dry erase boards with a markers in dressing rooms to jot down un-purchased items. It’s a common practice that positions brands to lose the chance to capture important customer data. At Fabletics, every active member shopping inside a store location is “scanned in,” which allows for streamlined service and personalized product recommendations.

Regarding inventory management, Fabletics again relies on its own software. The company’s predictive modeling software allows inventory to be stocked according to consumers’ preferences and it has 95 percent accuracy — 5 percent of inventory is left over each month on average. “A lot of retailers are missing the boat around the inventory logic,” Throgmartin said, adding that the business is constantly being perfected.

“We want to find the porridge where it’s just right. We’re always working on that,” Throgmartin told WWD.

 

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