Sometimes you find a creative solution to a problem others have had. Fabletics started out to create a solution to the problem women had of finding premium quality athletic wear at a moderate price. Solution: In July 2013, actress Kate Hudson joined forces with Don Ressler and Adam Goldenberg to create a fashion line that was coined, “athleisure.” Now that company, Fabletics is posed to do something very few other e-commerce businesses can boast of, take on Amazon. That little “athleisure” company, which started out as an online business only is now ready to open multiple “bricks and mortar” retail locations.
Amazon is a recognizable name in the e-commerce, laying stake to a commanding 20% share of the fashion market. Kate Hudson and her business partners are now in position to challenge Amazon in three different classes. Fabletics has grown from an obscure little fashion label into a spot of their own as a leader in the subscription based “activewear movement.” The three classes which Fabletics is set to go toe-to-toe with Amazon are:
Subscription based membership-High value brand at an economical price-Opening physical retail stores in Hawaii, California, Illinois and Florida-
- Subscription based membership- Amazon’s prime is membership only
- High value brand at an economical price- Amazon has built their entire 23 year history around name brand merchandise at low prices
- Opening physical retail stores in Hawaii, California, Illinois and Florida-Amazon opened its first one in November 2015
Fabletics had $250 million in sales in its initial three years. The successful formula for the company has been allowing customer to mix-and-match pieces to create custom athletic wear. Customers like to control the pieces that they own as exclusive activewear selections. In a published statement, Fabletics General Manager talked about the importance of being recognized as a “high value brand.” Gregg Throgmartin said, “Our membership model is what allows us to offer personalized service and on-trend fashion at half the price of our competitors. It’s just a lot easier to make people happy when you know who they are and what they want.”
As a subscription based brand, Fabletics doesn’t plan on straying too far off course from their original business model for the retail stores. Instead of trying to compete with other showroom merchants such as Nike, Under Armour and Reebok, Fabletics will stick to having customers browse merchandise offline. This will result in a return client base of people who are members; with an expected draw of 30-50 percent. Meaning that nearly half of the people who walk through the door of Fabletics retail stores will have already have a membership. Fabletics estimates that they’ll convert 25% of walk-ins into members.
What’s exciting about Fabletics opening retail stores is that it will flow in conjunction with online sales and actually enhance the shopping experience for members. So, the formula for success for Fabletics is familiarity and offering real value for the money. Kleiner Perkins Caufield & Byers (KPCB), anticipates that more companies will follow Fabletics lead.