Alternative (Business) Models
Another way to go…
In an ever evolving world and industry, we can expect to see ever evolving business models. In the case of fashion business models, this is no different. Alternative business models look at the current traditional model and either focus on a number of key stages or create a loop where there’s a natural end to a product lifecycle.
Are you setting up a business and you don’t want to work within traditional timelines? Do you currently operate an established structure and looking for new ways to innovate and generate revenue with the same product range? Here a few routes we believe may be worth considering.
What, (if any) are the key considerations for your business at the moment.
A. You would like to increase the rate of repeat customers to your business.
B. Make your product more accessible - allow more people enjoy your product
C. Build a greater emotional connection with your brand or your product.
D. Deliver a good product without the hassle of managing the supply chain or manufacturing.
Image: Ré Lagos
Here are some other models worth considering
Subscriptions
Rental
Repair
Licensing
1.Subscriptions
Subscription models in fashion are a spillover from the sharing economy we’ve witnessed over the last 10 - 15 years. Certain products naturally work well with subscription models, these are products that are either bought frequently or used frequently.
To run a subscription model for your business, consider how frequently your customer can use your product or your service. If this is a product that may need to be replaced or refreshed a subscription model can offer projected income and clients that walk through the door throughout the subscription period.
Identify what the value of a subscription with your business may bring to your customer, this could be keeping up with trend, ease, time or money savings. The key to running a successful subscription is to communicate this value to your customer and for them to accept and understand it.
Brands that have been able to run successful subscription models such as Harry’s razors consider how frequently men buy grooming products and offer options that can suit their budget and their perception of the subscriptions value. The same will work for clothing or a clothing service such as dry-cleaning, the key to the subscription game is value!
Image: Ajabeng
2. Rental
Consumer attitudes especially in the UK, Europe and the US have evolved in the last decade to really embrace rentals. It appears the fashion rentals are here to stay and there’s no surprise why. Growing concerns for the environmental harm the fashion industry has caused on the planet has opened up new conversations on how toe extend product lifecycles, and rentals propose a part solution.
Asides from the sustainable/environmental angle of rental fashion, this also democratises and makes accessible an endless amount of items that the usual over consuming fashion customer could ever buy. Dresses with four figure price tags now available for a limited time at a fraction of the price, often a tenth of the retail price.
Rental models offer brands with high ticket items a chance to engage a more frugal customer or a customer who fails to commit or part with large amounts of money for trend lend buys. It’s no surprise rental companies that focus on occasion wear such as Hurr, By Rotation and Rent The Runway have garnered large investment in the past few years for their forward thinking business models.
As you may expect, rental models can be incorporated into a larger traditional model, but this requires you to be ready to cover a number of costs to keep the cycle running. Rentals often cover dry-cleaning, delivery and care for the garments. If you make a product people love but struggle to pay that price per wear, consider offering a rental model along side your traditional model.
Image: This Is Us
3. Repair
Similar to the customers for a rental model, repair models look at elongating the lifecycle of the products we already own. These are often offered as a service as opposed to a product especially within fashion. Companies like Sojo have made this a very popular option especially with simple fixes such as upsizing, downsizing or repairing worn out clothes.
Offering a repair service along side your products is a way to ensure your customer uses your product more than once. This also develops a greater emotional connection between your customer, your brand and your product as it addresses real life use after sales.
To implement a repair model, your business will be required to collect customer data and keep in contact with your customers to ensure they are able to bring the item back to you for repair or up cycling. This will also signal to customers you care about environmental issues such as waste and over consumption.
Image: Clan
4. Licensing
If you would like to cut out the production process completely and only sell a product you care about, you may want to consider licensing as an alternative. Licensing rights permit you (or your company) to use branding and intellectual property to sell a product in your current market.
For example, large companies that would like to enter a new market, this could be a new state, region or country may be tempted to license out their goods for you to attract new customers within your market.
The upsides of this is, you benefit from an already established supply chain, the value the product brings and the quality of the product. Working as a licensee Will enable you to build a customer base with an already determined product. As an alternative model, licensing does not address sustainable concerns but this provides a readily available product ready to sell to your customer.
As always, businesses and motivations will differ and alternative or add on services are not necessary to ensure a business will thrive. Some companies concentrate solely on one of the above while a handful combine a number of models. What current model do you operate and could any of these alternative models enhance the way you do business?
If you would like to discuss your options in developing your current business model and opportunities for expansion book an introductory call with us with the link below.
