I don't know anything about fashion but I spoke to some friends who are lifelong fashion addicts. Apparently in the fashion blogosphere they're more well known for copying small designers than they are for the quality of their clothing:
About your link: Nasty Gal could have handled that a lot better. Something like "Hey, we're really sorry that your design got ripped off. We've written privately to you to explain how this happens. We like the design, and we want to keep selling it, so we've also written to you about that. And you point out something that's a problem (link to competitors ripping off designers) - we want to help. So we've got a "report the rip off" site here, and if we're ripping off a designer we'll put things right!". That would have got them a lot of credit amongst designers, and maybe among customers.
The bottom line was basically that you can have the best design in the world, but if the competition has a better distribution chain, their imitation will be out in stores, before yours are.
I thought it was pretty interesting to read about the importance of the logistics of a fashion label.
As a Supply Chain professional, Amancio Ortega is one of my biggest role models. Their returns rate is almost zero, their discounting is nonexistent, their conception-to-floor time is two weeks, and they manage to do all that with the labor costs found in a developed economy.
It surprises me that the fashion industry has largely overlooked Zara as a technical leader, referring to them as nothing more well-practiced copycats. It is just a pathetic excuse. Zara can create a similar design (they never blatantly copy, they always have their own spin), mass produce a garment and sell 50k units in less time than it takes the original creator of the "copied" garment to solidify a production plan with a Honduran Maquila with a 6 month lead time.
New fashion companies should be aware that if they can't compete logistically, they have no chance at survival. Old fashion companies with bad logistics practices are only squeaking by due to brand cachet.
I don't think Zara's supply chain innovation has gone unnoticed. I think many if not most in the fashion industry understand that it's the reason they excel.
I'm wondering what other industries are ripe for disruption-by-supply-chain. Dell did it to PC, Zara did it to fashion, FedEx did it to post...
There are several reasons they excel, but when I did a Harvard Business Case about them the main factors were the supply chain innovation due the ability to move quickly and keep less inventories + not having to hire expensive designers by copying = fast copying.
http://hbswk.hbs.edu/archive/4652.html
... Steve Jobs did it, when he ordered all remaining air transportation way back when and blocked everyone else from using it. It may have been before the iPod.
As I understand it, H&M has a similar supply chain/business model, but Zara came along and turned it up a notch. From my not-really-interested totally non-scientific observations, Zara does seem to be expanding faster than H&M at the moment.
"They also monitor customers’ reactions, on the basis of what they buy and don’t buy, and what they say to a sales clerk: “I like this scooped collar” or “I hate zippers at the ankles.” Inditex says its sales staff is trained to draw out these sorts of comments from their customers. Every day, store managers report this information to headquarters, where it is then transmitted to a vast team of in-house designers, who quickly develop new designs and send them to factories to be turned into clothes."
The tldr is: In the fashion industry there is limited protection for innovative designs and as a result, copying is rampant. Despite the ease of copying, innovation is quite strong in the industry and there is a great deal of competition.
I would add that, (1) the clothing industry is similar now to the the time IP was being legislated so it was directly addressed rather than derived by similarity to other areas. Its a little more logical and true to the original goals of IP than areas that derive. (2) There is a big element of hivemind/zeitgeist/emergence in fashion because people invent their own outfit every time they dress. (3) The combination of innovative fashion & quality is what makes high fashion brands valuable. (4) the lack of IP protection actually fuels innovation as a design will remain somewhat exclusive for a season only.
This is an excellent podcast. There was a similar video a while back, actually showing the garments that they talked about, but I can't seem to find it.
What I find most humorous about those that are so bent out of shape about the copying is that they themselves are copycats, but they hold themselves to different standards. To them, it is okay to copy a design from 10-20 years ago, or to pull 10 different design elements from a current design...but if someone does it to them, they want to sue. The simple fact is that design elements of contemporary fashion are always recycled. Runway fashion is innovative (from an art and design perspective, as much as this crowd would probably laugh at that), but not marketable, as most people (even fashionistas) do not want to be walking art exhibitions.
Interesting. I think anyone interested in software patents should listen to the first 10 minutes of this. Good info about utilitarian-ness being the reason clothing design is free of protection.
A design is non-protectable, which is why they generally keep things moving fast or cover it with logos which are protectable and gives them leverage to go after copies.
You like big players using their vast resources to steal from "up and comers" who have no way of defending themselves? I find that attitude utterly disgusting.
Downtown LA is home to a thriving fashion startup scene, but it doesn't get much coverage (aside from male-led startups like ShoeDazzle) because fashion isn't something that the (largely male) startup world understands.
This seems like a great founder/product fit. She's hip/cool/fashionable and knows her product and demo pretty well.
I really like the fact that stuck through the grind, and slowly built up a loyal following. I think that is something missing from a lot of start-ups in the valley right now. People tend to shut down their projects when people don't come flocking. This also might be a testament to just building something people want.
There's nothing in that article that suggests she "did a startup" though, which is the other side of the coin. She resold some clothes on ebay to make a few extra bucks, and it grew from there.
I run in to loads of people that want to "do a startup". They've subscribed to the culture of 'tech startup', they know all the buzzwords, go to the right networking events, learn about VC and term sheets before they even have a product or service, and so on.
She did have a Virgin tattoo, and was/is a fan of Branson from an early age; I'm assuming from that she had a head for business early on, and built from that, but that is miles different from the 'startup culture' I run in to these days ("how many accelerators have you applied to? are you on angel list?" etc)
I'm surprised to read Nasty Gal being seen as a fad - what indicators of stability are stronger than 6 years of consistent growth? Don't fashion fads have a single season 6 month life expectancy?
For a brand like Nasty Gal, it's dependent on the people running it and their ability to constantly shift with the tide. Very few can do it, but some entrepreneurs do pull it off (and they often end up as huge fashion brands).
Fashion trends have a short life expectancy, but if you can change with them season after season, then you'll be a monster in the fashion world.
For a brand like SomeStartup, it's dependent on the people running it and their ability to constantly shift with the tide. Very few can do it, but some entrepreneurs do pull it off (and they often end up as huge startup brands).
startup trends have a short life expectancy, but if you can change with them season after season, then you'll be a monster in the startup world.
A great success story. She just mapped her own personality online, and tried to make money out of it - which her company did, boatloads of. Could be a classic example of "look around, and try to solve a problem that you face yourself and people like yourself. that would be a great idea for a startup".
It would be interesting (but unlikely) to hear about the company's entire financial picture. After working in online fashion retail, it's clear almost nobody is making money, despite what their revenues are.
That doesn't really mean much - most online fashion retail has similar markups, and nobody else is making money.
Edit: In the case of the 2nd piece, Nasty Gal probably isn't making much money on it at all. It's made in the USA (which is usually a higher cost item), and the direct from manufacturer price is 63 dollars. Thus, it's probably a drop ship item with a razor thin margin.
Nasty Gal initially started out by selling vintage clothes which happen to have huge margins. One piece she purchased for $8 sold for $1000. So I'm sure the margins are still there now that Nasty Gal is trying to become more of a brand. It wouldn't make business sense to abandon a profitable strategy only to shift and scale to a non-profitable one.
That is how most of the fashion sites start out. There's some point in time where they find a desperate luxury goods manufacturer willing to give them a deal, or meet a guy who inherited his family's shirt factory and wants to try out something new, or they get lucky selling a few pieces of vintage clothing. Then for a while, the site does very well.
Eventually they run out of high margin stuff to sell, because they literally run out of the stuff (in the case of vintage clothing) or their suppliers start raising their prices. Then they need to sell more stuff, which requires more employees, and bigger warehouses, which continues to eat at the margins.
There's also many copy cat fashion sites, since between 2009-present "fashion internet" seems to have been a trend for fresh MBA grads. I'm not really sure how they get started, but I'm pretty confident they also don't make any money.
Nasty Gal initially started out by selling vintage clothes which happen to have huge margins. One piece she purchased for $8 sold for $1000.
what about the other 100 she purchased at $150 and still are not sold? I made the numbers up but you cannot use an extreme case and assume the same applies to all.
Sites like these have huge expenses. In addition to having to pay staff ranging from programmers to models, they take on a lot of risk when they buy and warehouse the products. Consumers are fickle. If the site buys the wrong stuff, they are perpetually losing money on it as it takes up space in the warehouse.
The business model for online fashion retail is for the founders to extract as much cash as they can for themselves while it's hot and leave investors holding the bag when it's not.
I would take any article about such a company with grain of salt. One thing these companies do well is PR. Getting media placement often comes easy for them as employees of magazines, newspapers and blogs are often into fashion themselves and are eager to run a story about something they are personally interested in.
No retailer pays manufacturer-direct prices. Retailers pay wholesale prices, which are usually 1/2 to 1/3 (or even less!) of the manufacturer-direct price. The substantial discount reflects that the retailer takes on the bulk of the risk associated with marketing and actually selling the apparel.
Rue La La is a flash sale site (a la Gilt Groupe, Amazon's MyHabit, and so on). Their inventory changes pretty quickly (something like 48 hours, I think), and different brands are featured during each iteration.
NastyGal doesn't appear to have rolling inventory; rather it seems they have relationships with some set of brands, but the brands themselves aren't front and center. Moreover, NastyGal also appears to have its own brand, which RueLaLa does not (though Gilt Groupe does have its own Gilt Home (ie furniture) line).
Interesting story, but I find the whole cinderella angle extremely tiresome. Isn't cinderella about women dreaming about being courted by a rich man? Seems to me there are plenty of rags-to-riches stories/legends that are better fits - but then again, those are not about women...
"Cinderella Story" is now a pop phrase which simply means exceeded expectations. It is most commonly used in sports. In this context it fits perfectly.
Except that it mentions several key insights that the founder used to exploit market opportunities. She clearly has solid domain knowledge that allowed her to buy low and sell high, through not just thrift stores (which is labor intensive, but certainly not a new concept), but also identifying people who didn't have her expertise and thus didn't appreciate the value of the goods they were selling.
It also sounds like she had a model that allowed her to build an engaged userbase and enlist them to help her build the business.
Granted this is all just what one article says, but this is exactly the sort of thing you're supposed to do as a start up of any kind.
"Ms. Amoruso also outgrew eBay, which she said was a terrible platform to start a business. Competitors started flagging Nasty Gal for breaking the site’s rules by, for example, linking to Ms. Amoruso’s Myspace page. Fed up, she decided it was time to start ShopNastyGal.com."
It's not just this. Many users are terrible and will leave you negative feedback based on what they are feeling that day, even if you did everything right.
I bend over backwards for my customers and still get negatives. College students seem to be the worst. If they don't get things exactly their way, you get a negative.
http://la.racked.com/archives/2013/01/09/nasty_gal_engages_i...