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Hey! Thanks for the long and detailed reply. (On a side note I enjoyed the Pascal reference: http://en.wikipedia.org/wiki/Lettres_provinciales#Other http://en.w

Hey! Thanks for the long and detailed reply. (On a side note I enjoyed the Pascal reference: http://en.wikipedia.org/wiki/Lettres_provinciales#Other http://en.wikipedia.org/wiki/Lettres_provinciales#Other :) I definitely agree with your main point, inventory is the enemy. I'm not trying to claim that this is an entirely new idea, however, it is a fact that brands are moving online and doing so quickly in a way that has not happened en masse before. I cover in the article that many brands will probably mis-manage this transition and go out of business. My own TL;DR of the article would be something more like this: Brands are moving online rapidly, this will mean they have to hold inventory. This is a new risk they have not taken before and some may fail because of it. They will take this risk because there is margin benefit as well as threats from direct-to-consumer online retailers taking their business. Going forward, direct-to-consumer with higher value to the consumer will be the 'new normal'.

digitailor 13y ago
I understand what you mean. And your bottom line that online retailing is growing and will cause a shift in the apparel industry, as it has in most others, is certainly valid. I'm just not sure the shift you're describing is likely. I think this strategy is untenable for almost all of the designer brands in the market you're addressing, because the assumption of all the risk is not a good business model in any industry. Let's look at VC for a moment. Having been involved in it, there is an obsession with risk analysis and reduction, and with good reason. A model that says "Let's take 100% of the risk and capture the margins!" probably can't support a whole market shift, and would probably be difficult to fund. And funding of some kind would be necessary for most brands to be able to stock goods. You're very knowledgeable about the back-end of the apparel business, it was cool to see a story like this on the front page of HN.
- jamiequint 13y ago
  I think that a less extreme, but possible, outcome could be that brands move to a partial wholesale/retail model. Its possible that brands could take some of the risk and wholesalers take a smaller margin hit but still guarantee a partial buy. My opinion is that it is more likely that the types of successful brands that exist change all-together in the long run. There are small-ish new brands that seem to be able to sustain only direct-to-consumer retail (e.g. Everlane, Warby Parker, Frank & Oak) that are taking on 100% of the risk. Maybe we see more brands like that. The differences there seem to be more agile production on a more frequent basis, with smaller production runs and more willingness to stock out.
- prbuckley 13y ago
  First off congratulations on having a business that has lasted 100 years! That is a rare accomplishment these days. I think you both have an interesting perspective on the future of apparel and e-commerce. The one thing that I think deserves mentioning is that it has been getting easier and cheaper to own the means of production so you can convert raw materials into finished goods with out holding lots of inventory. You also need the manufacturing capabilities if you want to do mass customization. My limited experience with this has come over the past 3.5 years building DODOcase.com. We ended up building all of our own manufacturing and hold less than 2 weeks of inventory, while over 30% of our online sales are one off custom built products. My hope is that the future is brands built online that actually make their own stuff. I agree with Jamie that the brands of tomorrow will have to be more hands on but just holding inventory and shipping D2C is not enough, I think they will have to own and master the manufacture of their own products.
  - wsul 13y ago
    Completely agree here. I've spent the last year and a half building Pistol Lake - we make men's shirts. There are the few of us who want to spend the years it takes building manufacturing and operational expertise necessary to build an online-first direct-to-consumer company - and there are a huge number of things in our favor: 1. easier to build audience than ever before 2. costs overseas are changing and making domestic, short-run manufacturing more economical 3. allowing you to keep less inventory, and if you don't have a billion SKUs, turnover can be rapid That said, it takes a long time to build the expertise and a long time to make a good product, period. Nothing will change that. It also takes a unique skillset to be able to be creative in the design of things, process driven to build scalable manufacturing and logistics, technical enough to manage an e-commerce platform and sophisticated customer acquisition/economics hacking, etc. Ultimately, I think there will be hundreds of designers going online-first, direct-to-consumer, making incredible things, and we all benefit from it. Couldn't be more excited about this maker revolution.
  - prbuckley 13y ago
    Also as a side note I just started reading (yesterday) "LL Bean: The Making of an American Icon" by Leon Gorman grandson of LL Bean and former president of the company. It is a fascinating read on the ups and downs of a 100 year 4th generation family run business. It sounds like something you might find relevant to your business.

digitailor 13y ago

I understand what you mean. And your bottom line that online retailing is growing and will cause a shift in the apparel industry, as it has in most others, is certainly valid. I'm just not sure the shift you're describing is likely. I think this strategy is untenable for almost all of the designer brands in the market you're addressing, because the assumption of all the risk is not a good business model in any industry. Let's look at VC for a moment. Having been involved in it, there is an obsession with risk analysis and reduction, and with good reason. A model that says "Let's take 100% of the risk and capture the margins!" probably can't support a whole market shift, and would probably be difficult to fund. And funding of some kind would be necessary for most brands to be able to stock goods. You're very knowledgeable about the back-end of the apparel business, it was cool to see a story like this on the front page of HN.

jamiequint 13y ago
I think that a less extreme, but possible, outcome could be that brands move to a partial wholesale/retail model. Its possible that brands could take some of the risk and wholesalers take a smaller margin hit but still guarantee a partial buy. My opinion is that it is more likely that the types of successful brands that exist change all-together in the long run. There are small-ish new brands that seem to be able to sustain only direct-to-consumer retail (e.g. Everlane, Warby Parker, Frank & Oak) that are taking on 100% of the risk. Maybe we see more brands like that. The differences there seem to be more agile production on a more frequent basis, with smaller production runs and more willingness to stock out.
prbuckley 13y ago
First off congratulations on having a business that has lasted 100 years! That is a rare accomplishment these days. I think you both have an interesting perspective on the future of apparel and e-commerce. The one thing that I think deserves mentioning is that it has been getting easier and cheaper to own the means of production so you can convert raw materials into finished goods with out holding lots of inventory. You also need the manufacturing capabilities if you want to do mass customization. My limited experience with this has come over the past 3.5 years building DODOcase.com. We ended up building all of our own manufacturing and hold less than 2 weeks of inventory, while over 30% of our online sales are one off custom built products. My hope is that the future is brands built online that actually make their own stuff. I agree with Jamie that the brands of tomorrow will have to be more hands on but just holding inventory and shipping D2C is not enough, I think they will have to own and master the manufacture of their own products.
- wsul 13y ago
  Completely agree here. I've spent the last year and a half building Pistol Lake - we make men's shirts. There are the few of us who want to spend the years it takes building manufacturing and operational expertise necessary to build an online-first direct-to-consumer company - and there are a huge number of things in our favor: 1. easier to build audience than ever before 2. costs overseas are changing and making domestic, short-run manufacturing more economical 3. allowing you to keep less inventory, and if you don't have a billion SKUs, turnover can be rapid That said, it takes a long time to build the expertise and a long time to make a good product, period. Nothing will change that. It also takes a unique skillset to be able to be creative in the design of things, process driven to build scalable manufacturing and logistics, technical enough to manage an e-commerce platform and sophisticated customer acquisition/economics hacking, etc. Ultimately, I think there will be hundreds of designers going online-first, direct-to-consumer, making incredible things, and we all benefit from it. Couldn't be more excited about this maker revolution.
- prbuckley 13y ago
  Also as a side note I just started reading (yesterday) "LL Bean: The Making of an American Icon" by Leon Gorman grandson of LL Bean and former president of the company. It is a fascinating read on the ups and downs of a 100 year 4th generation family run business. It sounds like something you might find relevant to your business.