draft - Business Models in Fashion

Flashcards covering key vocabulary and concepts related to business models in the fashion industry, including brands, retailers, and multisided platforms.

Business Model

Blueprint of a company’s core components, explaining how an organization creates, delivers, and captures value.

3 components of business model?

Value Chain Design, Value Proposition, Revenue Model

Value Chain Design

The resources and activities a company organizes to fulfill customer needs, including vertical integration and control over activities.

• unique benefits, quality, price position, and emotional/functional appeal that differentiate the brand and attract its intended audience 

• (Ex - convenience to the mass, trend to the fashionista, timelessness luxury to investor )

Value Proposition

The product or service that is considered valuable by a specific customer  segment. (what value do we deliver to the customer/what problem do we fix?)

Revenue Model

How a company monetizes its offering, translating delivered value into financial returns (e.g., margin vs. volumes, international sales, licensing fees).

3 major types of players

Brands, Retailers, Digital Multisided Platforms

Brands

Focus on product design, brand identity, and marketing, offering a distinct, recognizable collection.

• might oversee  production directly or work with specialized manufacturers

Retailers

Curate and sell multiple brands, creating a shopping experience through merchandising and inventory management.

• use physical stores / e-commerce

Digital Multisided Platforms

Facilitate interactions between third-party sellers and consumers, earning revenue from fees, advertising, or subscriptions.

• rely on network effects to scale, rapidly growing bcuz e-commerce/social media

Brand value proposition

unique product design & brand narratives as the result of data-informed  & design-driven approach 

Brand market strategy

Strategy : B2B, B2C, D2C

Direct-to-Consumer (D2C)

Selling directly to consumers, integrating the entire value chain

• capture retailer margin, improve consumer insights, control brand image.

• Brand makes and sells everything directly, online or in its own stores.

B2B Strategy (Wholesale)

Income is based on sell-in revenue at a wholesale price. (nike cheaply sells to footlocker)

• brand sells clothes to stores, and stores sell to shoppers

B2C Strategy (D2C/Retail)

Income is based on sell-out revenue at a retail price. (nike sells via nike store)

• Brand sells clothes straight to shoppers.

Brand Evolution

concentrate on one core product vertical (nike sneaker) and expand to other product cateogires, global markets, sales channels

Retail Value Proposition

Product is the retail assortment offered directly to the end consumer

• leverage customer insights, use merchandising mix of multiple brands, styles, and inventory levels

Retail uses what market strategy?

BTC ONLY, based on sell out revenue and retail price. built on customer side.

unlike MSP - intermediary controls pricing / presentation

Retail Evolution

investments in building customer mindshare (stop by kohls), opens new stores, launch private label along with brand resales

Multi-Sided Platform Value Proposition

Create value by enabling interactions between 2+ customer groups, reducing search or transaction costs.

MSP market strategy

bring 2+ parties together,  enabling direct interaction among them (e.g., Airbnb, eBay, Uber, Xbox). direct exchange btn parties. evolve - switch btwn retailer/not.

Vertically Integrated Fashion Players

Consolidating multiple steps of the value chain downstream beyond that of a pure brand including own retail and e-commerce but no wholesale

Velasca

Brand - DTC - vertically integrated fashion player

Moncler

Brand - Mix wholesale/DTC - own retail and own ecommerce and wholesale customers

• Moncler’s Genius project addresses seasonality

Sephora

online and offline retailer - multibrand retailer (physical stores offer several brands and their own brands(private label)

• Sephora’s digital community strategy- inc customer engagement.

Stitch Fix

Online only retailer - multibrand pure e commerce retailer - online stores offer several brands along with their own

Farfetch

online only multisided platform - manage interactions of 2+ sides

Rent the Runway

online only multisided platform - manage interactions of 2+ sides

wholesale vs endsale

• Wholesale: Retailer buys clothes from brands at a low price to resell. (footlocker buys from nike)

• End Sale: Retailer sells those clothes to shoppers at full price. (footlocker sells expensive shoes)