Boohoo – sometimes referred to as Boohoo.com – is an English online fashion retailer founded in 2006 by Mahmud Kamani and Carol Kane in the historic textile district of Manchester. Boohoo makes money by selling fashion items for more than the cost of manufacturing, advertising, marketing, and distributing them.
Element
Description
Value Proposition
Boohoo offers a range of value propositions for its customers: – Affordable Fashion: Boohoo provides trendy and affordable fashion options, appealing to cost-conscious consumers. – Wide Product Range: The brand offers a diverse range of clothing, footwear, accessories, and beauty products. – Rapid Fashion: Boohoo emphasizes quick turnaround times, allowing customers to stay up-to-date with the latest trends. – Inclusivity: The company offers inclusive sizing and styles to cater to a broad customer base. – Convenience: Boohoo’s online shopping platform provides a convenient and accessible shopping experience. – Global Reach: Boohoo serves customers worldwide, offering international shipping and localized websites.
Core Products/Services
Boohoo’s core products and services include: – Fashion Merchandise: Boohoo designs and sells a wide range of fashion items, including clothing, shoes, bags, jewelry, and beauty products. – E-commerce Platform: The brand operates an online shopping platform accessible through its website and mobile app. – Brand Portfolio: Boohoo owns several fashion brands, including Boohoo, BoohooMAN, PrettyLittleThing, Nasty Gal, and Missguided. – Trend Spotting and Design: The company keeps a close eye on fashion trends and designs products accordingly. – Supply Chain and Production: Boohoo manages its supply chain, including manufacturing and logistics, to maintain speed and cost efficiency. – Customer Support: Boohoo offers customer support services for inquiries, returns, and assistance.
Customer Segments
Boohoo’s customer segments include: – Fashion Enthusiasts: Individuals who have a passion for fashion and enjoy keeping up with the latest trends. – Young Adults: Young consumers looking for trendy and affordable fashion options. – Budget Shoppers: Cost-conscious shoppers seeking affordable clothing and accessories. – Online Shoppers: Those who prefer the convenience of online shopping and are comfortable purchasing fashion items digitally. – International Customers: Shoppers from around the world looking for global fashion trends and styles. – Inclusive Sizing: Customers of various body types and sizes who appreciate Boohoo’s inclusive range.
Revenue Streams
Boohoo generates revenue through several revenue streams: – Product Sales: The company earns revenue from the sale of clothing, footwear, accessories, and beauty products. – Brand Portfolio: Boohoo’s diverse brand portfolio contributes to revenue, with each brand catering to specific customer demographics and styles. – International Sales: Revenue is generated from sales to customers worldwide, with international shipping options. – Promotions and Discounts: Boohoo offers promotions, discounts, and seasonal sales to attract and retain customers. – Collaborations: Revenue may come from collaborations with celebrities and influencers for exclusive collections. – Subscription Services: Boohoo may offer subscription-based services with premium features and benefits.
Distribution Strategy
Boohoo’s distribution strategy focuses on e-commerce, speed, and brand diversity: – E-commerce Platform: Boohoo operates an e-commerce platform through its website and mobile app, providing a convenient and accessible shopping experience. – Global Shipping: The brand offers international shipping, allowing customers from different countries to access its products. – Quick Turnaround: Boohoo emphasizes a rapid fashion model, minimizing lead times from design to delivery. – Brand Diversity: The company’s diverse brand portfolio caters to various fashion preferences and customer segments. – Marketing and Social Media: Boohoo invests in marketing and social media campaigns to promote its brands and engage with its audience. – Customer Engagement: The brand maintains customer engagement through personalized recommendations, loyalty programs, and customer support.
Table of Contents
History of Boohoo
Boohoo – sometimes referred to as Boohoo.com – is an English online fashion retailer.
The company was founded in 2006 by Mahmud Kamani and Carol Kane in the historic textile district of Manchester. Kamani originally worked as a delivery driver for his father Abdullah, owner of wholesale garment business Pinstripe. Kane was also an employee for Pinstripe, having taken a position as a senior designer in 1993.
With eCommerce still a relatively new concept, the pair set out to create a platform selling direct to shoppers by removing the retail middleman. From the beginning, the Boohoo business model was focused on offering ultra-fast and ultra-cheap clothing. Unlike competitors such as Asos, all Boohoo clothes are own-brand giving the company more control over profit margins.
With the vast majority of its clothes manufactured in the United Kingdom, the company is also able to adapt to social media-fuelled fashion trends quickly. In fact, company chief executive John Lyttle once noted a new design could be on the Boohoo website in as little as 48 hours from conception. In any case, over 3,000 new styles are added weekly with an average price of just $17.
Boohoo makes money by selling fashion items for more than the cost of manufacturing, advertising, marketing, and distributing them.
However, its profit strategy is somewhat unique and has been enabled the company to increase revenue while others had experienced negative growth.
Test and repeat model
The company is well known for adding many new fashion items to its website daily. To maintain turnover, Boohoo uses a “test and repeat” model. This involves producing small batches of new styles to assess saleability before deciding to move into mass production. Batches may number in the tens of items while some others may include as many as 300. Production of popular items is then ramped up immediately to maximize profits.
It is thought the business model is an adaptation of a strategy used by Inditex. Indeed, the Spanish retail giant has used a similar strategy to adapt to new tastes and trends while managing a network of over 7,300 stores.
As a so-called fast-fashion retailer, Boohoo arguably makes more money than some competitors by staying abreast of current trends. But this business model has attracted criticism because of poor working conditions in factories. Many clothing items are also destined for landfill, either because of poor quality or fluctuating fashion trends.
Targeted demographic
Profits are also maximized when one considers the Boohoo target audience of consumers aged 16 to 24 years.
While most in this age group have less disposable income, Boohoo products are so affordable that the consequences of making a bad purchase are reduced significantly. The company’s tendency to produce on-trend items also taps into the younger generation’s preference for newness and social acceptance. These values are unlikely to change, so the Boohoo business model is likely to be one that could carry it well into the future.
Key takeaways:
Boohoo is an English online fast-fashion retailer. It was founded by Mahmud Kamani and Carol Kane, both with prior experience working for Manchester textile business Pinstripe.
Boohoo makes money by selling clothing items for a profit. Profits are maximized by using the test and repeat model to assess whether an item is likely to sell in large volumes before mass production.
Boohoo also maximizes profits by selling to a target demographic that craves consistently new and on-trend clothing that is also affordable.
Key Highlights:
Boohoo’s Founding and Business Model: Boohoo is an online fast-fashion retailer founded in 2006 by Mahmud Kamani and Carol Kane in Manchester, England. The company’s business model involves selling fashion items at a price higher than the cost of manufacturing, advertising, marketing, and distribution.
Origins and eCommerce Approach: Kamani and Kane, with prior experience at Pinstripe, a wholesale garment business, aimed to create a direct-to-shopper platform, eliminating the need for a retail middleman. Boohoo focused on offering affordable and rapidly produced clothing, with over 3,000 new styles added weekly.
Adaptable Manufacturing and Fast Turnaround: Boohoo’s majority of clothing production takes place in the UK, enabling quick adaptation to social media-driven fashion trends. The company can introduce new designs within days of conception, leveraging its agile manufacturing approach.
IPO and Revenue: Boohoo went public in 2014 with an IPO valuing the company at £560 million. Its revenue in 2020 reached £1.235 billion.
Profit Generation: Boohoo’s profit generation strategy involves the “test and repeat” model. This approach entails producing small batches of new styles to assess demand before moving into mass production. Successful styles are then rapidly scaled up to maximize profits.
Similarity to Inditex: Boohoo’s business model is reminiscent of Spanish retailer Inditex’s strategy, involving rapid adaptation to trends while managing a vast network of stores.
Fast-Fashion and Trends: Boohoo’s focus on fast fashion enables it to stay aligned with current trends, contributing to its revenue growth. However, this approach has led to criticism due to factory working conditions and clothing waste.
Targeted Demographic: Boohoo’s target audience comprises consumers aged 16 to 24. The affordability of its products reduces the impact of poor purchasing decisions, aligning with the preferences of a young demographic that values newness and social acceptance.
Sustainability and Future Prospects: Boohoo’s rapid production model has attracted attention regarding environmental concerns and waste. Its focus on young consumers and affordable, trend-focused offerings positions it well for the future.
Slow fashion is a movement in contraposition with fast fashion. Where in fast fashion, it’s all about speed from design to manufacturing and distribution, in slow fashion, quality and sustainability of the supply chain are the key elements.
Patagonia is an American clothing retailer founded by climbing enthusiast Yvon Chouinard in 1973 who saw initial success by selling reusable climbing pitons and Scottish rugby shirts. Over time Patagonia also became a fashionable brand also for its focus on slow fashion. Indeed, the company sells high-priced clothing items built to last which it will repair for free.
Patagonia has a particular organizational structure, where its founder, Chouinard, disposed of the company’s ownership in the hands of two non-profits. The Patagonia Purpose Trust, holding 100% of the voting stocks, is in charge of defining the company’s strategic direction. And the Holdfast Collective, a non-profit, holds 100% of non-voting stocks, aiming to re-invest the brand’s dividends into environmental causes.
Fash fashion has been a phenomenon that became popular in the late 1990s and early 2000s, as players like Zara and H&M took over the fashion industry by leveraging on shorter and shorter design-manufacturing-distribution cycles. Reducing these cycles from months to a few weeks. With just-in-time logistics and flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.
With over €27 billion in sales in 2021, the Spanish Fast Fashion Empire, Inditex, which comprises eight sister brands, has grown thanks to a strategy of expanding its flagship stores in exclusive locations around the globe. Its largest brand, Zara, contributed over 70% of the group’s revenue. The country that contributed the most to the fast fashion Empire sales was Spain, with over 15% of its revenues.
LVMH is a global luxury empire with over €79 billion ($83 billion) in revenues for 2022, spanning several industries: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, and selective retailing. It comprises brands like Louis Vuitton, Christian Dior Couture, Fendi, Loro Piana, and many others.
Kering Group follows a multi-brand business model strategy. The central holding helps the brands and Houses part of its portfolio leverage economies of scale while creating synergies. At the same time, those brands are run independently. Kering is today a global luxury brand that made over €20 billion in revenue based on this multi-brand strategy. Within Kering Group are brands like Gucci, Bottega Veneta, Saint Laurent, and many more—the primary operating segments based on luxury and lifestyle.
Kering is a luxury goods multinational founded in France by François Pinault in 1963. The company, which initially specialized in timber trading, grew via acquisitions and was listed on the Paris Stock Exchange in 1988. Two years later, Kering merged with a French conglomerate interested in furniture, department stores, and bookstores.
The Ultra Fashion business model is an evolution of fast fashion with a strong online twist. Indeed, where the fast-fashion retailer invests massively in logistics and warehousing, its costs are still skewed toward operating physical retail stores. While the ultra-fast fashion retailer mainly moves its operations online, thus focusing its cost centers on logistics, warehousing, and a mobile-based digital presence.
ASOS is a British online fashion retailer founded in 2000 by Nick Robertson, Andrew Regan, Quentin Griffiths, and Deborah Thorpe. As an online fashion retailer, ASOS makes money by purchasing clothes from wholesalers and then selling them for a profit. This includes the sale of private label or own-brand products. ASOS further expanded on the fast fashion business model to create an ultra-fast fashion model driven by short sales cycles and online mobile e-commerce as the main drivers.
Real-time retail involves the instantaneous collection, analysis, and distribution of data to give consumers an integrated and personalized shopping experience. This represents a strong new trend, as a further evolution of fast fashion first (who turned the design into manufacturing in a few weeks), ultra-fast fashion later (which further shortened the cycle of design-manufacturing). Real-time retail turns fashion trends into clothes collections in a few days or a maximum of one week.
SHEIN is an international B2C fast fashion eCommerce platform founded in 2008 by Chris Xu. The company improved the ultra-fast fashion model by leveraging real-time retail, quickly turning fashion trends in clothes collections through its strong digital presence and successful branding campaigns.
Zara is a brand part of the retail empire Inditex. Zara is the leading brand in what has been defined as “fast fashion.” With almost €20 billion in sales in 2021 (comprising Zara Home) and an integrated retail format with quick sales cycles. Zara follows an integrated retail format where customers are free to move from physical to digital experience.
Wish is a mobile-first e-commerce platform in which users’ experience is based on discovery and customized product feed. Wish makes money from merchants’ fees and advertising on the platform, and logistic services. The mobile platform also leverages an asset-light business model based on a positive cash conversion cycle where users pay in advance as they order goods, and merchants are paid in weeks.
Poshmark is a social commerce mobile platform that combines social media capabilities with its e-commerce platform to enable transactions. It makes money with a simple model, where for each sale, Poshmark takes a 20% fee on the final price for sales of $15 and over and a flat rate of $2.95 for sales below that. Its gamification elements and the tools offered to sellers are critical to the company’s growth as a mobile-first platform.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
