Fast Fashion Business Model In A Nutshell

Fash fashion has been a phenomenon that became popular in the late 1990s, 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, flagship stores in iconic places in the largest cities in the world, these brands offered cheap, fashionable clothes and a wide variety of designs.

Origin Story

Fast fashion players took over the industry around the late 1990s and the early 2000s; those players like Zara and H&M “innovated” in a few ways. The core strength of the fash fashion industry relied on the replication of trends from high-fashion designers. Thus turning these trends into clothes and making them readily available in most retail stores located in central, iconic places in the largest cities across the world.

Zara had mastered this model. Its strength relied on a few key elements.

Fast Following Fashion Trends

By quickly replicating designs, Zara initially didn’t innovate in these terms. Instead, it copied fashion trends. Therefore, it fast followed the existing trends created by high-fashion players. The key here was quickly turning these trends into clothes available in its stores.

Here being quick meant reducing the time it took to bring to manufacturing clothes, as previously it took months.

Shortened Manufacturing Cycles

Zara also had mastered quickly and cheaply manufacturing its clothes to achieve extreme speed by mass manufacturing them. Where competitors or existing players took six months to turn the design into clothes available at the store, Zara took this to another level, shortening the design-manufacturing cycle to as low as 2-4 weeks.

Just-in-Time Logistics

Mass distribution and logistics: Another key element of this strategy was making logistics a core competency of Zara. As these clothes could be easily made available in all its stores. By leveraging a “just-in-time” process, Zara distributed clothes across the stores from its central warehouses (perhaps in Spain), making the clothes available within 48 hours in any of the European stores.

Iconic, Flagship Stores

Flagship retails: Zara also invested in a marketing/distribution strategy where stores would be located in iconic and central places in the major cities across the globe. This is both a marketing and distribution strategy as the millions of tourists checking Zara’s store every day also could get comforted by the fact of finding Zara anywhere they were going (not that dissimilar to finding a MacDonald’s restaurant anywhere in the world). And this strategy of flagship stores also worked as a distribution strategy as its clothes could be easily made available to millions of consumers each day.

Wide Variety

High turnover: Another key element of Zara’s strategy was the high turnover of clothes. In short, each week, fashion shoppers could find different styles of clothes, thus creating a sort of addicting shopping mechanism, where you could go shopping with more and more frequency.

Key Takeaways

  • In the early 2000s, the fashion industry has been taken by storm by fast fashion players who mastered shorter cycles for manufacturing clothes by fast following fashion trends.
  • Fast fashion players also mastered the process of cheap manufacturing of these clothes.
  • They also distributed quickly across the iconic store located in the various major cities, drawing in millions of potential consumers each day.

From Fast Fashion To Real-Time Retail

As the 2010s brought many more people online across the world, the fast fashion phenomenon became even more rapid, thus giving rise to the ultra-fast fashion first, then to real-time retail.

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 cycle or a maximum of one week.

Connected Case Studies

SHEIN is an international B2C fast fashion eCommerce platform founded in 2008 by Chris Xu. The company improved on the ultra-fast fashion model by leveraging real-time retail, which quickly turned 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 business model, with over €18 billion in sales in 2018 (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 merchants’ 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 to 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. As a mobile-first platform, its gamification elements and the tools offered to sellers are critical to the company’s growth.
Etsy is a two-sided marketplace for unique and creative goods. As a marketplace, it makes money via transaction fees on the items sold on the platform. Etsy’s key partner is comprised of sellers providing unique listings, and a wide organic reach across several marketing channels.

Read Also: ZaraWishPoshmarkEtsy.

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