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, 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 toward logistics, warehousing, and a mobile-based digital presence.
| Aspect | Explanation |
|---|---|
| Definition | The Ultra-Fast Fashion Business Model is a retail strategy characterized by the rapid production and delivery of fashion products to the market. It is an evolution of the fast fashion model, aiming to shorten the time it takes for fashion designs to go from concept to store shelves or e-commerce platforms. Ultra-fast fashion brands focus on reducing production lead times, adopting agile supply chains, and leveraging digital technologies to respond quickly to consumer trends and preferences. This business model thrives on speed, agility, and the ability to offer trendy and in-demand fashion items in a matter of weeks, rather than months. |
| Key Concepts | – Rapid Production: Ultra-fast fashion brands prioritize speed in manufacturing and supply chain processes. – Agility: The ability to respond quickly to shifts in consumer preferences and market trends is crucial. – Digitalization: Leveraging digital technologies for design, production, and distribution. – Shortened Lead Times: Reducing the time it takes from design conception to product availability. – Consumer-Centric: Focusing on meeting consumer demand for the latest trends with minimal delay. |
| Characteristics | – Quick Inventory Turnover: Ultra-fast fashion relies on frequent product turnover to stay relevant. – Limited Stock: Brands often carry limited quantities of each product, creating a sense of urgency for consumers. – Data-Driven: Utilizing data and analytics to predict trends and consumer preferences. – E-commerce Focus: Digital platforms play a central role in reaching consumers quickly. – Sustainability Challenges: The model’s emphasis on speed can pose sustainability challenges due to increased production and waste. |
| Implications | – Market Competition: The ultra-fast fashion model faces intense competition, as brands vie to be the first to market with the latest trends. – Environmental Impact: Rapid production cycles may contribute to environmental concerns, such as overproduction and waste. – Consumer Behavior: Consumers may develop expectations for constant novelty, impacting long-term brand loyalty. – Supply Chain Complexity: Managing an agile and responsive supply chain requires advanced logistics and technology solutions. – Fashion Trends: The model is heavily influenced by fast-changing fashion trends and consumer demand. |
| Advantages | – Competitive Edge: Being among the first to offer the latest trends can provide a competitive advantage. – Consumer Engagement: Frequent product releases and limited editions can engage consumers. – Revenue Generation: Rapid turnover and high demand can lead to increased revenue. – Data Utilization: Utilizing data for trend prediction and consumer insights. – Brand Awareness: Frequent releases keep brands top-of-mind among consumers. |
| Drawbacks | – Sustainability Concerns: Overproduction, textile waste, and environmental concerns are challenges. – Supply Chain Risks: Managing a complex and fast-paced supply chain can be risky. – Consumer Fatigue: Constant novelty can lead to consumer fatigue and decreased brand loyalty. – Quality Control: Rushed production may lead to quality control issues. – Market Saturation: The market may become oversaturated with similar products and trends. |
| Applications | Ultra-fast fashion brands are prevalent in clothing, footwear, and accessories sectors. They are often associated with online and e-commerce platforms due to the need for quick product launches and digital marketing. |
| Use Cases | – Limited-Time Collections: A fashion brand releases a limited-time collection of trendy clothing items and promotes them through digital channels. – Flash Sales: An e-commerce platform offers flash sales with deep discounts on select fashion products for a short duration. – Monthly Trend Drops: A clothing subscription service delivers new fashion items to subscribers every month. – Collaborative Releases: Brands collaborate with influencers or celebrities for exclusive, time-limited product releases. – Real-Time Feedback: Brands use social media and consumer feedback to make rapid design and production decisions. |
From Fast Fashion to Ultra-Fast Fashion
Zara had mastered this model. Its strength relied on:
- Quickly replicating designs: Zara initially didn’t innovate in terms of design. Instead, it copied fashion trends. Therefore, it fast followed the existing trends created by high-fashion players.
- Mass manufacturing them: Zara also had mastered quickly and cheaply manufacturing its clothes to achieve extreme speed. 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.
- 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.
- 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.
- 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.
As the 2010s came, more and more shoppers turned to online retail. This brought to a further evolution where online players, or at least those able to leverage their online presence, could quickly gather the feedback of users, by further reducing the time from design to manufacturing/distribution.
Therefore, ultra-fast fashion is a further evolution of fast fashion. How did it evolve? By simply relying on online stores, rather than building a physical presence. For instance, in the case of ASOS all its efforts are invested in further shortening the design-to-sales cycles.
As ASOS highlights on its website:
We’re all about online at ASOS so you won’t find us in your local mall. We’ve got hundreds of brands and thousands of products that just wouldn’t fit into a store.
Instead we focus our efforts on bringing you thousands of new products each week and the latest fashion news and tips via our Women’s and Men’s homepages.
You don’t have to worry about opening and closing times or trying to find a parking spot – just log on from the comfort of your own home and start shopping. We’ve also got a mobile site and app so you can shop while on the go.
To better understand this transition from fast fashion toward ultra-fast fashion, we need to give a glance at ASOS’ financials.
The trend toward casual clothes has been accelerated by the pandemic and that has favoured ASOS. In fact, from a quick glance at its financials it’s possible to see how the company has further accelerated its sales and global customers acquisition:
When looking at the financials of ASOS, it’s interesting to note a few things:
- The company has a high marginality, with most of its sales coming from retail. This is thanks to the fact that ASOS is online-only. Thus, it uses its cash to invest in shortening the design-sales cycles, rather than operating massive stores, as it has been in the past for fast fashion retails like Zara or H&M.
- Among its key metrics there are the total visits, conversions, and mobile device visits.
- As it’s clear from its KPIs, mobile shoppers represent the majority (they grew to 86.3% in 2021).
- With a strong mobile presence, ASOS has incorporated the social shopping experience into its process thus, managing to increase the average units per basket and the frequency to which mobile shoppers place orders (over 3 orders per year with an average selling price of 23 pounds, and an average basket value of 71 pounds as shoppers usually have three items at least in their baskets).
Where a fast-fashion player like Zara has most of its operational costs skewed toward stores (which in Zara’s case are both a distribution and marketing tool), an ultra-fast fashion player like ASOS instead has most of its operational costs toward warehousing, logistics (delivery), and digital marketing/social media marketing.
While also Zara is converting a good chunk of its activities to online, the main difference between a fast-fashion player and an ultra-fast fashion one is the online-only presence of the latter. Furthermore, the online presence is skewed toward mobile shoppers.
Key Highlights:
- Ultra-Fast Fashion Model: The Ultra Fashion business model is an evolution of fast fashion with a strong online twist. Instead of operating physical retail stores, ultra-fast fashion retailers move their operations mainly online, focusing on logistics, warehousing, and a mobile-based digital presence.
- Fast Fashion to Ultra-Fast Fashion: Fast fashion brands like Zara and H&M popularized the concept by leveraging shorter design-manufacturing-distribution cycles. Ultra-fast fashion further evolved by relying solely on online stores to quickly gather feedback and reduce the time from design to sales.
- ASOS as an Example: ASOS is an ultra-fast fashion retailer that operates exclusively online, shortening design-to-sales cycles rapidly. It focuses on mobile shoppers and incorporates social shopping experiences to increase sales and customer engagement.
- Operational Costs: Traditional fast-fashion players like Zara have operational costs skewed toward physical stores, while ultra-fast fashion players like ASOS direct most costs towards warehousing, logistics, and digital marketing.
- Real-Time Retail: Real-time retail is the latest trend, where fashion trends are turned into clothing collections within a few days or a maximum of one week, offering consumers an integrated and personalized shopping experience.
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