ultra-fast-fashion

Ultra-Fast Fashion Business Model

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.

From Fast Fashion to Ultra-Fast Fashion

fast-fashion
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.

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:

asos-financial-statements
retail-sales-by-country
asos-kpis
Data Source: ASOS Financial Statements

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).
zara-operations
Source: Inditex Financials

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.

asos-operating-costs
Source: ASOS Financials

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.

fast-fashion
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.
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.

Read Next: ASOS, SHEIN, Zara, Fast Fashion, Real-Time Retail.

Related Case Studies

Other business resources:

Related Visual Resources

Fast Fashion

fast-fashion
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.

Ultra Fast Fashion

ultra-fast-fashion
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.

Real-Time Retail

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 or a maximum of one week.

SHEIN Business Model

shein-business-model
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.

Inditex Fashion Empire

inditex-fast-fashion-empire
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.

Zara Business Model

zara-business-model
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 Business Model

wish-business-model
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 Business Model

poshmark-business-model
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.

Read Next: Zara Business Model, Inditex, Fast Fashion Business Model, Ultra Fast Fashion Business Model, SHEIN Business Model.

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