Launched in 2013, Fabletics is the brainchild of movie star Kate Hudson. Fabletics is an athletic apparel e-commerce brand that has taken the fashion world by storm thanks to Hudson’s consistently innovative ideas. The company, now worth over $250 million, continues to take bold risks that demonstrate Hudson’s deep understanding of today’s fashion consumers.
The company follows a subscription service business model. When you log onto the Fabletics website, you are greeted by an enormous variety of athletic apparel in various colors, styles and patterns. Anyone can purchase clothes from the website but customers are heavily encouraged to sign up for the VIP membership program in order to experience online shopping in a totally new and convenient way.
The VIP membership program allows subscribers to receive a brand new workout outfit that is shipped straight to their door each month. The cost is a monthly fee of $49.95 and shipping is free. First-time subscribers receive their first outfit for half the price.
Instead of having to browse through endless products, Fabletics selects the outfit for the subscriber. By giving subscribers a survey to fill out that asks them questions about their fashion tastes and workout preferences, the company is able to determine what type of workout clothes each subscriber would like best. For women who frequently exercise and are always looking for new athletic apparel, this is an extremely convenient way to shop.
When Teri Hutcheon of afoodiestaysfit.com received her first Fabletics outfit, she couldn’t believe the value of the membership program. For such an affordable price, the clothes are the real deal. The outfit that arrived matched her personal style perfectly and she noticed that the clothes are built to last. She noted that the high-performance fabrics can endure strenuous workout routines and the colors don’t fade after several washes.
About a year ago, Hudson took a bold risk by launching a handful of brick-and-mortar stores throughout the United States. While many online retailers are unwilling to invest in physical stores, Hudson had an innovative idea in mind. Instead of opening the stores to provide new revenue alongside the revenue the company gets from online retail, she aimed to use the stores as a way to get more VIP subscribers online. This strategy is known as the “reverse showroom” and has been successfully implemented by Apple.
When customers try on clothes in a Fabletics store, the items they select end up in their online shopping cart. While in the stores, customers are urged to try out the VIP membership program. While 35 percent of customers who walk into a Fabletics store are already VIP members, about 25 percent of first-time customers sign up for the program before leaving the store.
This strategy is highly effective because it targets the type of customers who want to see items in person before committing to a monthly subscription. Because Fabletics products are made with quality materials, Hudson knows that customers will find the membership program offer irresistible.
The strategy has proven highly effective. Fabletics revenue has beaten out that of Amazon’s fashion department which is no easy task. Hudson now plans to launch several more stores around the globe over the next five years.