Nasty Gal, an Online Start-Up, Is a Fast-Growing Retailer
nytimes.com
nytimes.com
http://la.racked.com/archives/2013/01/09/nasty_gal_engages_i...
The tldr is: In the fashion industry there is limited protection for innovative designs and as a result, copying is rampant. Despite the ease of copying, innovation is quite strong in the industry and there is a great deal of competition.
I would add that, (1) the clothing industry is similar now to the the time IP was being legislated so it was directly addressed rather than derived by similarity to other areas. Its a little more logical and true to the original goals of IP than areas that derive. (2) There is a big element of hivemind/zeitgeist/emergence in fashion because people invent their own outfit every time they dress. (3) The combination of innovative fashion & quality is what makes high fashion brands valuable. (4) the lack of IP protection actually fuels innovation as a design will remain somewhat exclusive for a season only.
What I find most humorous about those that are so bent out of shape about the copying is that they themselves are copycats, but they hold themselves to different standards. To them, it is okay to copy a design from 10-20 years ago, or to pull 10 different design elements from a current design...but if someone does it to them, they want to sue. The simple fact is that design elements of contemporary fashion are always recycled. Runway fashion is innovative (from an art and design perspective, as much as this crowd would probably laugh at that), but not marketable, as most people (even fashionistas) do not want to be walking art exhibitions.
http://www.ted.com/talks/johanna_blakley_lessons_from_fashio...
They sued Calvin Klein when they started to make some similar pants. It was settled out of court:
http://www.theglobeandmail.com/globe-investor/lululemon-calv...
The bottom line was basically that you can have the best design in the world, but if the competition has a better distribution chain, their imitation will be out in stores, before yours are.
I thought it was pretty interesting to read about the importance of the logistics of a fashion label.
It surprises me that the fashion industry has largely overlooked Zara as a technical leader, referring to them as nothing more well-practiced copycats. It is just a pathetic excuse. Zara can create a similar design (they never blatantly copy, they always have their own spin), mass produce a garment and sell 50k units in less time than it takes the original creator of the "copied" garment to solidify a production plan with a Honduran Maquila with a 6 month lead time.
New fashion companies should be aware that if they can't compete logistically, they have no chance at survival. Old fashion companies with bad logistics practices are only squeaking by due to brand cachet.
I'm wondering what other industries are ripe for disruption-by-supply-chain. Dell did it to PC, Zara did it to fashion, FedEx did it to post...
Tim Cook is a bit of a logistics genius as well.
http://www.nytimes.com/2012/11/11/magazine/how-zara-grew-int...
As I understand it, H&M has a similar supply chain/business model, but Zara came along and turned it up a notch. From my not-really-interested totally non-scientific observations, Zara does seem to be expanding faster than H&M at the moment.
"They also monitor customers’ reactions, on the basis of what they buy and don’t buy, and what they say to a sales clerk: “I like this scooped collar” or “I hate zippers at the ankles.” Inditex says its sales staff is trained to draw out these sorts of comments from their customers. Every day, store managers report this information to headquarters, where it is then transmitted to a vast team of in-house designers, who quickly develop new designs and send them to factories to be turned into clothes."
I don't want any part of the system you call "capitalism" no matter what it's name is.
Someone posted this link on HN a while ago, and it's pretty shocking just how blatant some copying is. (http://youthoughtwewouldntnotice.com/blog3/)
About your link: Nasty Gal could have handled that a lot better. Something like "Hey, we're really sorry that your design got ripped off. We've written privately to you to explain how this happens. We like the design, and we want to keep selling it, so we've also written to you about that. And you point out something that's a problem (link to competitors ripping off designers) - we want to help. So we've got a "report the rip off" site here, and if we're ripping off a designer we'll put things right!". That would have got them a lot of credit amongst designers, and maybe among customers.
One wonders how someone presumably in charge of PR could have gone about it that way.
Jack&Jones, HM, GAP, Banana Republic etc.
Most people just want to look contemporary without looking trendy. Think about it as curation for the common man.
This has a lot more insights into how she built Nasty Gal, and how she raised her series A.
I LOVE this girl. She built Nasty Gal in the most healthy way possible. LOVE IT!!
I really like the fact that stuck through the grind, and slowly built up a loyal following. I think that is something missing from a lot of start-ups in the valley right now. People tend to shut down their projects when people don't come flocking. This also might be a testament to just building something people want.
She did have a Virgin tattoo, and was/is a fan of Branson from an early age; I'm assuming from that she had a head for business early on, and built from that, but that is miles different from the 'startup culture' I run in to these days ("how many accelerators have you applied to? are you on angel list?" etc)
Fashion trends have a short life expectancy, but if you can change with them season after season, then you'll be a monster in the fashion world.
For a brand like SomeStartup, it's dependent on the people running it and their ability to constantly shift with the tide. Very few can do it, but some entrepreneurs do pull it off (and they often end up as huge startup brands).
startup trends have a short life expectancy, but if you can change with them season after season, then you'll be a monster in the startup world.
eg: http://www.nastygal.com/clothes/paisley-sky-overalls
$78 for overalls.
Or $65 for a bikini bottom -
http://www.nastygal.com/clothes/righteous-bikini-bottom
It wouldn't surprise me at all if their net margin is great (compared to most retail).
Edit: In the case of the 2nd piece, Nasty Gal probably isn't making much money on it at all. It's made in the USA (which is usually a higher cost item), and the direct from manufacturer price is 63 dollars. Thus, it's probably a drop ship item with a razor thin margin.
The business model for online fashion retail is for the founders to extract as much cash as they can for themselves while it's hot and leave investors holding the bag when it's not.
I would take any article about such a company with grain of salt. One thing these companies do well is PR. Getting media placement often comes easy for them as employees of magazines, newspapers and blogs are often into fashion themselves and are eager to run a story about something they are personally interested in.
Eventually they run out of high margin stuff to sell, because they literally run out of the stuff (in the case of vintage clothing) or their suppliers start raising their prices. Then they need to sell more stuff, which requires more employees, and bigger warehouses, which continues to eat at the margins.
There's also many copy cat fashion sites, since between 2009-present "fashion internet" seems to have been a trend for fresh MBA grads. I'm not really sure how they get started, but I'm pretty confident they also don't make any money.
what about the other 100 she purchased at $150 and still are not sold? I made the numbers up but you cannot use an extreme case and assume the same applies to all.
NastyGal doesn't appear to have rolling inventory; rather it seems they have relationships with some set of brands, but the brands themselves aren't front and center. Moreover, NastyGal also appears to have its own brand, which RueLaLa does not (though Gilt Groupe does have its own Gilt Home (ie furniture) line).
http://boundary.com/blog/2013/03/18/grig-gheorghiu-on-the-mu...
Yes, very hot company.
It also sounds like she had a model that allowed her to build an engaged userbase and enlist them to help her build the business.
Granted this is all just what one article says, but this is exactly the sort of thing you're supposed to do as a start up of any kind.
Sounds like a relevant success story to me.
I bend over backwards for my customers and still get negatives. College students seem to be the worst. If they don't get things exactly their way, you get a negative.