The online retail industry is slowly becoming traction as one of the most profitable industries in the United States. The largest player in this field is Amazon, which currently holds more than 20% of the industry. Independent online retailers are having a tight competition against Amazon, but Fabletics managed to face the online retail giant and the startup transformed into a multi-million dollar business in just a short period of time. Co-founded by Kate Hudson, an American actress, Fabletics focuses on selling athletic and stylish garments for women. They sell their products through their website, but in recent years, they also opened up several physical stores across America.
Fabletics is unique, because they require customers to become members in order for them to purchase a product. Members are even classified into two – the regulars members and the VIP members, with the latter receiving the most discounts and freebies. Fabletics also installed an intelligent AI into their system, and what it does is to give a short quiz to first time visitors so that the system can determine each customer’s preferences. The next time they log in, the system would automatically preview the garments that match the customer’s preference. If the customer does not want any of the presented outfits, they can still browse through the website’s collection and choose what they want.
The number of physical stores owned by Fabletics is also rising. The company is slowly focusing on selling their merchandise through their physical stores, but they stated that the majority of their revenue still comes from their website. Fabletics has taken a different method in managing their physical stores. A method known as reverse showroom has been dreaded by retailers for years. With this method, customers would browse through the store’s merchandise, take note of the item that they wanted, and will be looking at another shop for a cheaper alternative. Fabletics have used this in their advantage, allowing their members to browse the items that they wanted but instead of going outside to find a cheaper alternative, Fabletics is giving their members the items that they wanted partnered with discounts. The customers are also ensured that the items that they will be purchasing from Fabletics are made of high quality materials. Approximately 30% to 50% of those who are entering Fabletics stores are members, and another 25% are signing up to become members. This statistic only shows how successful the business model of Fabletics is.