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Building a Fashion Business from Scratch

Every modern fashion business needs a rock-solid angle to stand out from the crowd. Some of the industry's most successful founders break the 'big idea' into three key components.
Source: Marcus Castro & BoF
By
  • Soheb Panja
BoF PROFESSIONAL

To read part two of this series, please click here.

LONDON, United Kingdom — There was a time when being a talented designer with a little business savvy was enough to start a fashion company. And while the occasional phenom still bursts onto the scene, the fact that anyone can set up an online shop means it takes more than a good eye to stand out from the crowd.
Fashion founders and investors point to some common threads linking some of the best known digitally born fashion brands such as Outdoor Voices, Monica Vinader, Glossier, Everlane, Common Projects, Rapha and many more:
  1. Specificity
  2. Addresses a problem
  3. Has a clear point of view

Find Your Niche

Allbirds started out selling shoes made from wool. Warby Parker sold glasses. Everlane only made T-shirts. It’s a common trait among successful internet-born businesses: rising above the noise through a clear association with a single product.
“We had a single focus and belief there was a better way to make high quality shoes using natural and sustainable materials,” said Allbirds founder and chief executive Tim Brown. “We were obsessed on the product and doing it in a particular way.”

Historically, single focus companies were criticised for being unambitious, not to mention vulnerable should consumers get tired of their sole product. The conventional wisdom was to launch with a diverse range of products under one brand.

But digitally-born companies have demonstrated the value of cultivating a clear and distinctive identity around a niche. Consumers instantly know “what you do,” and it’s easier for companies to claim they’ve developed the “perfect” product when they are competing in a single category.
“Focus allows you to tell a tight and special story,” said JB Osborne the founder of Red Antler, a creative agency that has worked with brands like Allbirds, Birchbox and Casper. “Once you build that awareness around your identity you have a platform to go into other areas.”
He cites Everlane as an example. The company produced t-shirts for months before gradually adding other products, including jeans and hoodies as it built its brand, supply chain and retail channels.
The luxury outerwear maker Moncler followed a similar path after its acquisition in 2003 by Remo Ruffini. He staged the brand’s revival around quilted jackets and only in recent seasons has produced a broader product assortment.
Once a brand establishes a foothold (and fame) in the market with its single product, as well as an operational structure to produce and sell goods, it can - and should - then quickly expand into new markets or risk being overrun by imitators.
Moncler’s success with tailored, sporty jackets quickly bred competition, including from established fashion companies.The swimwear brand Orlebar Brown pioneered well-cut premium swimwear for men around a decade ago. It also saw new and old fashion companies move in on its turf. Like Moncler, it had to quickly become more than a single product and create a broader mix and sell in more than one season.
Kym Canter said building her company, House of Fluff, around a single product - faux fur - makes her products an easier sell to customers and investors. It also streamlines the decision-making as the brand expands.

"It's better to be a specialist than a generalist in today's market," she said. "Whenever we feel we're getting lost, we go back to who we are and what we set out to do."

Challenge the Status Quo

Founders say they came up with their big idea by identifying something missing, inefficient or even dysfunctional with traditional ways of doing business. This is known as the category problem.
Few companies have best demonstrated this than the spectacles startup turned poster child for disruptive consumer brands, Warby Parker.
It shone a light on the multiple layers involved in making, marketing and selling glasses. It was able to sell stylish spectacles at an affordable price by breaking up the traditional supply chain.
For many startups adopting the role of upstart challenger is a winning formula. Their products become associated with fighting inefficient, regressive or exploitative methods on behalf of the conscious consumer. Typically, cheaper prices are part of the pitch.
Take Naadam, a company launched in 2015. Founder Matt Scanlan observed that the supply chain to make a cashmere sweater was riddled with middlemen slowing down the process and taking their cut.
He traveled to the Gobi desert and cut deals with Mongolian goat herders for vast quantities of cashmere, cutting out local buyers and wholesalers, with a plan to sell directly to consumer brands. When that business took off he got even more ambitious, developing his own line of cashmere apparel. The wholesale cashmere trade is now just 15 percent of his business, and falling.
Cuyana was founded by self-confessed fashion outsiders based in San Francisco. The business is premised on what they see as a fault in how clothes are made: that the push for scale is cutting out of the supply chain specialized factories that often manufacture the best products.
Cuyana is putting in orders to small factories around the world while using modern technology and data to hold down costs.
The category problem is not confined to supply chain. It can come with attacking an observation of the established structure or system incentivised to act against the interests of the consumer. It is compelling for investors, and many startups have found giving consumers a peek into this process can create interest as well.
The story of the plucky founder with a fresh idea challenging the incumbents has a power it arguably has never had before. It’s also a much-needed trump card for a startup facing up to more-established and better-resourced competitors.
(We talk more on founder stories, transparency and building a tribe in future articles in this series).

Build on a Foundation of Strong Values

Values are the final pillar of the idea behind modern fashion businesses. The trick is to demonstrate that a brand’s point of view is more than marketing. That means founders need to build their entire business around how they see the world.
Modern Citizen was set up in 2014 in San Francisco by Jessica Lee and Lizzie Agnew around a few core principles: “shameless good value,” “by women for women” and deeply ethical credentials, Lee said.
The “guardrails,” as she put it, inform every decision the company makes from suppliers to retail staff to the models in its advertising.
“Everyone was really telling us we needed to build the business with a single product and start from there, but we started from the customer,” Lee said. “We wanted to build around a mindset and our belief modern women lived differently today [than in the past] and with different values. A $900 dress isn’t something our customer is interested in, but they still want something beautiful and special. They care about where the products came from, and they don’t split things between workwear and evening wear.”
The value of values can be seen in the rapidly moving athleisure segment. Barely a few years old and it’s already cluttered with innumerable and sometimes indistinguishable brands selling variations on yoga attire.
Heroine Sport founder and creative director Nima Taherzadeh took his experience in ready-to-wear fashion to launch a collection in what was in 2014 a still new sector.
Many athleisure brands have sprouted in recent years on similar insights as Taherzadeh. Mainstream fashion companies have caught up too. Few of the startup athleisure specialists have managed to stand out amid the noise.
Taherzadeh adds: “You have to stand out for something, have a strong voice and have a clear point of view.”
The success of the idea, and even the values, are often a matter of timing, especially in new sectors or at times when the cultural or economic environment is changing. Taherzadeh reflects he may have been too early with Heroine Sport. He found his plan for an athleisure collection was competing with far more brands than he originally conceived. His reaction is to focus more on his tailoring credentials and expand the collection.
It’s a point reiterated by Osborne at Red Antler. He said: “Good product is just table stakes today.”
Founders and investors concur. Consumers have never been bombarded with so much choice. Standing out with a razor sharp focus, a new approach and/or engaging values are what successful founders today say was the foundation to their core ideas.

Editor's Note: This article was revised on 5 June, 2018. An earlier version of this article misspelled the brand Naadam and the name of its founder, Matt Scanlan. 

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