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Is the Customer Always Right?

A slew of fashion start-ups are crowdsourcing critical business decisions. Is it working?
Source: Shutterstock
By
  • Kate Abnett

LONDON, United Kingdom — When talking about the digital world, fashion designers and business leaders often mention the "direct conversation" the internet enables them to have with consumers — the instant feedback they get on every image or product they publish online. Now, some companies are using this direct line to their customers to ask: what do you want to buy?

“What better way to make something that people want than actually asking people what they want?” asks Kevin Chan, co-founder of Maderight, the global sourcing company behind Orin, its in-house activewear label that will launch its first collection in November. Orin’s products, manufacturing and marketing will be based on the results of an online survey — which had received over 42,000 responses at the time of publication — asking potential shoppers to vote on the style and colour of its clothing, the countries and factories in which they are manufactured, and the race and body type of models in its advertisements.

Orin is not the only company experimenting with crowdsourcing business decisions, a method Thomas Wedell-Wedellsborg, business innovation expert and author of “Innovation as Usual,” describes as “a way to listen to the market’s signals — much like a focus group but with bigger numbers.”

Chicago-based retailer Threadless launched in 2000, selling clothing designed and voted-for by an online community. Artists submit designs and those with the most votes are printed onto t-shirts, sweatshirts and other products, and put on sale. Since 2009, Modcloth, a fashion brand and e-tailer, has also asked online shoppers to vote on a selection of new clothing designs, and has run online surveys before making strategic decisions, such as when it merged the “plus-size” and “regular” sections of its online store last October.

Everlane has experimented with crowdsourcing pricing decisions — with discounted items, consumers can choose the price they want to pay from a range of tiers — and launched a crowdsourcing campaign to decide if it should expand into Canada. The San Francisco-based basics label asked consumers to “donate” money if they supported the move (each donor received a gift card equal to the amount given) and entered the new market after the campaign exceeded its target of $100,000.

Proponents of crowdsourcing — which can involve crowdfunding, surveys or inviting customers to submit product ideas and designs — argue that letting consumers make business decisions can boost sales, consumer trust and brand loyalty. “From a business point of view, it’s wonderful. It allows you to see which products people really like,” says Chris Lindland, founder and chief executive of Betabrand, a clothing retailer and crowdfunding platform, which crowdsources clothing design ideas from an online community and then asks them to vote for the ones they would buy. Up to 50 percent of Betabrand’s revenue comes from pre-orders, where customers commit to buy an item before they know if it will get enough backers to go into production. “The trick with crowdfunding is to say, ‘Can we get the strongest possible indication that people will actually put credit cards down, that that’s inventory worth making a bet on?’” says Lindland.

I'm actually not worried about having something stand out, I want something people are going to buy.

Indeed, crowdsourcing methods can reduce the risk in design decisions for brands and help retailers avoid unsold inventory, waste and having to resort to heavy discounts. Betabrand produces 250 to 350 crowdsourced projects each year, including products like its Dress Pant Yoga Pants, which are projected to reach $20 million in sales this year.

Consulting customers on big decisions can also drive brand loyalty. “It can help turn consumers into brand advocates: it creates a feeling of ownership in the brand,” says Wedell-Wedellsborg. “Studies have shown that if you get people to make some kind of small commitment to a brand, such as filling out a survey, they are also more likely to support the brand in a bigger way in the future, e.g. by buying from them.”

Modcloth has a NPS score with repeat customers of 75 (a Net Promoter Score measures, out of 100, the proportion of consumers that are likely to recommend a company or its products to other potential customers), which chief executive Matt Kaness attributes to Modcloth’s emphasis on customer feedback. “We are constantly taking inspiration from our community to inform and help prioritise what we focus on creatively,” he says. Kevin Chan agrees that crowdsourcing has psychological appeal: “If people are voting for something, they’re more likely to buy that item because they felt like they’d contributed to its creation,” he says.

Crowdsourcing can also help a company justify its decisions. In Orin’s survey, a significant majority of respondents said they would prefer workers to be paid the “status quo,” rather than a living wage. “It partially legitimises some of the company’s choices,” says Wedell-Wedellsborg, of consulting consumers on decisions like these. “While not absolving the company of the responsibility to treat their workers well, it certainly gives them some added ammunition if such questions come up,” he adds.

We live in the age of the social network. The clothing brand itself should be a social network.

But does the customer always know best? The popular vote does not always agree with expert opinion. And in the fashion industry, handing over strategic decisions to customers could undermine both the cult of the creators who lead luxury houses, and a skill which many companies pride themselves on: giving consumers what they want, before they know they want it.

According to Betabrand’s Lindland, however, even trend-setting luxury houses stand to benefit from crowdsourcing. “Those companies are filled with designers who are angry about the products that they design that they think are great, that are lying on the cutting room floor,” he says. “By exposing those concepts to an audience, we have a chance for there to be popular support.”

NellyRodi, a Paris-based trend forecasting agency, uses data analysis and a network of more than 15 agents on the ground in global markets to predict what consumers want. According to Pierre-François Le Louët, president of NellyRodi, crowdsourcing is a good way “to introduce a friendly relationship with your customer, get closer and to attract and keep him — the big mistake would be to give him too much power,” he says. “A brand always need a vision and this vision can not only be built thanks to the crowd.”

There is also the risk that consumers will say one thing in a survey, but do another in practise, like pledge to pay more for a product if it is made in America, but then not buy the product because it’s too expensive. “The ‘wrong’ decision would be if a consumer decides to vote a certain way but then ends up not buying because of something that they voted for,” concedes Chan.

To try and close this gap between “intent” and “action,” Orin’s survey gave customers a live update of what the product price would be, based on their decisions. Similarly, Modcloth tracks its crowdsourcing initiatives against sales data to gauge customer intent. The company’s mobile app has a Tinder-like feature that consumers can use to build a ‘Loves List’ of products. “Comparing her Loves List to sales tells you a lot about her intent,” says Kaness.

And what if the consumer chooses “wrong”? Is there a problem with letting amateurs — rather than professionals with business experience — decide what’s best for a company?

When it came to choosing Orin’s product designs, survey respondents voted for black tank tops and black yoga pants — hardly something that will make a new brand stand out in the crowded activewear market. According to Chan, Orin’s team had predicted consumers' responses before opening up these decisions to consumers. When the survey results came back, “Basically it matched what we were thinking,” he says. “I’m actually not worried about having something that stands out, I want something that people are going to buy.”

To mitigate these risks, Wedell-Wedellsborg recommends that companies use crowdsourcing alongside, but not instead of, market experiments and the expertise of a professional team. “[Customer] preferences are best learned not from merely listening to customers, but from doing in-depth observational studies or perhaps running live experiments in the market,” he says. “If you leave decision-making solely to the crowd, instead of using their voice as input to be tempered by your own expertise, you are likely to make some bad calls.”

At Betabrand, this means using crowdsourcing to let consumers explain what they need — to suggest, “Wouldn’t it be great if a product did X, Y or Z?” — before the company’s team turns those ideas into technically viable products. “We have a full design staff that translates people’s ideas, which are often more lifestyle ideas or marketing concepts or solution products. Then, our professionals, who have experience in the industry, work with them to formalise those ideas into products that fit well, wear well, last a long time,” says Lindland.

Orin, meanwhile, mitigated risk by asking customers to give feedback via a multiple choice survey — for example, respondents chose their favourite garment category and colour out of four options, but didn’t design the product from scratch. “We’ve basically opened up every business decision to the customer, but we’ve limited their options so that nothing crazy would happen,” says Chan, who says crowdsourcing has been useful in generating interest in the new brand, but that he doesn’t plan to crowdsource Orin’s collections in future.

For Lindland, crowdsourcing is fundamental to fashion businesses operating in today’s market, where consumers expect products and services to be tailored to their every need. “We live in the age of the social network. The clothing brand itself should be a social network,” he says. “If you start a clothing company in this day and age and it ignores the social nature of the internet, I think you’re missing the point.”

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