- Marjorie van Elven |
Amazon, Alibaba, Shopify and even Instagram have made it easier for starters to launch a niche fashion brand online. However, the “first mile” of the supply chain hasn’t changed much: the majority of fashion manufacturers still operate according to the traditional model, in which collections are planned up to 1 year in advance and ordered in large quantities. As a result, these new brands often struggle to find a manufacturer which is able or willing to produce small batches for an affordable price.
Enter The/Studio, a Los Angeles-based startup offering a cloud-based platform through which brands can order custom apparel and accessories on-demand, in the quantities they need -- even if it’s just 100 pieces. The company takes the duty of building a supply chain off the brand’s shoulders: with a network of 400 partner factories in China, the order is sent to the most suitable one. Samples are sent free of charge.
While small, niche brands are The/Studio’s target client, the need to quickly manufacture trending items has led big players such as Nike, Everlane, Tommy Hilfiger and Urban Outfitters to use the company’s services as well. Last year, the startup raised 11 million US dollars in a Series A funding round led by Ignition Partners. FashionUnited spoke to founder and CEO Joseph Heller over the phone to learn more about the company’s business model and next steps following the investment.
How did the idea for The/Studio come about?
I’ve always been an entrepreneur. Coincidentally, my grandparents and great-grandparents both worked in the textile industry, but I swear my decision to work in fashion was not guided by that! I lived in China for a few years, where I did some private label manufacturing. There, I realized there was a big opportunity for quick, small batch production.
Traditional manufacturers are not set up to support quick turnaround times and small bath requirements, lead times are very long. That’s because large retailers were the ones who started outsourcing their production to China. Since they all worked with structured seasons, most supply chain teams are oriented around large productions.
But the world is changing. Today we have all these niche, Instagram brands, and consumers themselves are driving the trends, the relationship between fashion brands and customers has been shifted in the last 10 years. Brands now have to act much faster.
Additionally, excess stock is a pervasive problem in the fashion industry. So many fashion retailers sit on piles of unsold apparel they couldn’t get rid of even after markdowns. If you look at the entire industry, a lot of companies aren’t even profitable because of all the unsold inventory. So, I think it’s time for us to change the traditional buyer’s mentality, based on buying large quantities to get the lowest possible price, which leads to excess stock and hurts the environment, and move towards a more responsive, on-demand model. Everybody benefits from such a model: the price may go up for the consumer, but brands will get rid of excess stock and there would be less pressure for low prices on the manufacturer.
How do you go about approaching Chinese factories to work with The/Studio?
We target small and mid-sized factories, which know how to meet the quality requirements of bigger brands because, when big factories can’t meet the demand, they usually hire smaller ones to help. We try to take as much capacity in the factory as possible, that’s our pitch. With some factories, we took nearly 100 percent of their capacity.
Then, we provide them with our software, so they’re able to process our orders. That’s extremely important to us because it removes the miscommunications that can happen when everyone uses a different system or uses emails and spreadsheets. when customers place an order, they have to use our dashboard as well, everybody uses the same system. That leads to more efficiency and transparency.
What are the advantages of using The/Studio?
The/Studio allows for brands to eliminate a lot of the risk involved in manufacturing. They don’t have to look for factories or visit them, and we ensure the success of their order. Brands don’t really care who makes their products, as long as the quality is up to their standards and the order is delivered on time. And we can guarantee that. Our customers also like that they can manage everything from our dashboard, it makes their lives easier.
At The/Studio, brands get a sample free of charge. Manufacturers often complain about losing money with all the samples they have to make for fashion brands. Who covers the costs of the sample?
The manufacturer does, but at The/Studio, the customer first has to commit to the order.
What is The/Studio’s revenue source?
Currently, we make money per transaction, but we are also looking to launch a subscription service in which clients would have access to certain advantages, such as express shipping.
Small brands seem to be your target client. However, your client list also includes prominent players such as Tommy Hilfiger and Calvin Klein. Did you approach them or did they approach you?
It was purely organic, we didn’t even have a sales team when Everlane and Tommy Hilfiger approached us! Since our product also has great potential with larger players looking to compete with smaller Instagram brands, we’ve hired a VP of sales to manage these larger clients and prospect new ones.
The company received 11 million dollars in a Series A funding round in September. How do you intend to use the money?
We want to continue investing in our software so orders can be manufactured even quicker. We already hired 15 engineers to help us out with that! In addition, we’re looking to expand our factory network. Another thing we’d like to do is add a third-party designer network to our platform as well, so small fashion brands wouldn't even have to have a designer in-house.
Photos: courtesy of The/Studio