Can v-commerce give brands the edge they need online?

Discussion
Photo: Fanatics
Sep 18, 2017
Tom Ryan

At least in apparel, Michael Rubin, executive chairman of Fanatics, believes the next online wave will be “verticalization commerce,” or v-commerce, in which online retailers produce their own merchandise closely tied to orders.

Fanatics sells sports licensed apparel through fanatics.com while also operating the e-commerce sites of more than 300 partners, including all major professional sports leagues, many major media brands, collegiate and professional teams.

Last week at Recode‘s Code Commerce event, Mr. Rubin said online selling has evolved to be dominated by two “incredibly successful e-commerce companies”: Amazon and Alibaba. But Mr. Rubin added that “in a lot of ways they’re not that great for brands.”

He elaborated, “They don’t have a great brand presentation and in a lot of ways you can have kind of a flea market experience.”

By comparison, Fanatic’s partners that go direct-to-consumer are able to “control the presentation” in a “brand-right way.” With its verticalization manufacturing capabilities, Fanatics is also able to react quickly to demand.

In sports licensing, demand is often driven to “hot market” opportunities such as a big win, a major accomplishment by an athlete or major trade.

“A great example is Kyrie Irving’s trade to the Celtics,” said Mr. Rubin. “In the old days, it would take weeks to get those jerseys to retail. Now in hours, since we’re completely vertical, we can best service fans.”

Shorter lead times also reduce inventory risks. Being direct-to-consumer also helps Fanatics and its branded partners gain customer data to help anticipate needs and use for marketing.

Mr. Rubin portrayed Fanatics’ approach as a “modern online version” of H&M, Zara or Uniqlo while referring to Fanatics as the “first large-scale, v-commerce” company in extending the fast-fashion model online.

Asked about retail’s future, Mr. Rubin said he anticipates a “much more technology rich, omnichannel focus,” brands increasingly selling direct-to-consumer, with stores selling commodity-based merchandise feeling the most pressure.

DISCUSSION QUESTIONS: Does the on-demand manufacturing, direct-to-consumer v-commerce model described in the article represent the future of selling apparel online? Does it solve apparel’s challenge of reacting effectively to changing trends and minimizing inventory risks?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"[CPG brands] need more D2C (direct-to-consumer) channels working for them or they are going to lose significant market share in the next decade."
"Gosh, I think I must really be missing something. We’re talking about a combination of dying grey goods (maybe) and then flocking on the fly, right?"
"The key to any branded retailer competing with the Amazons of the world is the ability to offer experiences that set them apart."

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12 Comments on "Can v-commerce give brands the edge they need online?"


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Tom Dougherty
BrainTrust

Suddenly the future is upon retail. Will brands adjust or hang on until they themselves are hanged? Brand focus and nimbleness are the two keywords that spell success. V-commerce is simply a marketing efficiency. Woe to those who ignore economies.

Chris Petersen, PhD.
BrainTrust

There is no question that v-commerce is a new disruptive force that enables “mass customization” at an unprecedented speed for fashion. It will have great appeal for fanatics and those wanting to capture fashion trends first. Will v-commerce sweep the fashion industry? There is always a balance between the need for speed, price and availability.

One thing that is clear is that v-commerce is yet another disruption for stores when brands can go direct to customers with customized products literally overnight.

Ken Lonyai
BrainTrust

I totally agree with Michael Rubin’s comments — except v-commerce is not a good name. It will be confused with voice-commerce which might be adapted to the v-commerce moniker. I especially agree with the “flea market experience” analysis of Amazon. Putting aside the underpinnings behind the website, Amazon, in terms of site experience, is not all that much different/better than eBay — the flea market/garage sale digitized.

CPG brands can take a big lesson from this. They are being squeezed from every direction, especially as TV is being threatened. They need more D2C (direct-to-consumer) channels working for them or they are going to lose significant market share in the next decade.

Paula Rosenblum
BrainTrust

Gosh, I think I must really be missing something. We’re talking about a combination of dying grey goods (maybe) and then flocking on the fly, right? Flocking has been a thing for over 50 years, and dying grey goods for 30. I looked for other articles on the topic and couldn’t find anything to indicate otherwise. Even the grey goods part seems like a stretch.

Is it disruptive? No more than my Camp Colang tee shirts were. Again … I could be totally missing some very high tech something-or-other, but it feels very “back to the future” to me.

Brandon Rael
BrainTrust

Verticalization, or v-commerce as stated by Michael Rubin, clearly represents where the industry is going, meeting the increased demand for apparel customization and achieving economies of of scale, especially around solving speed-to-market challenges. This v-commerce model has worked very effectively for Bonobos, Indochino and other digital native brands which may have a showroom. The customer ultimately leaves the store without the finished product but has an outstanding guide shop experience. The customer is more than satisfied to have their personalized and customized finished products shipped to their homes a few days later.

For the retailer, verticalization significantly reduces their inventory risks, enables them to nimbly move and shift with the changing fashion trends and, most critically, allows them to build a stronger relationship with their customers via personalization, which is the key to success in today’s digital-first world.

Cynthia Holcomb
BrainTrust

So we are talking about “blanks” being personalized? Or are we talking about printers spitting out custom garments? I am sure at some point in the years to come personalized “blanks” will go beyond basic apparel. Zara and H&M fast fashion have vastly variable product attributes combined in thousands of combinations, using hundreds of different fibers, fabrics and silhouettes. Totally different ball game. No pun intended!

Lee Kent
BrainTrust

There is certainly place for this but will it disrupt all apparel retailers? Not in my opinion. I’m going to go out on a limb and say that most of us aren’t creative enough to want to design our own clothes. We need designers to show us the latest and let us pick our own style. That being the case, I don’t think we are necessarily talking about custom design. So is this article suggesting that it is easier, faster and more efficient to produce each item on-demand rather than to mass produce in bulk? I get it for the sports apparel mentioned but I would have to see the numbers to believe this is the case for mass apparel. But that’s just my 2 cents.

Neil Saunders
BrainTrust

Is this on-demand manufacturing new? It sounds like a rehash of what has existed for some time. Deep personalization and customization — which is about much more than stitching a player name on a sports top — has enormous disruptive potential, but I am not sure we are in the age of mass customization quite yet.

Sterling Hawkins
BrainTrust

On-demand is not new, it’s just getting better! Yes, personalization and customization is a part of it. There are also tremendous supply chain implications, especially as 3D printing goes to the next level. I’m in agreement we’re not quite in the age of mass customized products quite yet, but we’re getting close.

Jackie Breen
Guest

This is the future of commerce. The key to any branded retailer competing with the Amazons of the world is the ability to offer experiences that set them apart. Customization and the focus on “v-commerce” aims to do exactly that. However it’s easier said than done. Branded retailers must pull together the right technology stack to deliver these experiences to consumers.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
2 years 2 days ago

First, Mr. Rubin nails the problem with Amazon and Alibaba when he suggests they are in a lot of ways a “flea market experience.” I know very few people who like shopping at Amazon — but it’s a great place to buy once you know exactly what you want and a good place to check out reviews before buying in a store.

But I don’t see his “v-commerce” as the answer, or the solution.

It’s smart what Fanatics is doing — and something uniquely possible in fan gear. I suppose the suggestion is that we’ll go to THEIR ecommerce site to get the latest and most up-to-date. But I struggle to see it as the solution. It’s a part — but not enough.

Ricardo Belmar
BrainTrust

Verticalization may work well for sports fan types of products, but I’m not sure how the model translates to other product categories. Does extreme personalization and on-demand manufacturing have a future? Yes, no doubt. Especially when we factor in the future of 3D printing — which I’m surprised didn’t enter the discussion in the article. It’s also interesting to note that this type of disruption has the potential to make retailing very interesting in the future if taken to the extreme — otherwise, it doesn’t really sound revolutionary at all if done in small doses.

wpDiscuz
Braintrust
"[CPG brands] need more D2C (direct-to-consumer) channels working for them or they are going to lose significant market share in the next decade."
"Gosh, I think I must really be missing something. We’re talking about a combination of dying grey goods (maybe) and then flocking on the fly, right?"
"The key to any branded retailer competing with the Amazons of the world is the ability to offer experiences that set them apart."

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