The crowd is taking charge.
This story first appeared in the July 26, 2010 issue of WWD. Subscribe Today.
Thanks to the Internet, the line between designer, consumer and brand is blurring more and more. Large brands and retailers such as Keds, Bloomingdale’s and Nike, as well as small start-ups like ModCloth and Spoonflower, are increasingly setting up businesses in which the consumer gets a say about what is designed and produced. Creators can share and rate each other’s designs. In some cases, anyone can create a design and get paid when someone else orders it.
Major brands and retailers see crowdsourcing as a way to increase customer loyalty, while smaller firms build entire businesses from it.
And in a fashion democracy that already is accelerating at an alarming rate, ultimately anyone could be a designer, creator or manufacturer, with profound implications for the structure of the fashion and retail worlds, as well as the overall economy. Analysts estimate that crowd-sourced and customized products could eventually make up as much as 10 percent of the total market for apparel, accessories and footwear.
“If you make the technology and tools accessible to large enough numbers of people, you have the possibilities of new industries evolving and the balance of power shifting,” said Stephen Fraser, co-founder of Spoonflower, which custom prints fabric by the yard. “The textile industry — and the same is true of the apparel industry and the craft fabric industry — their whole bread and butter for decades has been trying to predict what people will want. There’s a huge apparatus for selecting what’s going to be popular. [Our business] is really different from the traditional product marketing and manufacturing mentality, where you’re trying to figure out what people are going to want and creating a demand for whatever product you’ve developed.”
The new businesses borrow elements from crowdsourcing, mass customization and group buying or simply exploit the Internet’s capacity for assembling ad hoc groups of people around a common interest or purpose, no matter how fleeting.
Bloomingdale’s is highlighting the idea of creativity, community and customization in a summer and fall campaign, even if the majority of what it sells is traditional product.
Last week, the retailer promoted a collaboration with Keds and the Whitney Museum in the windows of the 59th Street flagship. Customers could design their own custom Keds 24 hours a day through the Bloomingdale’s store windows, two of which acted as a giant touch screen.
During store hours, three M.F.A. student artists, who won a contest judged by the three partners, painted canvases in the store windows. Their work will be shown at a series of events through the summer. A live Webcam broadcast video of the windows at the event blog at theoriginalsneaker.com/whitney. Visitors who “checked in” at the windows on Foursquare got special offers, such as a two-for-one ticket to the Whitney.
Meanwhile, in the store and online, Bloomingdale’s is selling a premium Americana- and vintage-inspired collection of Keds sneakers as well as an exclusive line designed by artist Jenny Holzer. Two more lines by artists Laura Owens and Sarah Crowner will make their debuts in September. All the merchandise is also available on keds.com, and all profits from the artist editions will be donated to the Whitney.
“Bloomingdale’s looked at the Keds-Whitney collaboration as the perfect opportunity to bring both art and fashion to our customers while benefiting a good cause,” said Anne Keating, Bloomingdale’s senior vice president of public relations.
The windows proved a hit.
“Bloomingdale’s was selling the collection before the interactive Keds-Whitney windows were installed,” said Francine Klein, executive vice president and general merchandise manager for fashion accessories at the store, adding that once they went up, traffic and sell-throughs got even stronger.
At the opposite end of the spectrum, retailer ModCloth, which turned over $19 million last year selling inexpensive vintage-inspired clothing online, is crowdsourcing its buying with its Be the Buyer program. Anyone can vote and comment on a sample, and the ones that garner the most votes will be put into production and sold on the site.
Each sample is posted online for about two weeks so people can vote on it. At the end of two weeks, ModCloth looks at the results, contacts the designer to confirm they still have the fabric, then places an order. Many of the items are manufactured locally and arrive in two or three weeks, but some are imported and can take up to 10 weeks. Online, the status of the sample is changed, so it says “you picked it” and “coming soon.” Customers can sign up to receive an e-mail when the item is available for sale.
Since the experiment went up late last year, ModCloth has posted close to 300 samples online and produced 50 of them. The online store has more than 1,800 products on its site, so Be the Buyer is a small part of the mix.
“We are definitely seeing a higher sell-through rate,” said chief creative officer and founder Susan Gregg Koger. Since the program launched, along with a new checkout process, overall site traffic and conversion rates have increased. “We see users that participate in Be the Buyer spend more time on the site and spend more on the site,” she said.
“Most of the times my picks coincide with customers’ picks, that’s part of why we’ve been successful as a traditional retailer. But there are some that surprised me, some that I thought would have performed better or others I thought will get a decent reaction and actually got a great reaction,” said Gregg Koger.
As the company learns more, it plans to involve more designers. Future iterations will let shoppers give much more specific feedback. In the future, not all votes will be equal. A vote from a customer who has been to the site many times and placed multiple orders will count more than a vote from a new visitor.
So far, dresses, longer lengths, and interesting prints are doing well, she said.
The company recently received $19.8 million in venture funding and moved its headquarters from Pittsburgh to San Francisco. It plans to add more social-commerce innovations in the future.
“We want to continue to blur the lines between designers, consumers and producers, and we want to continue to connect our customers to independent designers,” said Gregg Koger. “Our goal is to fundamentally change the supply chain. We think with the Internet, we don’t have to make all these decisions and commit to big buys up front without getting customer feedback. Getting the customer truly involved with this process is important. From a user perspective, being a fashion buyer is a dream job and hard to get. Historically, the industry has been hard to get into — people must spend years being an assistant — so being able to give customers the power to make these types of buying decisions and affect what items get made and affect fashion is definitely really exciting, and I think it’s going to shift the industry.”
When customers feel like the company understands them and they can voice their opinions and the company acts on it, they can become fiercely loyal.
“ModCloth is helping to change the way people shop in the same way that Facebook changed the way we communicate,” said Theresia Gouw Ranzetta, a partner with ModCloth investor Accel, when the Web site revealed its funding. “In a very short period of time and with little outside capital, the company has leveraged the social Web to empower a wildly loyal and engaged customer base.”
“Consumers love it,” said Marshal Cohen, chief industry analyst at The NPD Group, referring to custom and crowdsourced products. But “it’s got to be quick and easy for the consumer to execute.”
These new offerings play into a bigger trend among young people he calls “distinctive conformity.” They want to wear something no one else has, but they also don’t want to be laughed at, he said.
It’s important for brands to recognize that the person who creates a custom product may not be typical of the total population, but personalization is a way to create loyalty and brand awareness.
“Customization in the form of personalization is critical in being able to take the brand to the next level,” Cohen said. “This is where brand loyalty is heading. It’s a very small part of the business, but a very significant part of the business.”
To that end, designers and their followers have been using the Internet to arrange special editions. For example, accessories designer Rebecca Minkoff has been responding to requests, creating exclusives and holding parties for various fashion communities such as the Purse Blog. When a blog or community picks up on an exclusive bag, photos and comments can proliferate online and reach a larger group of people. If a certain bag proves popular, Minkoff may suggest that a retailer pick it up. Feedback from bloggers has also helped her adjust some designs.
Coach, Havaianas and other companies have successfully used crowdsourcing for design contests and to generate interest in their products and spur sales. Coach, for example, held a tote design contest where two of the three winners were picked by Coach based on ratings and how widely they were featured on other Internet sites.
German pattern company Burda offers free, crowd-sourced sewing patterns, advice and projects at its Brooklyn-based BurdaStyle site. The community has 385,000 registered users and is growing by about 10,000 members a month. It offers 448 patterns, including 158 that are user generated, and 39,003 user-generated projects. The company estimates several million patterns have been downloaded. Later this month, it will partner with Gap on a user-generated styling campaign.
Even unknown designers have been able to find an audience, a market, and funding online; consumers in turn have been able to establish a one-to-one connection with a designer.
Through Kickstarter.com, handbag designer Andrea Tobin of Marla Cielo was able to fund and assemble a group of buyers for a series of one-of-a-kind clutches fashioned out of a mural she painted. She raised $4,000 to pay for materials and time. Individuals who donated $295 or more received a signed and numbered edition of one of the 50 bags, a photograph of the mural and an invitation to a party for the owners of the bags.
The number of companies diving into the crowdsourcing arena in one way or another is growing exponentially. Other examples include:
• Using a model very similar to ModCloth, London-based furniture company Made.com posts furniture samples online for people to vote on. The items that get the most votes are then posted in the online store for a brief number of weeks to garner orders. When enough people have ordered, the item is produced in a factory in China. Returns are permitted; it takes about two months to receive an item. Prices are relatively low, perhaps because the company has lower overhead compared with a traditional retailer or manufacturer.
• Nike, which introduced customized sneakers with NikeiD in 1999, has in recent years broadened the program to include a huge variety of options, personalized clothing and sports equipment, and the ability for customers to share and order each other’s designs in its online gallery and iPhone app.
• Threadless, founded in 2000 and headquartered in Chicago, generates revenues of about $38 million a year producing and selling T-shirts whose graphic designs are submitted and chosen by users on the site.
• At Ponoko, visitors can create, sell, source, produce and buy anything from tables to jewelry by uploading drawings to the New Zealand-based company, which then laser cuts the design in felt, metal, wood or other materials.
• Anymatic of Santa Monica makes custom-printed yoga mats and boardshorts. At Shortomatic.com, which recently added shorts for women, anyone can design a pair of shorts by uploading unique graphics and choosing other custom elements such as an inscription. Shoppers can also choose from a curated selection of existing designs, and they can submit a design to be considered for inclusion in the artist community. The curated shorts are produced in limited editions of 200, and artists receive $5 for every pair sold. The company is collaborating with designer Matthew Langille, who has worked for Swatch and Marc Jacobs, on a collection of shorts for the site that will be worn by a contestant in a reality show about diving. The company is producing about 600 shorts a month, said William Cawley, ceo and creative director of Anymatic.
One of the key players in the crowdsourcing world is Spoonflower, located in Mebane, N.C., physically and metaphorically halfway between the old textile manufacturing center of Greensboro and the new-technology economy of Raleigh. Opened in October 2008, Spoonflower has prospered, thanks to weekly design contests, a passionate DIY craft community and a site that makes it easy to find styles and designers. Anyone can design, order and sell custom-printed fabric by uploading a digital image and specifying the repeat style. Designers earn 10 percent if someone else orders a fabric they have designed.
The site now has about 125,000 users and offers about 200,000 designs, said Spoonflower’s Fraser, who heads up operations and marketing. The company produces more than 2,000 yards of fabric a week. More than 50 percent of Spoonflower users are making fabric to sell, often to create unique products such as pillows and other crafts, which they sell on craft marketplace Etsy.
About 20 percent of Spoonflower sales are to people buying someone else’s design. Many of the users on the site have day jobs, such as Spoonflower community blogger Cameron Blazer, who is a lawyer.
“Textile design is something that used to be limited to a tiny number of professionals and products that were mass produced,” said Fraser. “You put these tools for self expression out there, and people will embrace them, whether it’s books, photography, textile design, product design, and the same thing could easily be true for apparel design as well. Micro-manufacturing could easily become a significant force in the U.S.
“Broadly speaking, we’ve opened up a channel for expression that wasn’t really there before,” he continued. “There are hundreds of thousands of designs on the site now that are available for sale that would never have seen the light of day.”
Much as Internet celebrities have emerged from YouTube and fashion blogging, so Spoonflower has created successful fabric designers. One of the early winners of a contest, Laurie Wisbrun of Etsy shop Scarlet Fig, has been picked up by fabric manufacturer Robert Kaufman. Not a formally trained artist, she previously worked in advertising and marketing.
“There is this vast filtering mechanism going on, it’s big enough to be an ecosystem. Certain talented individuals get pushed up, and we as a culture get the benefit of finding out about them. Otherwise, we would never have known about them, and they would never have been discovered,” said Fraser.
The company uses large-format digital printers that have been altered to print pigments on fabric rather than paper. The digital textile production process is the opposite of mass manufacturing. There are no set-up costs to print a pattern, as there is with rotary-screen printing, but the process is very slow: four to five yards an hour versus hundreds of yards a minute.
Fraser and co-founder Gart Davis met while working at nearby Lulu.com, a similar company that digitally prints books on demand. Spoonflower now has 12 employees. It does not reveal revenues, but it is profitable, according to Fraser.
While producing things one at a time is more expensive and not as efficient as mass manufacturing, it nonetheless could grow into a significant business, said NPD analyst Cohen.
“Right now it’s not even 1 percent of most of the market. Of course, there are companies where it’s everything,” he said, referring to such firms as Threadless. “Now it’s not even big enough to be on the radar screen, but over time it could potentially be up to 10 percent of the total market of product. It’s not going to grow much more than that. That’s a sizable business in its own right. That’s a $2 billion business.”
Keds is perhaps the largest and best-known company — whose success is based on 20th-century mass manufacturing techniques — to set up a marketplace for customized products.
The Keds Design Your Own custom program, launched in 2008, lets online visitors specify the color or print of more than a dozen elements on five styles of sneakers. If shoppers don’t like the prints provided, they can upload their own. Visitors can share and sell their creations on Zazzle.com, which powers the Keds custom business. They can also set their own royalty from 10 to 99 percent above the base shoe price of $60.
Redwood City, Calif.-based Zazzle is one of the largest retailers of custom-printed products that include apparel. It produces a wide variety of goods, including postage stamps, mugs, T-shirts and iPhone cases, and offers a marketplace for everything. A recent offshoot is its Artsprojekt Labz, which offers a more curated selection of designs from contributors approved by Zazzle.
Zazzle does not disclose annual revenues or the number of units it has sold, but it offers 31 billion products for sale and is “highly profitable and [has] been for some time,” said Zazzle director of consumer marketing Michael Karns. It employs about 400 people. In 2005, the site received $16 million of venture capital funding in a Series A round led by Kleiner Perkins Caufield & Byers.
Last year, Keds introduced the Keds Collective, a curated collection of designs from artists, musicians and others chosen by Keds.
A Style Gallery shows an ever-evolving collection of streetwear-style shots of people wearing Keds. It is powered by Chictopia, a fashion social-networking site where members share and critique photos of themselves in their outfits.
“The [regular] Keds business is much greater than our custom business, which I think is natural,” said Keds president Kristin Kohler Burrows. “It’s easier for people to buy an existing product versus designing their own. We expect to see large numbers of sales from the Keds Collective. It’s a growing segment now.”
There are 35 designers and 424 designs in the Keds Collective. There are 326,000 custom Keds styles available on the Zazzle site from an unknown number of users.
“We provide a clear point of view or starting point for that product because it’s Keds Champion and it encourages people to add their point of view on top of that. We felt it really reinforced the brand’s positioning of creative possibilities,” she continued.
“Marketing today has become much more of an interplay between the consumer and the brand, and although the brand must have a clear point of view, the brand must also listen and be relevant and engaging to the consumer today.”
The Keds Collective area on keds.com is getting a lot of traffic, she said. Retail accounts can also order and sell custom product.
“I think what you’re seeing is a diversification of the way consumers interact with media and brands, and I think it’s critical that brands are there [in order] to stay engaging. It’s never going to be 90 percent of the business, but at the same time, it’s a critical part of the business because the consumer expects the brand to be there to really engage the consumer,” said Kohler Burrows.