Can Failed Retail Fashion Brands Find An Afterlife Online? – Forbes

Photo by Spencer Platt/Getty Images

Failed fashion brands might think they’ve died and gone to heaven if they buy the promise that Onestop Internet is offering, as reported in this weekend’s Wall Street Journal.  The WSJ article maps out a plan for failed retail brands to remain viable by closing stores and “transition to online-only fashion labels,” by partnering with Onestop.

The Compton, California-based company offers “end-to-end commerce solutions” and in its thirteen years of operation reports servicing more than 120 brands to launch e-commerce capability. Apparently bankrupt American Apparel and BCGC Max Azria believe their brand can go on in the digital afterlife that Onestop promises.

Onestop’s compelling case for this online-only tactic is made by the numbers. They breakdown the costs and profits for a sample pair of $150 jeans, showing that profits soar to 30% using its online-only model, as compared with 16% for a sale made at retail. Can’t you all hear the calculator keys clicking among the investment firms that have picked up so many of these brands in bankruptcy proceedings?

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Onestop Internet Inc. Cost/Profit for Fashion Item Sold Retail vs. Online

Frankly, I’m a bit skeptical about the cost/profit breakdown Onestop reports, but it is clear that by cutting out the high costs of physical stores, with its staffing requirements and premium rental fees, which the company estimates at $120/square foot, an online-only model is more cost-effective. That is, if the fashion brands can actually generate sales online, which is a variable that isn’t really addressed in the model. If people don’t want to buy the brand in the store, what makes anyone think they will want to buy it online?

To their credit, Onestop boasts a lot of experience selling fashion online, having worked with brands including True Religion, Lululemon and Juicy Couture. It claims “Our clients average almost 3X industry average annual sales growth.”

While I am not sure that failed fashion brands can actually be resurrected online, I think that the Onestop approach might offer hope to those that are failing, but not completely dead , brands like J. Crew.

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