Fabletics is a retail company that specializes in sportswear, footwear, and accessories for both men and women. The company is a global, active-lifestyle brand that started its operations in 2013. The company’s founders include Adam Goldenberg, Don Ressler, and famous celebrity Kate Hudson. Fabletics primarily operates in the “activewear” industry.
Fabletics operates a membership business model. The company has accumulated over 2 million VIP members, as announced in 2020. Similarly, Fabletics surpassed $500 million in annual revenues in 2020. On top of its activewear collection and membership program, Fabletics also offers an app fitness app known as Fabletics Fit.
Fabletics also operates over 60 brick-and-mortar stores across the US. The company also expects that number to reach 74 by the end of 2021. Similarly, Fabletics also runs and operates a cloud-based enterprise retail platform in all of its stores. This system, known as OmniSuite, combines e-commerce, POS, and order management solutions with back-office systems.
Although Fabletics offers both men and women activewear, the company primarily targets women. The company offers a wide selection of apparel and accessories specifically design for casual outings and intense physical activity sessions. The company says it was “designed with the modern woman’s busy lifestyle in mind”.
Apart from the US, Fabletics also operates in seven other countries. These include Canada, the UK, Germany, France, Spain, the Netherlands, Sweden, and Denmark. The company initially started as an e-commerce platform. However, it has extended its business model to include physical retail stores. These stores also include systems for customers to order online from the company if they can’t find specific products in the store.
Fabletics currently faces competition from fitness-related brands, such as Ares Sportswear, Varley, Tracksmith and Tilly’s, etc. On top of these, the company also competes with big brands, such as Nike, Adidas, Puma, Reebok, etc. Despite this competition, the company has stayed strong and increased its revenues significantly over the years.
How does Fabletics work?
Initially, Fabletics began as an online retail store. The company uses a membership business model, which is not prevalent in the activewear industry. Through this model, the company does not sell products by direct payments. Instead, it sells its users credits by paying a membership fee. These credits can help them purchase a new outfit each month.
For most customers, this experience is different from what other companies in the same industry offer. Therefore, it is easy to confuse it with others. In essence, Fabletics works similarly to other competitors. However, there is the additional step of converting currency into credits involved in the process. Similarly, instead of buying products directly, customers have to wait for their credits to purchase outfits.
Some users may complain that the company forces them to purchase an outfit each month. However, that is not the case. Users can skip a month that allows them to transfer their credits to the next month. However, this option is only available for the first five days of a month. If users choose to go with this feature, they don’t have to pay a membership fee for that month.
Each month, Fabletics launches a new collection of outfits and apparel. It allows users more variety in the options from which they can choose. On top of that, users can also choose to take a survey on the platform. If they do so, the company will offer them personalized recommendations each month.
On top of that, users can also roll over their credits for a year. That means if a user forgets to skip a month, they can still use their credits until the end of the year. Most of these features are available to all members. However, Fabletics also has another membership tier, the VIP members, which can get additional benefits.
VIP Members
The VIP membership program allows users to get additional benefits compared to other users. With this membership, customers can get early access to the company’s new launches, a reward program and discounts of up to 50% on Fabletics items. It also promises free shipping on all orders over $49.95 and free returns and exchanges within 45 days. This program also offers access to the Fabletics FIT app on smartphones, for which other users have to pay.
However, the VIP membership is optional. Users can still shop on the company’s website and platform. But these users usually have to pay more compared to VIP members. This feature is an added benefit for VIP members. The platform promises at least a 20%-50% discount on all items for VIP members all the time. VIP members can also earn points toward the company’s reward program.
Rewards Program
Fabletics also has a rewards program for VIP members. This rewards program has three classes, including VIP, Gold and Elite. Users can collect points on each purchase they make through the platform. Using these points, they can then upgrade their rank to a higher tier. The rewards program offers various benefits to members from each tier.
For VIP status users, the program offers discounted prices, the ability to earn points for rewards and extra discounts on first purchases. For Gold status members, this program provides early access to sales and promotions, personalized boutiques with curated items from the brand’s new collection. It also offers them double-point bonus events.
Lastly, Elite Status members get triple-point bonus events. These members also receive free shipping days and invitations to exclusive in-store events. The reward program offers points on all money spent by users and any reviews they submit. Sometimes, Fabletics also offers bonus events as an opportunity for members to earn more points.
What is Fabletics’ business model?
What makes Fabletics unique from its competition is that it uses several business models. The company primarily uses an online retail store business model. Through this, Fabletics offers various products on its website. Users can buy these products using various payments options available. This business model works similarly to other online retail stores.
However, Fabletics also combines the retail business model with a subscription model. As mentioned, this model allows users to pay a membership fee to receive credits. This way, users can get better deals and perks that common users don’t receive. The subscription model also involves a rewards program, as mentioned above.
Lastly, Fabelics’ business model also incorporates a retailer model. As mentioned above, the company has several brick-and-mortar stores across various locations. These stores serve as a market for the company’s products. Furthermore, the company offers an online retail experience within these stores. Visiting customers can shop the store’s online catalog in-store if a product is not available.
How does Fabletics make money?
The primary source of money for Fabletics is its products. As mentioned, users can buy directly from the company’s online retails store. Through this process, the company makes money. However, Fabletics also makes money from its VIP membership fees. The company charges each user $49.95 per month for the subscription service.
With VIP membership service, the company provides each user with credits. These users can then use their credits to purchase items from Fabletics’ online store. As mentioned, users also get a discount with the membership program. The subscription fees also contribute to a substantial amount of the company’s overall revenues.
Overall, Fabletics makes money from its stores, whether online or in retail shops. The company has over 1.5 million members that contribute to its current revenues. Similarly, the physical retail stores that Fabletics operates also generates revenues for the company. Through a combination of these, the company has successfully crossed $500 million in annual revenues.
Conclusion
Fabletics is an online retail store that specializes in activewear. The company operates two business models, including a retailer model and a subscription model. Fabletics makes money from its product sales and subscription fees received. Overall, the company is highly profitable due to its revolutionary business model. It is one of the reasons why it has been distinguishable from its competitors.