Fabricly is a company that intends to use the $400,000 of seed capital it raised to expand its offerings of a basic product sold with an innovative marketing approach. The startup was initially founded within an entrepreneurial incubator.
Fabricly sells designer clothing with a method that permits buyers to vote for their favorite designs. Instead of fashion designers dictating the latest styles, the public expresses which designs it wants produced. The entire process works like Groupon and other social retailing sites.
With the $400,000 of seed money, Fabricly can add more designers and provide additional fashion collections to consumers. Designers submit sketches to Fabricly, which posts them online. When enough buyers select a design, it enters production. Purchasers are charged on their credit cards for orders that reach a high enough vote total for producing and shipping.
This business model avoids inventory costs and rent expense for retail stores. More importantly, it assures that all produced items are sold. The share of sales is smaller for the designers than the traditional fashion industry norm. However, the profit margin of designers is reasonable considering that they don’t have to pay for product manufacturing. They only need to provide sketches and promote their designs.
Fabricly started in 2010 and raised its seed capital to leave the incubator stage before the year ended. Interestingly, Fabricly is not the only company operating in this space. Other online designer retailers have recently launched or are in the incubated idea stage.
This is further evidence that a good business concept is bound to attract competitors. Competition is not a reason to ignore your idea for a new corporation. Rather, it demonstrates that you’re on to something for which there’s genuine market demand.