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Membership-based e-commerce sites are on the rise.
Andy Moss, founder of aggregated shopping site ShopStyle, will introduce FabKids today, a new e-commerce concept with a modified subscription hook — and he’s brought on actress Christina Applegate as creative partner of the site at fabkids.com.
The main idea: users sign up for a monthly membership of $49.95 — applied as a three-piece, head-to-toe outfit credit — to select an outfit for their daughters. Members fill out a style profile and receive selections based on it (so they don’t have to sort through all of the site’s product), and have the option to pick an outfit or skip the month if they please. Members are charged upon their first purchase, and all outfits include free shipping and returns.
This is the first venture from Personal Retailing Inc., Moss’ company that specializes in personalized e-tail experiences. After continuing to run ShopStyle and staying on as an executive at Sugar Inc., the parent company of the successful PopSugar, FabSugar, FitSugar and more that acquired ShopStyle in 2007, Moss left his post at the Sugar network last year to start working on Personal Retailing.
“I started to think a lot about what personalized e-commerce could look like,” Moss said of the “huge opportunity” he believes this category presents across the fashion and apparel categories. He clarified that ShopStyle is an aggregated shopping experience and FabKids is a completely personalized one. The latter designs, produces and merchandises all product — exclusively sold on FabKids.com — while ShopStyle aggregates items from many designers and drives traffic to respective retailers.
The idea is similar to what BeachMint did almost two years ago when founders Josh Berman and Diego Berdakin introduced social, membership-based e-commerce experiences with celebrity partners — and the company now boasts six properties. In October 2010, the duo tapped Kate Bosworth to codesign jewelry for JewelMint, followed by Mary-Kate and Ashley Olsen doing the same with T-shirts for StyleMint in July 2011. BeautyMint launched in October of last year with Jessica Simpson, ShoeMint launched in November 2011 with Rachel Bilson, HomeMint launched in May with Justin Timberlake and IntiMint last month with Brooke Burke. HomeMint is the only one that does not require a subscription to purchase.
Sucharita Mulpuru, vice president and principal analyst at Forrester Research who specializes in online and multichannel retail, strongly believes that this e-commerce model has significant potential.
“It takes elements of Costco, flash sales, Amazon, Zara and other fast-fashion retailers — some of the most successful shopping models — and puts it all together. I am much more bullish about this than I’ve been about Groupon or any of the other flash-sale sites,” Mulpuru said, calling it a “landgrab” right now for newer online companies such as BeachMint and Personal Retailing.
The modified subscription model is based upon pre-calculated demand and locking in the customer — but success depends on the size of a company’s mailing list. It’s the opposite of what flash-sale sites do, because instead of being constrained by inventory and what’s on sale, sites like FabKids can create the demand with their own exclusive product, Mulpuru explained.
Three-year-old ShoeDazzle (of which Kim Kardashian is a cofounder) started off on a subscription basis strictly selling shoes that were $39.95 a month for members. It moved away from the model several months ago because the company thought it could get broader adoption if it didn’t lock people in and opened sales up to a larger audience, according to Mulpuru. Now, consumers fill out a three-minute “style quiz” to obtain access to a personalized showroom with new shoe, jewelry, handbag, apparel and lingerie options on a monthly basis. The majority of the merchandise on the site still retails for $39 — with some dresses and lingerie priced at $50.
“Now they are just fast-fashion. It’s Zara with Kim Kardashian as the face. You get a far less compelling revenue model,” Mulpuru claimed. “At the beginning, it’s about repeat users and locking in a loyal customer base.”
“We are dropping that commitment to come every month because we want to give women the option to shop how and when they want to shop,” Bill Strauss, who took over as chief executive officer of ShoeDazzle late last year, told WWD.com this past spring in explaining the change.
An issue for all the subscription sites is that people will only be willing to subscribe to so many of them, so the platforms have to create a strong offer that members will want to stick with, according to Mulpuru. There is a window of opportunity for start-ups right now as major retailers that have a large number of stores and huge online databases have yet to really do something of this nature.