A Revolution Paused. Time for Collaborative Factories!

We are one step away from a revolutionary change in the fashion industry.

The economic and cultural climate created by the emergence of internet commerce has reached an impasse. The ability for brands to charge less to their customers and make more because of a vastly superior margin sits tantalizingly close but remains unreachable for many and unreached for by some.

From a brand’s perspective it looks like this. Spending a few hundred to a few thousand a month on expanding your social media reach will quickly allow you to put your product in front of thousands and later tens of thousands of customers. Spend a few thousand more on a clever and well aimed marketing campaign and you can get massive amplification for free because of content sharing. Because you are eliminating an entire markup, (no retailer), you can charge a lower price and have a much higher margin which means the brand and all who work for it make more money. By simply attaching a pre-built and managed store to a site you have now created the ability to make money from your designs directly from your customers. All you seemingly need to do is create samples and have them well photographed and posted. So why isn’t this obviously superior system obliterating traditional retail the way it did in other industries a decade ago?

Our current system of garment manufacturing doesn’t allow it.

Garment factories are set up on scale production. The more pieces you make, the less the factory has to charge. Emerging brands are rarely, if ever, able to pay for and then pay to house large runs of styles. E-commerce in fact asks you to do the opposite. When a design sells you make it, inspect it, and ship it. For young brands without large amounts of start up cash the initial level of orders per month is likely to be; three blouses, four pairs of pants, five dresses, etc… A designer should be able to make a living that way but they can’t because they will get charged sample price for each and every one of those pieces which erases any profit.

The solution to the gap between emerging brands and their potential customers is the creation of medium sized collaborative factories in communities that have low prices per square foot but retain excellent access to distribution.

An excellent example would be Hillside near Jersey City or say Aurora near Chicago. Five or six more developed brands could band together to purchase a building, build it out with machinery and staff it. They could then allow younger brands to buy access without restrictions on price per piece. The workers would always be busy. All participating brands would have access to the lower costs and higher margins and their respective e-commerce businesses would explode in profitability. They could also share in all the other resources that are needed to drive this model. This is already happening to some extent. ManufactureNY, Stitch Factory, and the proposed Portland Apparel Lab are excellent examples.

I do want to be explicit that what I am proposing requires full control of production, and not production partners.

I believe this is the way forward and it is fairly obvious. The reason it hasn’t happened yet is a mystery, though it is obviously in the interest of those that are profiting from the status quo to see it not happen, but I hasten to say that haven’t seen any evidence of collusion to prevent it from happening. Nonetheless it’s adoption is inevitable and to all I say, adapt or perish.

 

Picture taken by Pavan Bahl of @OSFashion in Berlin, Germany.

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Pavan Bahl

Pavan founded Open Source Fashion (OSF) in 2011. He has since emerged as a connector between innovators working in fashion, retail, and related technologies. He's a strong advocate for startups and entrepreneurship, focusing his efforts on uncovering opportunities for the OSF membership base between New York City and Washington, DC.