When movie star Kate Hudson announced in 2013 that she was launching an athletic apparel company, few could have predicted that she would end up proving to be one of the sharpest and most innovative entrepreneurs of the e-commerce world. The announcement wasn’t exactly shocking considering the fact that Hudson had retreated from the spotlight to become somewhat of a social media fitness guru prior to launching the company.
Today, Fabletics, the name of Hudson’s brand, is worth over $250 million. Her fitness fashion company manages to continuously outsell Amazon in the athletic apparel department. The success of the company is the result of Hudson’s ability to take smart risks and develop new marketing strategies for fashion consumers who belong to the millennial generation.
The company started out as an online retail business. Fabletics follows a subscription service model. For a monthly fee of $49.95, subscribers, referred to as “VIP members” on the brand’s website, receive a complete workout outfit in the mail at the beginning of every month. These outfits are selected by Fabletics based on a survey that is given to subscribers upon signing up. This survey asks them questions about their fitness routines and personal style preferences. Members’ first outfits are only $24.95.
The deal was too good to pass up for bloggers Joanie and Heather of thekrazycouponlady.com. When they finally received their first outfits in the mail, they noticed that Fabletics apparel items are made of high-quality fabrics. Workout staples like sports bras and leggings come in exceptionally cute styles and a wide array of colors and patterns.
VIP members like Joanie and Heather are hooked. The subscription service model has offered customers an extremely convenient and fun new way to purchase clothing. The success of this model has allowed Hudson to launch several brick-and-mortar Fabletics stores across the country.
Instead of using these stores to sell clothes in person, Hudson uses them as “reverse showrooms” that aim to get more customers to sign up to the VIP membership program. For customers who prefer to try clothes on before purchasing them, this “reverse showroom” allows them to see for themselves that the clothes are well-made before committing to a monthly fee online. When customers try on items in a Fabletics store, those items appear in their online shopping carts. About 25 percent of customers who purchase an item in a Fabletics store end up becoming VIP members.
Thanks to the success of this strategy, Hudson has announced that she will be launching several more Fabletics stores over the next five years.