Crowdfunding Startups Are Looking To Refashion The Business Of Fashion

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TechCrunch | | Dec 28, 2014

Crowdfunding and fashionCrowdfunding is enabling new fashion startups to fight against the industry norm of manufacturing in Asia by bringing production closer to home thanks to lower minimum orders, willing local manufacturers and the trend of unique, customized clothing.

Fashion startups such as Before the Label, I Am La Mode and Out of X use the crowd to provide an alternative to mass manufacturing for the masses. Small startups online are not looking to produce quantities comparable to big retailers, but instead respond to a growing demand of personalized and unique clothing.

The concept of these new fashion crowdfunding startups is simple and similar to Kickstarter and Indiegogo.

Each item has its own campaign with a minimum threshold to make the final cut. After the item gets the minimum amount of backers, the piece of clothing or accessory goes into production. The power is solely in the hands of the crowd that decides whether a dress gets made.

Tel Aviv-based OutOfX wants to break the manufacturing norm by incorporating two funnels: one between the business (individual designer) and the buyer of the end-product, and one between the designer and local manufacturers.

“Designers who submit the designs decide where to manufacture, but prefer to do it locally for obvious logistical reasons. After submitting and pricing the design, we put them in contact with a local manufacturer,” Shany Elkin, the creative director of OutOfX said.

Even though Elkin doesn’t rule out that in the future some designers might opt to produce in Asia, most do not.

“Manufacturing in Asia is only meaningful if you make huge amounts. We are currently collecting a database of manufacturers in the countries where our designers are based.”

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As part of the website, the company plans to launch a service that rates local manufacturers to give designers more choice and create competition between local players to push down the prices.

OutOf X’s business model is based on revenue share with a flat fee of 12 percent from the purchasing price. It’s optimistic about the future as it expects its turnover to reach $10 million by 2016 and see the number of designers on the site rise to 5,000.

The main differences between the crowdsourced and retail models lie in the accuracy of determining the real cost of an item. Instead of first designing the summer collection, then estimating demand and finally manufacturing thousands of different styles in China or Indonesia, fashion startups use crowdfunding to turn the whole cycle upside down to let desginers and the crowd have a conversation about the demand.

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The National Crowdfunding Association of Canada (NCFA Canada) is a cross-Canada crowdfunding hub providing education, advocacy and networking opportunities in the rapidly evolving crowdfunding industry. NCFA Canada is a community-based, membership-driven entity that was formed at the grass roots level to fill a national need in the market place.  Join our growing network of industry stakeholders, fundraisers and investors. Learn more About Us | Crowdfunding | Support

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