JustFab

Product Model






JustFab is an online retailer that offers its female customers a range of shoes, apparel and bags. The company delivers designer quality at lower prices than traditional department stores. JustFab designs and manufactures their own products and sells them exclusively on the JustFab website, thereby operating a product business model.

JustFab further provides its customers with a personalised shopping experience. Customers are able to take an online quiz after which the company’s style experts match the individuals to a personalised boutique. Each month JustFab’s style experts handpick a selection of shoes and handbags for each member, thus customizing their shopping selection. [i] The online quiz is a complementary product that aims to enhance the value of the JustFab website and thus is not a solutions business model that creates a high level of trust with its customers.

JustFab operates a subscription-based business. Through memberships, JustFab aspires to eliminate the inefficiencies faced by many participants of the fashion industry: JustFab can design and manufacture products according to the size of their customer base and their preferences, thereby avoiding overstocks and dilution of their profit margins. [ii]

History

Launched in March 2010 by Don Ressler and Adam Goldenberg, JustFab operates a subscription-based fashion business, built on its personalized fashion styling advice and in-house designed clothing. [iii]

At its inception, the company sought to reinvent the global fashion business in a way that personally engages every customer and delivers on-trend fashion at exceptional value. [iv]

JustFab has raised $33 million in Series A financing led by Matrix Partners with co-investment from Technology Crossover Ventures. JustFab also enjoys star power with former model Kimora Lee Simmons as an investor, president and creative director. [v]

As of August 16th 2016, JustFab Inc., the parent company of membership-based brands like Fabletics, FabKids, JustFab, and ShoeDazzle, announced that it would rebrand itself as TechStyle Fashion Group. [vi] The rename aims at emphasizing the company’s roots in technology.

Customers – Who They Are

JustFab targets customers who are fasion-savvy, and are looking for designer quality at affordable prices. The service targets women aged from 24 to 45 who want “fast fashion” and love to go shopping, Adam Goldenberg, co-CEO of JustFab, says. [vii]

Engagement – Value Creation Proposition

JustFab creates value for its customers by providing them with designer quality items from $39.95. Most department store items sell for five times more than what they cost to make. JustFab delivers designer quality at lower prices by cutting out the middlemen and mark-ups. The company works directly with the same manufacturers than those contracted by designer brands. JustFab offers products that are identical in quality, exclusive to JustFab, at only a fraction of the price. [viii]

Customers enjoy free shipping, free exchanges and returns options. JustFab also offers its customers a subscription option, where they can become “VIP members” reap the benefits of exclusive deals.

As of 2016, JustFab had 4 million members, 12 million facebook fans, had shipped 50 million products, while 80% of sales was accounted for by repeat customers. All customers collectively saved up to $383 million VIP savings in 2015. [ix]

With Headquarters in Los Angeles, JustFab prides itself in having an expert team of Hollywood stylists, industry insiders and trendsetters.

Delivery – The Value Chain

JustFab operates a subscription-based commerce model. They charge their customers a monthly membership fee that grants members access to curated products offered by their website. Membership is available at a monthly price of $39.95 and comes with features such as free shipping and free returns.[x]

The registration process requires members to complete an online quiz investigating their fashion preferences. On the first of each month, JustFab stylists provide members with a personalized boutique catalogue. Customers can shop their boutique or alternatively "Skip the Month" by the 5th of each month without being charged. If customers do not take action between the 1st and the 5th, they will be charged $39.95 each month for a membership credit to the card on file. Each credit can be redeemed toward one JustFab item, which can be used later at any time. [xi]

Monetization – Value Capture

As of August 2014, the company had a valuation of $1 Billion. [xii]The company washoping to acquire $400 million in 2014 revenues and more than $500 million in 2015 revenues, Mr. Goldenberg said. Of that amount, roughly 90% comes from the site’s subscribers. [xiii] The company is on track to make $650 million in the coming year.[xiv]

References

[i] JustFab. (2016). JustFab. Available: http://www.justfab.co.uk/. Last accessed 24th August 2016.

[ii] TechStyle. (2016). JustFab. Available: http://www.techstyle.com/about-us/. Last accessed 24th August 2016.

[iii] Tomio Geron . (2011). Former Intermix COO Raises $33M For Fashion Brand JustFabulous. Available: http://www.forbes.com/sites/tomiogeron/2011/09/21/former-intermix-coo-raises-33m-for-fashion-brand-justfabulous/#a5abd467e63f. Last accessed 24th August 2016.

[iv] TechStyle. (2016). JustFab. Available: http://www.techstyle.com/about-us/. Last accessed 24th August 2016.

[v] Tomio Geron . (2011). Former Intermix COO Raises $33M For Fashion Brand JustFabulous. Available: http://www.forbes.com/sites/tomiogeron/2011/09/21/former-intermix-coo-raises-33m-for-fashion-brand-justfabulous/#a5abd467e63f. Last accessed 24th August 2016.

[vi] Mallory Schlossberg. (2016). This retail company just changed its name. Available: http://uk.businessinsider.com/justfab-becomes-techstyle-fashion-group-2016-8. Last accessed 24th August 2016.

[vii] Tomio Geron . (2011). Former Intermix COO Raises $33M For Fashion Brand JustFabulous. Available: http://www.forbes.com/sites/tomiogeron/2011/09/21/former-intermix-coo-raises-33m-for-fashion-brand-justfabulous/#a5abd467e63f. Last accessed 24th August 2016.

[viii] JustFab. (2016). JustFab. Available: http://www.justfab.co.uk/. Last accessed 24th August 2016.

[ix] TechStyle. (2016). JustFab. Available: http://www.techstyle.com/about-us/. Last accessed 24th August 2016.

[x] One Million Blog . (2015). Billion Dollar Unicorns: JustFab Getting Ready for an IPO. Available: http://www.sramanamitra.com/2015/03/26/billion-dollar-unicorns-justfab-getting-ready-for-an-ipo/. Last accessed 24th August 2016.

[xi] JustFab. (2016). How it works. Available: http://www.justfab.co.uk/how-justfab-works. Last accessed 24th August 2016.

[xii] Carly Okyle. (2015). JustFab: Silicon Valley Sees a Unicorn. Available: https://www.entrepreneur.com/article/251093. Last accessed 24th August 2016.

[xiii] Lizette Chapman. (2014). JustFab Fitted With $1 Billion Valuation For Fashion E-Commerce. Available: http://blogs.wsj.com/venturecapital/2014/08/28/justfab-fitted-with-1-billion-valuation-for-fashion-e-commerce/. Last accessed 24th August 2016.

[xiv] Mallory Schlossberg. (2016). This retail company just changed its name. Available: http://uk.businessinsider.com/justfab-becomes-techstyle-fashion-group-2016-8. Last accessed 24th August 2016.

Disclaimer

Written by Halima Begum and edited by Danielle Reza under the direction of Prof Charles Baden-Fuller, Cass Business School, in September 2016. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2017



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