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Why so many hot apparel ecommerce startups are vertically integrated February 3, 2012

Posted by jeremyliew in apparel, Ecommerce.

The WSJ has a story on what goes into the price of a shirt that shows why so many of the current batch of hot apparel ecommerce companies (e.g. Shoedazzle*, Bonobos*, J Hilburn, Warby Parker, IndoChino etc) are vertically integrated. The retail value chain has a significant markup built into both the wholesale and retail channel as can be seen here.

Vertically integrated companies can take a lot of the costs out of the system and provide a much more compelling value to the consumer while still making an attractive margin.

* Lightspeed portfolio companies


1. Antonio Centeno - February 6, 2012

On the flip side – customers often look at the price to judge quality. Not the best indicator – but one that many still use. And eventually the vertically integrated companies move their prices up as they realize they are leaving value on the table and being pigeonholed as lesser quality EVEN though that’s not the case.

And then there are entire revenue channels these guys are missing…….

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