Traditionally in the fashion industry the brand marks up at least 100% of the production cost for covering the expense of design, management, marketing, logistics, over-production and rents etc. The retailer then adds another 100% for covering their costs of wages, rents, stock keeping, sales reductions etc.
The prevalent business model is based on a seasonal setup with 2, 4 , 6 or more collections being presented and produced a year. These collections are presented for the press and whole-sale buyers six months before they are available in stores. When a new collection is stocked the previous one is marked down and sold at a reduced price.
Atacac instead uses a price model in which the garments are available to pre-order before and while they are being produced, and priced according to an algorithm similar to that used for flight tickets with dynamic pricing. This means that if you pre-order when the design is presented you pay 60% of the full price, i.e. you pay only for the services you use; manufacturing, design and communication and not for stock keeping etc. Once the production has started and until the garment is stocked the price will be 80% as the production order is placed and the quantity being produced is set.
Once the goods are in stock the normal price applies and your order is shipped directly after the purchase. As a garment is about to run out of stock the price is raised once again as the item gets rare.
This model is constructive from a sustainability perspective as it permits a more efficient and sustainable cycle of production, logistics and consumption, meaning the opposite of today's short-term cycles where garments are sold at reduced prices after a few months.
We believe this model is great for many reasons:
– It rewards loyal costumers as you will be informed about new releases and periods of reduced prices.
– It is built on transparency and makes it clear what you actually pays for when you buy a garment.
– You only pay for the services you are using. If you pre-order you do not need to pay for the cost of stock keeping etc.
– The pre-order sales function as a form of crowd funding to finance production, addressing the liquidity problem that many start-up fashion brands face.
– The model allows atacac to check the interest in new products and regulate the amount of garments being produced and thus keep over-production to a minimum.
– It addresses today's unsound short cycles with frequent sales intervals by instead highlighting the value of goods instead as they are displayed.