By Julia Schasfoort
Today, the fashion industry is known for staggering discrepancies between production price and retail price; items are sold at 7 to 8 times the cost. This lack of transparency extends beyond prices, as the steps in the production process are often undisclosed, leaving customers in the dark about where products are made.
Observation of these phenomena led Michael Preysman, a young businessman from Silicon Valley, to launch Everlane. This new fashion brand offers a solution to the faults of the fashion industry by focussing on “radical transparency”. This innovative idea resulted in a detailed breakdown of the cost of each item, which includes the cost of the materials, labour, duties, and transport. The sum gives the customer a clear insight in the true cost of the item, allowing them to compare it to the price charged (see picture 1). Everlane manages to sell the products at only a fraction of the price charged by traditional retailers. Compared to the traditional price being 7-8 times the costs, Everlane charges only 2-3 times the cost of production. Besides that, Everlane shows its customers exactly where their clothes are made. They have included photos and videos of each of their partner factories, which are carefully selected on fair wages, decent working hours, and environmental sustainability.
Everlane’s transparent pricing model
Everlane is currently valued at over USD 250 million. To explain their success, it is worth looking at some of the unconventional choices they made along their path of development. First of all, they wanted to address the extravagant markups in the fashion industry. Their approach: simply reduce costs. To achieve this, they eliminated the middleman through partnering directly with factories and through selling online only. Also, they decided to cut out the most costly part of the traditional business model of the fashion industry: a surplus in production. Instead of changing their collection every season and producing in bulk, they decided to release their items in small batches and to only design items that are timeless and can be worn for years. “You don’t get laid in Everlane”, is what the company’s founder said in an interview with the New Yorker. It is a funny but surprisingly accurate way of phrasing Everlane’s design practices. Instead of designing trendy, sexy clothes, their clothes are functional and classic. To limit the chance of excesses even further, they make use of waiting lists, real-time data, and consumer feedback to make well-informed decisions with regards to their inventory.
Secondly, they do not look at traditional fashion brands for inspiration where organizational structure is concerned. Rather, they take their inspiration from companies like Pixar and Google. Similar to these companies, Everlane views design as an iterative process where each item release is not considered to be the last step, but rather constitutes an essential part of a much larger process of continuous development. For this reason, much emphasis is placed on feedback from customer surveys and the number of returns to engage in a process of continuous learning and improvement.
This practice of incorporating feedback and listening to customer demand has led them to do something that they vowed they never would: they opened their first physical store in 2018. This has led some to question whether a focus on growth is replacing their focus on the mission, but a closer look shows they have done a marvellous job at being consistent in their practices and in their commitment to their larger goal. The two physical stores that currently exist, one in New York and one in San Francisco, clearly focus on customer experience. The stores are clean, simple in aesthetic, and everywhere there are reminders of what the company stands for, exemplified by the headphones hanging on the walls through which customers can hear the soundscape of the factories where the clothes are made.
It is clear that Everlane addresses an important and relevant issue, which is reflected by their huge success and sales almost doubling each year. They have played, and still play, an important role in initiating discourse around the lack of transparency and unethical practices in the fashion industry. The question remains, however, whether they will be able to reach their long-term goal and whether they will manage to radically change the way in which clothes are produced and bought. Similar to how the term ‘organic’ did not exist a couple decades ago and can now be found everywhere, discourse of transparency and ethical practices in the fashion industry must become the new norm instead of the exception.
