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What is Threadless?
Threadless is a community-centered online tee-shirt company "with an ongoing, open call for design submissions" (Threadless.com, 2008). What does this mean? It means that Threadless does not hire expensive or chic fashion designers to create its product line. It does not even hire newly-graduated no-name fashion students. So who designs its collections? You do! All it takes is for one to download Threadless's "Submission Kit," and then any design is possible. When one creates a design that one is confident would make a good teeshirt, the design is then submitted to Threadless community. Members (membership is free) then grade the templates on a scale from zero (hate it) to five (love it), and even have the option of "I would buy it." After a week of judgment, Threadless employees will decide which templates to create into actual teeshirts based heavily upon customer ratings and comments. The reward for fashionable innovation? If your design is chosen, you are paid $2000 and given $500 Threadless credit! Not bad, considering most teeshirts sell for under twenty dollars!
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History
Threadless was founded in 2000 by two entrepreneurs named Jake Nickell and Jacob DeHart with the proceeds of a local tee-shirt design contest. In the wake of their victory the two decided to create a "community based teeshirt company with an ongoing, open call for design submissions" (Threadless.com, 2008). Jacob and Jake each contributed five-hundred dollars towards the production of teeshirts and sold them through their new site. For the first few years of the website's existence, the profit margins were essentially nonexistent, and every dollar earned was recirculated into the production of more teeshirts. However, the website began to gather a loyal fan base as it began implementing the platform of crowdsourcing. The website generated hundreds of submissions per week, and people were now not only submitting ideas for teeshirts, but also buying them. Revenues for Threadless were growing at an astounding five hundred percent per year regardless of the fact that it implemented little to no advertising (Chafkin 2008). With margins currently over thirty percent, Threadless now generates over thirty million dollars in revenue and nearly ten million dollars in profits.
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| Jake Nickell, founding father of Threadless |
How Threadless represents Web 2.0
Simply, Web 2.0 is an online community that easily come together for a specific purpose by means of collaboration and social networking. The reason why Threadless can be seen as a representation of Web 2.0 is because that is what the company does. The community of Threadless comes together for a couple different reasons, but the main reason being the overall business that Threadless has set up. It was originally a community of graphic designers that had come together from Dreamless.org, an internet forum for illustrators and programmers, but now includes any average person who wishes to show off a design or hopes to get the $2500 prize. Some come to submit their designs to win a cash prize. Others come because they were recommended to come to vote on the artists' designs, and the rest come to peruse through and purchase an item from the site. Although these people may be coming for slightly different reasons, the significance of this is that it is an online community that used collaboration to build a social network in order to maintain a business.
Who is its Market?
Due to the nature of their product, Threadless attracts mostly young adults looking for creativity or uniqueness. This online T-shirt company originally old to mostly artistic youth looking for products outside the ordinary or social norm. Since its rise in popularity and rapid expansion, Threadless now appeals to people of all kinds. While their clothing is still exclusive in its design aspect, the rating system makes it possible for Threadless T-shirts to set and follow latest trends and demands in fashion (Chafkin, 2008). The winning designs attracts a variety of customers, not just the artsy. Threadless now targets all consumers with the desire to stand out.
Reasons for Success
Community
Above all else, Threadless promotes a sense of community to lure and maintain a loyal customer base (37 Signals, 2007). Selling shirts designed by creative, young adults to consumers of the same nature add a personal and original touch to each T-shirt. Threadless refuses to sell their products to retailers in order to maintain their competitive advantage. Placing their products next to the imitative and banal clothings of Gap or Old Navy detracts the community and exclusive aspects that go into each and every Threadless Tee.
Popularity
Threadless’ rating system allows users to rate each design on a scale of 1 to 5. Since only the most popular items are manufactured and then sold, each shirt is a guaranteed hit. Threadless doesn’t have to spend time, money, or resources trying to predict the next trend. They allow the members to their site decide what is in. By “open sourcing” their marketing team, Threadless is insured that their clothing will always be in vogue.
Exclusivity
No other clothing retailer can provide the same T-shirt as Threadless (Burka, 2007). Even if a company chooses to copy artwork used on Threadless, the rapid change in designs would always keep them one step behind. The brief lifespan of each shirt increases the popularity of every product. Like Zara, customers must continually check for new products. Because each shirt will most likely be sold out by a customer’s next visit, they are compeled to buy even when they are unsure.
Artistic Outlet
A driving force behind Threadless’ popularity is its function as an artistic outlet for its designers. A lot of the drawings that are put up on the website would never have been brought to the public’s eye because a lot of the artist do not have the resources to display their art and attract the attention of the masses. By using the interactive features of Web 2.0, Threadless exposes designers’ artwork and gives them the opportunity to profit from their work. These artists’ desire to exhibit their work and receive feedback is what fuels Threadless’ 150 submissions a day (Chafkin, 2008).
No Marketing Costs
Threadless uses its online community and interactive website to attract customers. Threadless’ “create and rate” T- shirts results in direct consumer marketing that targets the right audience and costs the company little to nothing. The voters for a popular tee are also the buyers. Marketing is made possible through the designers themselves. Once an artist puts their work up on Threadless, they attract as much attention to their design as possible. By showcasing their work on social networking sites and contacting friends to view their art, the designers do most of the advertising for Threadless. Artists who design shirts have friends or know others who are interested in design or customized shirts. The consumers use word of mouth to advertise for the company (37 Signals, 2007).
Threadless then rewards their customers with store credit for every friend they invite to the website and for pictures they post up on the site of them wearing Threadless shirts. This provides the consumers with an incentive to increase the community.
Threadless also posts videos on its video page Threadless Tee-V. These videos make references to blogs, tee shirts, and their designers. It promotes the interactive nature of the site with its interviews of designers. With Threadless Tee-V, the viewer gets to see the reasoning and ideas that goes behind different works of art. This adds a personal touch to the shirts and reminds the customers of the authenticity of each design.
Competitive Advantages
Bill Taylor talks about the competitive advantage that Threadless holds.
Crowd Sourcing
Crowd sourcing,a type of Open Sourcing, is an IT enabled process that allows any individual or company on the net use the online community to gather large amounts of information. The way Threadless uses crowd sourcing as a competitive advantage is by literally asking the consumers what they are most likely to purchase, and the consumers love this because they can vote on what shirts they really want to wear. (Mark Weingarten, 2007)
The fashion industry is, by nature, an environment that can hardly be considered non-competitive. However, in an industry where so many fail, how does Threadless continue to grow and expand at such a rapid pace? The answer is in the way Threadless takes advantage of Web 2.0 and people’s desire to participate through crowd-sourcing, coupled with its ability to maintain a sustainable competitive advantage. Threadless’s goods and value chain are rare, valuable, non-substitutable, and inimitable, allowing them to profit while making any efforts by competitors seem irrelevant. Also, since the marketing aspect of the value chain is essentially nonexistent, this relieves a major financial burden.
1. Rare: The products offered by Threadless can be found nowhere other than the website and the single store located in Chicago, IL. All of its designs are original prints that come directly from the crowd. After the Threadless community decides which shirts to print onto teeshirts, Threadless pays the designers and owns exclusive rights to the design.
2. Valuable and Non-substitutable: When Threadless customers purchase a teeshirt, they are purchasing a piece of art. The value created by the fashionable teeshirt is of such a nature that it cannot be substituted with any generic-name clothing article. When one desires the fashion provided by the one-of-a-kind designers provided by Threadless, there is no substitute.
3. Inimitability: When one initially analyzes the value chain of Threadless, inimitability is certainly not the first word that comes to mind. It seems as though anyone would be able to set up a website that calls for consumer innovations. However, the network effects created by Threadless’s growing number of designers attracting a growing number of consumers (and vice versa) create an insurmountable barrier to entry for any prospective competitors. It is not necessarily the IT implemented by Threadless that allows it to assert itself, it is the data provided by its loyal users. The sense of community Threadless has created keeps its members coming back and creates extremely high switching costs for its competitors. (Threadless.com 2009)
Key Terms Explained
Sources
1. http://www.inc.com/magazine/20080601/the-customer-is-the-company_pagen_6.html
- This source is an article from Inc. Magazine which illustrates the way Threadless uses crowd-sourcing to its advantage.
2. http://blogs.harvardbusiness.org/taylor/2008/04/video_blog_threadlesscoms_comp.html
- This is a video blog on Threadless and its Competitive Advantage was recorded by Bill Taylor, a professor at Harvard.
3. http://www.threadless.com/tv
- Threadless’s video site that contains information on designers, upcoming features, and the general activity that is happening on the site.
4. http://www.threadless.com/submit
- This source explicitly describes the submission process for prospective designers.
5. http://goodproduce.net/blog/?page_id=271
- A website called Midwestern Goodness interviews the founder of Threadless, Jack Nickell, on the company, its origins, and features.
6. "http://www.37signals.com/svn/posts/68-7-reasons-why-threadless-rules
- A blog with seven specific differences that separates Threadless from the competition.
- Threadless has its own facebook account which consists of: photos of their tees, information on the company, a wall post, the latest designs, and videos that update Threadless’ “fans” on the latest features and events.
- Website that contains information on the technology company that created Threadless and its successive sites like: Threadless Kids, Selects, and Type Tees.
9.http://stuff.silverorange.com/archive/2004/december/threadless
- An online review of Threadless by the site, Silverrange Stuff. They comment on Threadless’ features, advantages, and drawbacks.
10. http://money.cnn.com/magazines/business2/business2_archive/2007/06/01/100050978/index.htm
- This article describes a short history of Threadless and the way Threadless runs its company.
someone should include the logistics of threadless. How do they get from a design on the web to an actual t-shirt. How, if possible, is IT involved in that?
contributed by Anthony Ezenna on Feb 27 12:56pm
I think your project may be missing some requirements of the project. I didn't really read much about Threadless' IT or competitive advantage. You may want to add more information on which types of IT Threadless uses on its website. The biggest strength of your project would be the marketing section. You explain clearly how Threadless has no need to advertise because of its loyal customer base (both designers and buyers). It is also very interesting how Threadless offers store credit to its customers as a form of marketing. I think you can improve your project by adding a table of contents to format the page better. Also, I think you can cut down on the history and marketing of Threadless and concentrate more on IT. Lastly, adding a few pictures won't hurt.
contributed by Kevin Chen on Mar 9 1:40pm
First of all I think that there are still parts of the project requirements missing on this page. For instance you have not talked about what IT Threadless uses and how uses that to form a competitive advantage?
Also, I think you should make the subtitles in H4 so that they would appear in the table of contents.
The strengths are that this is an interesting topic and the marketing section. Their use of marketing, which may be a form of competitive advantage, is very interesting. Especially how costumers are the ones that design and rate the t-shirts which makes no need for advertising.
contributed by lama alfulaij on Mar 9 3:15pm
Although you're off to a great start in terms of introducing the company, I didn't read much about the IT advantages of Threadless, so you should discuss those as well as integrate some more course concepts. You should create a table of contents as well as add a few pictures, possibly of their products. Once these things are added, it sounds like it will be a very interesting project!
contributed by Lisa Derr on Mar 9 5:22pm
1) The project meets all the requirements of the course and makes a good use of the link between web 2.0 and Threadless.
2) The best thing so far in this project is its link with topics covered in class like opensourcing and web 2.0. Threadless could not be possible in Web 1.0 and I consider this a remarkable fact.
3) How Threadless use IT to take advantage of this competitive advantage is not clearly explained yet.
contributed by Eduardo Holgado
Good job! Your topic is very interesting and I loved the marketing section, you explained very clearly how Threadless doesn't need to advertise, like in the case of Zara, because of loyal customer. If I had to say something negative, I can't see a clearly relationship between the use of it and competitive advantage.
