Betabrand Takes Crowdfunding to the Max

Many retailers talk about listening to their customers, but Betabrand has taken this to a whole new level. This is how it operates:

1. Rather than create its own collections, the online retailer actively solicits design ideas from its community as well as all of its internal employees (i.e. not just its four designers).
2. Customers submit designs to the "Think Tank" section of Betabrand’s website.
3. Betabrand solicits feedback in the form of votes as well as comments in sketch format.
4. If a new style receives enough votes, then a prototype is made and photographed asquickly as possible.
5. The style is posted on the website for Crowd Funding for 30 days.
6. A newsletter is emailed twice per week to alert fans of new styles under consideration.
7. If sufficient numbers of customers pre-order the style, then it is produced and shipped.
8. Ultimately, the customer "owns the story."

To be sure, Betabrand is not your grandmother’s clothing store. "There are no 'collections,’ no 'seasons,’ no pre-determined 'merch mix’" to direct what you will wear, says Lana Hogue, director of product development and production. Getting the word out about Betabrand comes primarily from web publications and organic social media — and it often goes viral, says Hogue. There’s a lot of buzz around the brand, with a community that "loves to debate 'Dress Pant Yoga Pants,’ 'Black Sheep Sweaters,’ 'Space Jackets,’ 'Gay Jeans,’ and shirts with 'Poo Emojis’ all over them," says Hogue. Other popular designs have included Executive Hoodies (which came about in response to a particular company’s IPO), 'Chef Jeans’ for Chris Cosentino, and an adult onesie designed by comedienne Margaret Cho.

The earlier a customer funds a design, the greater the discount offered. After a style has been crowdfunded, it becomes available for sale — at full price — to others who want to get in on the action. To date, the Straight Leg/Gray Dress Pant Yoga Pant is the site’s most popular item ever: as of press time it had achieved 10,408 percent funding, since hitting 100 percent funding on Jan. 17, 2014. The company’s crowdfunding goal is to meet production minimums and fund the production. Betabrand produces enough inventory to cover its projected demand for about four to five months, says Hogue.

Betabrand, founded by Chris Lindland in 2009 (prior to that it was called Cordarounds, which got its start in 2005), sells primarily online, but also has a flagship store at its San Francisco headquarters. Also awesome: 70 percent of Betabrand clothes are made in the United States (in San Francisco and Oakland), with the balance produced in China, Korea and Thailand.

The Betabrand model really turns retailing on its head by putting the power of design and production decisions in the hands of the customer, while eliminating the challenge of forecasting demand, says Hogue. It also solves the problem of raising capital for manufacturing, as customers have paid for the cost of production before it even starts. "This is the future of the apparel industry," she says.

"I have worked in the garment industry for more than 25 years and for more than a dozen companies, both big and small. Betabrand is by far the most innovative company I have ever worked with," she concludes.

Editor's Note: In case you missed it, the complete report on our 2015 Top Innovators can be found here.