Revolutionising Fashion Industry with Made-on-Order & Pre-Sell Business Models

The fashion industry is one of the most polluting industries in the world, and the overproduction of clothing is a major contributor to this problem.? Overproduction occurs when fashion brands and retailers produce more clothing than they can sell or consumers need, leading to an excess of inventory and waste. In recent years, pre-selling has emerged as a potential solution to this problem. Pre-selling is the practice of selling clothing before it is produced, allowing brands and retailers to gauge demand and produce only what is needed.?

In this article I explore why the overproduction of clothing is the most important problem to solve in the fashion industry and how pre-selling can be an effective solution.

Environmental Impact

The overproduction of clothing has a significant impact on the environment. The production of textiles requires large amounts of water, energy, and chemicals, which contribute to greenhouse gas emissions, water pollution, and the depletion of natural resources. According to the United Nations Environment Programme (UNEP), the fashion industry is responsible for 10% of global carbon emissions and 20% of global wastewater. The overproduction of clothing exacerbates these environmental problems, as it results in more textile production, which in turn leads to increased resource consumption and waste.

The disposal of excess clothing also has a negative impact on the environment. According to the Ellen MacArthur Foundation, the equivalent of one garbage truck of textiles is landfilled or incinerated every second. This waste not only takes up valuable space in landfills but also contributes to the release of greenhouse gases and other pollutants into the air and water.

Consumer Behaviour

Consumer behaviour also plays a significant role in the overproduction of clothing. The rise of fast fashion has led to a culture of disposable clothing, where consumers buy clothes at a low cost and wear them only a few times before discarding them. This trend contributes to the overproduction of clothing, as brands and retailers feel pressure to constantly produce new collections to meet consumer demand.

The overproduction of clothing has led to a lack of appreciation for the value of clothing. Consumers are no longer willing to pay a higher price for clothing that is made to last and instead opt for cheaper, lower quality options. This leads to a cycle of overproduction and waste, as consumers discard clothing after only a few wears and brands and retailers produce more low-quality clothing to meet demand.

Pre-selling as a Solution

Pre-selling is a practice that can help address the overproduction of clothing. Pre-selling is the process of selling clothing before it is produced, allowing brands and retailers to gauge demand and produce only what is needed. Pre-selling helps to reduce waste and overproduction by allowing brands and retailers to produce clothing based on actual demand, rather than anticipated demand.

Pre-selling can be implemented through pre-orders, which involves consumers placing an order for a product before it is available, with the understanding that the product will be produced based on the number of pre-orders received.

Benefits of Pre-selling

Pre-selling offers several benefits for both brands and consumers. For brands, pre-selling can help to reduce inventory costs and waste, as well as provide valuable insights into consumer demand. By pre-selling their products, brands can avoid the risk of producing too much inventory that will ultimately go unsold. Additionally, pre-selling can help brands to better understand their customers and their preferences, which can inform future product development and marketing strategies.

For consumers, pre-selling offers the opportunity to purchase unique and exclusive items before they are widely available. Pre-selling can also help consumers to make more informed purchasing decisions by providing them with information about the product, such as its materials and production process. Furthermore, pre-selling can create a sense of anticipation and excitement around a product launch, which can lead to increased engagement and brand loyalty.

Case studies

There are several brands that have implemented pre-selling and made-to-order production as part of their business model. Here are some examples:

• KOTN switched to a pre-sell model in 2019, which resulted in a 60% reduction in waste and a 90% reduction in inventory costs. This switch also allowed the company to grow its revenue by 300% and expand into new markets. By producing only what had been sold, KOTN was able to reduce waste and save on inventory and production costs. Additionally, customers appreciated the unique and exclusive products offered through the pre-sell model, leading to increased revenue for the brand. These impressive results demonstrate the financial viability of pre-sell models and the potential for sustainable and ethical production practices to benefit both the environment and a company's bottom line.
• Girlfriend Collective uses a made-to-order model, producing clothing only after it has been ordered. This has resulted in a 62% reduction in carbon dioxide emissions, as well as a 44% reduction in waste. Additionally, the brand has seen a 34% increase in customer loyalty, as customers appreciate the unique and exclusive products offered through the made-to-order model. By reducing waste and optimising production, Girlfriend Collective estimates that it has saved over $1 million in production costs since implementing the made-to-order model.
• Rothys has implemented a pre-sell model for its limited edition styles, producing only what has been pre-sold. This approach has allowed the company to reduce its carbon footprint by 80%, as well as reduce waste and production costs. Additionally, the pre-sell model has led to increased customer engagement and loyalty, as customers appreciate the opportunity to purchase exclusive styles and feel like they are part of a special community. Through its sustainable production methods, Rothys has seen significant revenue growth, with sales increasing from $20 million in 2017 to $140 million in 2020.
• Tonle uses a zero waste production model, producing clothing only from scraps and leftover materials. The brand also uses a made-to-order model for some of its products, reducing waste and minimising the environmental impact of production. As a result, Tonle has been able to reduce its waste by 95%, while also providing unique and exclusive products to customers. The brand has also seen a 40% increase in revenue since implementing its sustainable production methods, and estimates that it has saved over $100,000 in production costs through its zero waste approach.

Scaling Pre-Selling to the masses

While these brands are making progress in reducing overproduction and waste, some startups are proposing disruptive solutions to address the issue. One such startup is Sangrove, which has developed a cutting-edge pre-sell platform that uses early consumer engagement to accurately predict demand and enable brands to produce only what is needed, Sangrove is able to significantly reduce waste and minimise the environmental impact of overproduction, estimating a reduction of up to 30% in waste.

Sangrove is also leading the charge with Impact Shopping?, a social commerce platform that connects consumers with sustainable fashion brands that leverage pre-sell business models to plan their assortments and size their production runs. Through Impact Shopping? consumers tap into a unique and exclusive shopping experience discovering new, never before made products, while also promoting sustainable fashion production and leading the way towards a more sustainable and ethical fashion industry

In addition to reducing waste and minimising environmental impact, pre-sell models can also offer financial benefits to brands. By producing only what has been sold or ordered, brands can save money on inventory and production costs. In fact, the Fashion Industry Benchmarking Study by McKinsey & Company found that pre-sell models can reduce inventory costs by up to 50%.

Conclusion

With the increasing demand for sustainable and ethical fashion, it is becoming clear that made-to-order and pre-sell models are not only environmentally responsible but also financially viable. Brands that adopt these models can offer unique and exclusive products to customers, reduce waste and pollution, and save money on inventory and production costs.

Overproduction is a significant problem in the fashion industry that has far-reaching environmental and social impacts. However, by adopting sustainable production practices such as made-to-order and pre-sell models, brands can reduce waste and minimise their environmental impact while also offering unique and exclusive products to customers. Additionally, startups such as Sangrove are proposing disruptive solutions that use technology and innovative business models to address overproduction. With the increasing demand for sustainable and ethical fashion, it is becoming clear that the future of fashion lies in responsible production practices that benefit both the planet and the bottom line.