Business model example: Threadless - Dressing the long tail in user design

Challenges in the apparel industry are to find designers that can create hit products on a continuous basis, to predict the demand down to the style, color and size. Threadless started as a hobby inviting anyone to submit artworks for t-shirts to an online platform, a community to rate and the best t-shirts to be printed. Today, the company is the biggest community-based t-shirt store on the web, selling more than 100 000 t-shirts per month. It is one of the most famous examples of "crowdsourcing" inviting everyone to design and assess new t-shirts. Members, some 900 000, download a template and upload a design, around 150 submissions per day, and a small percentage are selected by the visitors and members of the community to be printed and sold through the online store. Creators of the winning designs receive $2000 in cash, a $500 gift certificate and a membership to a monthly subscription-based line of t-shirts. Threadless t-shirts are run in limited batches with 9 new designs a week, and when sold out reprinting only occurs when there is enough demand for a new batch. Producing a predetermined demand keeps costs low and margins high, and because community members tell the company which t-shirts to produce Threadless never produces t-shirts that are not sold. In addition to being designers, voters, and buyers, community members get t-shirt credits by sending in digital pictures of themselves wearing purchased t-shirts if featured, and for recommending t-shirts to people in their social networks when purchased through a referral link. Threadless was one of the first firms to systematically mine a community for designs, a trend that today can be seen in various industries.

Further reading:

• List of business model examples
• Zara - A devastating business model