When I was in elementary school, my friends and I each had our favorite baseball cap. In first grade, we all had basically the same Ohio State Block-O hat, since that was the local college football team. Once we were old enough to go to the shopping mall though, we discovered Lids – a store where you could buy hats repping teams from all over or, better still, make a customized cap to express yourself. The custom designs were simple but popular – if you made a cool design, your friends might want the same hat and come back from their next visit to the mall sporting your design.
Extending this concept to today’s crowd-sourced world, I propose a direct-to-consumer hat design company unifying artists and influencers with hat consumers and aficionados. BrandNewHats would be a business for those who not only want their fashion sense to be part of who they are but want to participate in the writing of their outfit’s story as well.
BrandNewHats would create value in two ways:
- Unifying artists and customers so that creators and fans could collaborate and create magical new designs in a vibrant fashion community.
- Streamlining the product design and delivery process to realize economies of scale and allow artists and customers to easily realize their product vision.
Value Capture and Sharing
BrandNewHats would capture value by capturing and sharing gross margin with hat designers – sharing value up front and on an ongoing basis would create shared benefits leading to a sustainable business and community.
Specific elements of the model would include:
- Crowd-source elements
- An artist design submission portal
- Monthly community vote contests to determine which styles would be manufactured (with no obligation to buy)
- Design requests and challenges proposed by the company and the community
- Operational elements
- Internally managed inventory buys based on input from voting customers and understanding of design trends and retail partner demands
- Flexible supply chain, likely in partnership with sourcing agent
- Strong community management focused on telling stories of artists and passionate customers
Reasons to Believe
RTB #1: Successful Product-as-Canvas Businesses Exist
- Chicago-based style shops BucketFeet and Threadless are two successful businesses that have employed this product-as-canvas business model. Threadless at one time earned over $30mm in revenue and BucketFeet has raised over $19mm in financing through multiple rounds since its founding in 2011.
RTB #2: Successful Hat Retailers and Manufacturers
- Hat retail is a big business – Lids had revenue of $846 million and earnings before tax of $42 million in 2017.
- Hat making, even based on simply showcasing team logos and mascots on a licensed-basis is huge. Major League Baseball cap manufacturer New Era earns around $700mm in revenue each year (*they also sell knit hats and other headwear) and did not have a down year during the recession.
RTB #3: Flexible Supply Chain Partners Could Help Source
- Informational interviews I’ve conducted with BucketFeet team members described how their early partnership with Li & Fung allowed them to create a flexible supply chain from day 1. Li & Fung and other sourcing agents will take a design and work with their factory partners to create and deliver the product allowing BrandNewHats to focus on building and maintaining the community and marketing the product.
RTB #4: Hat Culture is Huge and Expressive Hats Are Underserved
- There’s always a hat/headwear trend. From the brand (Von Dutch Trucker Hats to Flat Brim New Era Snapback Sticker Caps), to how you wear it (backwards, forwards, or rally style) there’s a hat people want to own.
- It’s more than just baseball caps of your favorite sports teams – celebrities have been seen wearing everything from plain denim hats to tropical print styles in recent years. A single platform where you could find unique hat designs would lower search costs for unique products and unite passionate artists and customers.
- Interview with BucketFeet (March 2017 and July 2015)