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What's your business model?

46460

How does JustFab make money?

The LA-based company is leading the subscription commerce fray

Innovation series by Faith Merino
June 27, 2014
Short URL: http://vator.tv/n/37ca

LA has had a bit of an uphill struggle when it comes to fleshing out its tech industry. But if there’s one company that has been redefining Silicon Beach, it’s subscription commerce company JustFab. While other LA-based subscription commerce companies have fought mightily, struggled, and ultimately capitulated, JustFab has grown at breakneck speed and has been acquiring smaller competitors and raising funds like nobody’s business.

So how is JustFab raking in all its cash?

The company abides by the traditional subscription commerce structure: members subscribe, take a style quiz, and pay $39.95 a month for any item selected from a specially curated collection assembled just for them. Members can skip the month and avoid charges if they do so between the first and fifth of each month, otherwise a credit will be applied to their account. While subscribers make up the meat and potatoes of JustFab’s sales, non-subscribers can also shop on JustFab.com, with the caveat that they will end up paying more.

But isn’t that what all the other subscription commerce companies were doing? Yes and no. Shoedazzle started out strong with the subscription model, but ultimately tailspinned when new CEO Bill Strauss decided to scrap subscriptions in favor of a boutique model. The company’s death spiral was dramatic, and founding CEO Brian Lee was brought back in to save Shoedazzle. While Lee was able to stop the careening losses, he wasn’t able to restore the company to its former glory, when it was valued at $200 million.

Save the Date: Splash LA is Oct. 2 in Santa Monica. A couple keynotes include Jessica Alba and Brian Lee, Founders of The Honest Company. Register here

Meanwhile, JustFab differentiated itself from fellow Shoe Wars competitor Beachmint by pacing its expansion. While Beachmint hurled itself into every conceivable women’s retail vertical at once, JustFab devoted its early focus entirely to shoes—then later expanded to accessories and denim.

JustFab has since expanded into children’s clothing—first girls clothes, and then a boy’s line in late 2013. The company also launched an activewear line called Fabletics, which generated $1 million in sales on its own in December 2013.

Altogether, the company is estimated to have generated $300 million in revenue in 2013—up from $1 million in 2012.

Last summer, JustFab acquired Shoedazzle for a reported $10-$30 million (lo, how the mighty have fallen…), and revealed that the two companies combined would rake in some $400 million in sales, but that’s likely a conservative estimate now.

The El Segundo-based company has raised $164 million altogether, including a $40 million Series C round in September 2013, as well as a $15 million follow-on in December. JustFab also went on something of a shopping spree of its own in 2013, starting with the UK-based FabKids in January 2013, followed by France-based Fab Shoes in May 2013. Shoedazzle was acquired in August 2013.

JustFab’s European expansion has been going particularly well. In November, JustFab’s European division generated $5 million in revenue for the month and was operating at a $50 million run rate. 

 


Related companies, investors and entrepreneurs

11776
JustFab
Startup/Business
Description: JustFab (www.JustFab.com) is an online fashion styling service andlifestyle fashion brand that offers members a fun and engaging personal...

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