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Supply Chain Transparency Increasingly Important to Consumers

Supply Chain Transparency Increasingly Important to Consumers

August 9, 2017

Transparent sourcing, production, and pricing are key for savvy consumers

With production details just a Google search away, consumers are starting to question the true cost of their clothing consumption. Luxury apparel brands continue to deliver impeccable quality, but often at prices 8x the actual cost of production. On the other hand, massive retailers like Gap and Old Navy have been harshly criticized in the media for their work with the clothing production giants, like the Ha-Meem Group in Bangladesh, that refuse to follow internationally recognized worker rights standards. While Gap, Old Navy, and the like claim to monitor their international factory conditions, these audit reports are typically not revealed to the public.

Fast Fashion Gets Harsh Review in Documentary

The fast fashion phenomenon received even more criticism in 2015, when Netflix debuted a documentary titled The True Cost which discusses several aspects of the garment industry from the treatment of low-wage workers in developing countries to negative environmental effects. The documentary also examines consumerism, mass media, and global capitalism—all of which contribute to the fast fashion crisis. According to the film, only 3% of clothing worn by Americans is actually manufactured in the United States.

But do consumers care if their products were made on U.S. soil? Not necessarily. Recent retail success stories such as Everlane, Warby Parker, and Patagonia, prove that true transparency can translate to revenue, even if products are produced overseas.

“Radical Transparency” Transforms into Revenue for Online Clothing Retailer

Everlane, an online clothing retailer based out of San Francisco, CA, is taking sustainable clothing production to a new level. They pride themselves on “radical transparency” with an entire section of their website dedicated to showcasing their factories, employees, and production process. From a 20-person factory in Ubrique, Spain that specializes in leather accessories, to a cotton clothing manufacturer in Lima, Peru where employee happiness is held to incredibly high standards, Everlane’s products are seemingly more valuable (with long wait lists on multiple items) because there is a compelling story to go alongside each piece.

Transparency as a Foundation, Not a Trend

To set Everlane apart from other eco-conscious retailers, transparency was a founding principle, not a trendy add-on. CEO and ex-venture capitalist, Michael Preysman sought to create a retailer with entirely transparent sourcing, production, and pricing. He launched Everlane with itemized costs for their signature item, cotton t-shirts, and eventually brought the same visibility to dresses, leisure wear, and bags as the company grew.

Relationship-Based Sourcing Results in Better Pricing

When looking to create and market a new Everlane product, the team researches the current practices of luxury brands. They scour the internet and reach out to contacts in apparel manufacturing to track down the very same factories that produce designers products sold for thousands of dollars. Everlane’s goal is to track down these factories, create a relationship with the owners and employees, and offer the same high-quality products at a fraction of the price.

Factory Conditions: Everlane Employees Ensure Standards

Everlane requires stringent workplace compliance paperwork, but they are also diligent about following up with each of their providers to ensure that these standards are maintained. Everlane employees visit all factories in-person to evaluate product quality and work environment before choosing to work with them. They seek out spacious, clean workspaces with employees that are enthusiastic and engaged in their work.

Sustainable Product Strategy: Shelf Life Over Seasonality

Everlane highlights individual items over collections, which means that the individual products are aimed to last in your closet—considering both the product style and quality. Plain cotton t-shirts, simple leather flats, all of Everlane’s products are classic. They also try to avoid viral marketing campaigns and discounting cycles, and rely on word of mouth to spread their distinctive message organically.

The Strategic Value of Transparency is Increasing

The Harvard Business Review concluded a 2010 report on Transparency by providing a bit of strategic value that is even more powerful in 2017:

As customers take greater interest in the origins and authenticity of the things they buy, providing them with tools to track provenance will become an important part of the marketing mix and will give producers and retailers new ways to capitalize on brand value. A key consideration is how much data to make publicly available, and in what degree of detail. Many firms have made bold assertions about how seriously they manage their supply chains. Transparency, at a granular level, gives credibility to those claims.

Find out how you can incorporate, and capitalize on, the benefits of Brand Transparency using one end-to-end retail ERP solution with robust business intelligence capabilities.

Author: Ellie Swanstrom

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