Profit Potential | License Global

Profit Potential


With a minimal investment, e-commerce center eFashionSolutions can help brands maximize their potential.

IN ONLY ITS FOURTH YEAR of operation, Secaucus, NJ-based eFashionSolutions has been quick to sign on a host of major fashion clients such as Rocawear, Fetish by Eve, JLO by Jennifer Lopez, ShadyLTD, and Baby Phat, as well as Sharagano, Shago, Arme, Apple Bottoms, Members Only, and Orange County Choppers. Its fashion brands run the gamut from trendy musicians who license their celebrity names to brands such as Members Only, an outerwear label that gained notoriety in the '80s. Although these brands represent a wide variety of styles from hip-hop to sexy, feminine looks, they all share the same needs when it comes to selling directly to the consumer.

eFashionSolutions' core responsibility is managing the online operations for fashion branded manufacturers and providing turnkey systems and services that range from Website design, fulfillment, digital photography, customer service, and buying to planning and analytical reporting. Via the system, manufacturers are able to venture into the e-commerce world with minimum up-front investment. Up-front costs

typically run from no cost to $50,000 depending on the marketing plan a potential client has in place.

This e-commerce center has 110 employees who currently service 15 Websites that distribute 50 different brands or licensees. Established by CEO Edward Foy, Jr., and President Jennifer Silano, it services fashion clients and online consumers and enables customers and fanatical fans to shop long after the retailers that carry these brands tally up the day's sales and close their doors. This retail approach opens up additional distribution channels that are more profitable than traditional brick-and-mortar retailers. Typically 60 percent of an online sale goes directly to the brand. That percentage comes without charge backs, co-op dollars for advertising, or in-store promotional materials. In other words, it goes straight to the bottom line.

"eFashionSolutions also aims to engage in a direct relationship with a brand's customer," says Foy, Jr., adding that having this relationship enables a brand to truly understand its customers' spending habits and expectations. Such data are gathered through many online "touch points" that occur when a customer places an order, contacts the call center, registers for a sweepstakes, or responds to a survey. The data are gathered, compiled, and analyzed by eFashionSolutions' staff, then presented to the client and utilized to determine why returns are so high in one particular area, or to evaluate the product offerings a particular brand lacks. Through surveys, eFashionSolutions can determine what magazines customers are reading. By providing this information to the client, it can effectively tailor its marketing efforts, allocating advertising money accordingly.

The company also controls a brand's integrity online. Foy, Jr., notes that the relationship between the consumer and the brand is sensitive and must be handled properly. He also mentions the lofty costs a fashion brand would have to take on if it opted to manage its online distribution in-house. eFashionSolutions' business model provides a cost-effective and seamless method of selling directly to the consumer. Since it caters to a host of other fashion companies with identical needs, it can offer a cost-effective operation. It can easily spread its five Website designers across several different clients, maximizing its service offerings while minimizing the client's costs.

eFashionSolutions is the result of the many years Foy, Jr., spent learning the inner workings of a retail operation. He began his career in the Executive Training Program at Macy's, and later was appointed manager of the juniors' department in New York City. He also worked with buying offices of large department stores, as well as distributors and manufacturers. In 1994, he joined Designer Holdings (Calvin Klein Jeans North America) as an account executive and was responsible for handling the Federated account. He also worked with key players such as Wet Seal and Pac Sun, and led the integration of reporting systems in the MIS and sales departments. He says that while at Calvin Klein, he saw the jeans business increase from $50 million to $500 million in 18 months. The company then went public and hit its peak of distribution. It now was time to establish the Internet as another way of handling distribution.

In 1998, he left to pursue his own venture in the e-commerce marketplace and signed his first client, XOXO. "We own the license for online distribution," says Foy, Jr., noting that, on average, the profit margins are larger for brands, and clients retain 55 to 60 percent of the sale. Among the criteria for hopeful clients that opt to hand over online management to eFashionSolutions, consumer awareness and an already established advertising campaign are key. Clients need to show they are dedicated because the package is offered at a very limited cost to them. "We put in a lot of investment, and there's a major contractual obligation," says Foy, Jr. "We prefer our clients spend their money on marketing." If a substantial marketing plan is in place, fees typically are waived.

Only approximately 25 percent of the companies that approach eFashionSolutions actually get signed on. The brands it targets represent the majority of its client base, and it generally signs 80 percent of the brands it aims for. It typically takes about six to eight months from the introduction point to going live, but according to Foy, Jr., that can realistically happen in eight weeks. "It takes time to get comfortable with the relationship." He notes that Rocawear, once a $900,000 business, soared to $3 million when eFashionSolutions took it over July 2003.

The ratio of licensed brands to non-licensed is currently at 30 percent licensed and 70 percent non-licensed; however within the next few months eFashionSolutions aims to expand the number of licensees represented. The JLO by Jennifer Lopez and XOXO brands plan to sign on more categories, opening up more potential.

Foy, Jr., reports that everything from media attention to concert coverage affects sales and that the fanatic customer wants to prove his or her fan status regardless of what the media reports. He also notes that when the celebrities don't wear their own products, all parties lose. "There is a fine line between not wearing the product and wearing it head to toe at every appearance," he says. "The key is to figure out that fine line and represent your products in a tasteful manner."