Sponsored by Italic
Italic’s Innovative Business Model
You may have noticed that I’m very interested in business models. The landscape of retail has changed dramatically since the early 2000s, when the internet suddenly disrupted brick-and-mortar establishments. But it seems that most brands simply built digital platforms for their stores without rethinking the supply chain. That’s why I’m intrigued by Italic’s innovative business model.
On its surface, Italic looks like your typical, millennial direct-to-consumer brand. They sell a range of cashmere sweaters, silk and cotton basics, supple leather bags, shoes, and even housewares and home linens with a minimalist aesthetic and affordable price point.
But that’s where the comparison ends. Italic does a number of things differently, from start to finish.
In this post, I’m sharing the details of Italic’s business model and product line, including their:
- Focus on luxury-quality goods
- Pricing structure
- Attention to ethics
- Product offerings
- Customer feedback
Italic uses the same factories used by luxury brands like Armani, Longchamp, Crate & Barrel, and Prada.
According to the founder, they do this not only to ensure that their items are good quality. It’s also a way to reduce sourcing costs and leverage previous brand awareness.
Basically, it helps them cut down dramatically on supply chain and marketing costs that typically drive up prices in the direct-to-consumer market.
Founder, Jeremy Cai, puts it this way:
On the qualitative side, I think it’s fairly straightforward, the way we have our merchandising benchmarks: One, is this a category that is already online? Did other brands or companies already do education, so we’re not going to be the first ones doing it? We like to see existing traction in a market before we develop a category in it. Is it high margin already? We really value having products that are high perceived value. Because Italic is so focused on value, being a great quality product at a fair price point, we want to see a high difference between our sales price and the sales price of our competitors.Glossy
Italic has a really interesting pricing structure.
Customers pay an annual fee of $60 for membership. Then, they pay a set price for each item on the site.
Products are priced substantially lower than luxury competitors: cashmere sweaters are under $100 and leather tote bags are in the $200 price range.
Cai also notes that they focus on relatively simple designs and a streamlined retail store to keep prices low.
Italic says that they actually sell these products at cost (plus nominal fees for order fulfillment). This means that the annual membership supports the structure of the business itself.
Attention to Ethics
Like only a few other innovative brands in the online retail space, Italic is concerned with profit sharing and economic sustainability for their partner factories.
In an interview for Business Insider, Cai shares why this matters to him:
Italic is the culmination of decades of growing up with a manufacturing family and working in technology. I had always thought it backwards that manufacturers take home the smallest margin in the supply chain despite making the actual products being sold for many times the cost. Italic bridges the gap between consumers and luxury goods by partnering directly with the manufacturers instead of purchasing inventory like a brand.Business Insider
By selling products directly from factories, the manufacturers make a much larger share of profit and can rely less on an uncertain wholesale structure.
Additionally, a majority of Italic products use natural fibers, mono-fibers (which make recycling and composting easier), or recycled textiles.
Just a heads up: Italic does use animal products like leather and cashmere in their products.
So what does Italic sell?
Italic sells lots of things. Women’s and men’s clothing, shoes, and accessories. And home goods, too. Clothing sizes are still fairly limited, offered in sizes XS-XL. But they have a growing number of beautiful bags, accessories, and housewares that are well worth exploring.
But they also have good reviews on sites like Reddit, particularly for their handbags. Luxury aficionados point out that items from Italic are generally more simple than competitor products, which is intentional.
I’ll be reviewing three items from Italic later this week, with plans to post an update after several months of use.
Do you have any questions about Italic? Any experience with the brand?
Thanks to Italic for sponsoring this post.