Founded in 2015 by Italian entrepreneur Monica Calicchio, Tailoritaly is an online fashion platform that lets customers personalize their clothes and accessories choosing details, color, fabric and fit, relying on the excellence of Italian style and materials. Everything is exclusively made in Italy through a network of small manufacturers in the Italian regions of Tuscany, Puglia and Basilicata.
The Italian fashion industry
Beyond and behind some of the most well-known Italian fashion brands, lies a thick network of small and medium enterprises spread around ~65 fashion districts concentrated in less than 10 regions. These small manufacturers operate mostly as contractors to larger fashion brands and lack direct access to end customers beyond the local reality where they operate.
In addition, the “tailor-made” segment has shrank substantially due to low accessibility (high price) and substantial lack of convenience in the shopping experience compared to current alternatives (e.g. Amazon, large retail chains).
Tailoritaly business model and competitive advantage rely on three main pillars:
- Uniqueness – basic designs offered on the online platforms can be customized through details, color, fabric and fit (Figure 1)
- High-quality – all garments are entirely produced in Italy using a highly selected range of fabrics and materials sourced directly from local producers
- Fairness – Tailoritaly supports small local communities by working closely with small manufacturers located in rural areas, providing them with access to a broad audience of Italian and international shoppers and limiting their dependence on larger fashion firms.
Figure 1: How it works – customer interface
All the above, is made available for delivery all over Europe in 10 days and at an affordable price, ranging from 79 Euros for a t-shirt to 279 Euros for a coat.
The following core processes characterize Tailoritaly’s operating model
- Key designs are defined by Tailoritaly creative team
- Customization options are agreed with manufacturers following criteria of technical viability, required throughput time and incorporating customers’ inputs
- Prototypes are generated according to customization options agreed with manufacturers
- Raw materials are purchased according to demand forecasting, quality and profitability requirements
- IT team performs the website back-end development to meet customization options and pricing
Manufacturing & delivery – The Company operates under a JIT production process.
- Semi-finished products are manufactured during downtime at the factory and are stored in the SMEs production floor
- Orders are submitted thought Tailoritaly online platform
- Orders are forwarded to the relevant local manufacturers
- Local manufacturers complete the semi-finished product according to customization requirements
- A third party courier picks up the product and delivers directly to the final customer
These processes are at the heart of the alignment between Tailoritaly’s business and operating models and have allowed the company to quickly achieve market traction and positive financial results, during its short life. In particular, the company’s operating model is based on:
- Shorter supply chain: Tailoritaly shortens the supply chain by connecting SMEs with end customers, avoiding any type of contractor / intermediary. This allows the company to enjoy ~60% margin (versus 28% of traditional e-commerce platforms) and to combine high quality customized products with competitive pricing.
- Selection of the right network of manufacturers: the SMEs’ selection process is aimed at identifying business realities that are both ready to adopt such innovative process and to meet style, quality and price criteria. Each manufacturer is specialized in a particular typology of product (e.g. knits) and the relationship between Tailoritaly and the selected SMEs covers the following requirements, as specified in the actual legal agreement:
- SMEs must be flexible in terms of production cycles in order to promptly be able to fulfill orders (relatively low utilization rate);
- Tailoritaly’s style department and the SMEs’ production manager must cooperate to simplify the production processes, study the feasible customization options and define pricing;
- Tailoritaly needs to be able to ship and deliver products to end customers within 10 days.
- Quality control: Tailoritaly partnered with Hoplites Srl., an Italian company with 30 years of experience in helping small manufacturers in the Italian fashion industry to ensure product quality and consistency. Hoplites advises Tailoritaly in the SME selection and coordination process.
- Optimized utilization: the typical fashion production cycle leaves small local manufacturers with 20% spare capacity and Tailoritaly allows them to use downtime (e.g. month of September, when the winter collection has already been delivered) to achieve full utilization. The production cycle is planned 3 months in advanced in order to avoid any overlap with other SMEs’ clients.
- Scalable operations: Tailoritaly operating model is based on an ongoing process of closing partnerships with local manufacturers. As such, an expected growth in sales can be sustained through closing more of these partnerships even exceeding, in the longer run, the current geographical boundaries (i.e. more regions). As of today, Tailoritaly production partners can sustain up to 2,000 orders per day and are expected to reach full utilization within 2 years.
Looking ahead: key questions to address
- To what extent is this business scalable? At what cost?
- How is the business affected by fluctuations in the fashion market and, as such, in utilization rates?
- How will after-sale processes be optimized?
- What would be the implications of an increased number of designs to the current (limited) portfolio?
- Could the use of advanced web technologies, like 3D or visual interactive content marketing, be a plus to differentiate from potential competitors?
- Interview with Tailoritaly founder, Monica Calicchio