Denim plus - Why are Zara so successful even though they're a fast fashion business?

Why are Zara so successful?
Zara are such a successful fast fashion business, and this is due to their strategy. They have a vertically integrated business model.

What is a vertically integrated business model?
"A vertically integrated business model means that you consolidate multiple steps in the typical distribution process. Instead of operating solely as a manufacturer, distributor or retailer, a vertically integrated company performs tasks commonly carried out by suppliers or trade buyers. Vertical integration has several pros and cons relative to specializing in one business function."[1]

What is a benefit?
"Vertical integration has a few core benefits. One is control. The more activities you carry out in the manufacturing and distribution process, the more control you have over the entire flow of goods until they reach the end customer. You may also benefit from lower costs. If you make goods, you only pay for the costs of manufacturing. When a wholesaler or retailer acquires goods from a manufacturer, a markup is added to the cost." [1]


What do they do?

1. Short production time - They react so quickly to trends that they can have the product out on the shelves within a number of days, inviting customers in.
2. Tune into the personal taste of it's customers before they ask for it - 200 designers in Spain look at the decisions made by consumers in their stores. 
3. More styles - they always have a number of different garments with so many different styles, and are always quick enough to pick out the trends fast and have it out on the shop floor within a number of days. 
4. Lower quantities - only a certain number of items will be for sale, therefore the customer will feel like they're wearing a unique garment.
5. Just in time production - make sure that 85% of their products are kept at the manufacturers. 
6. Sold distribution network - delivers goods to the UK within 24hours. 
7. Don't advertise, they simply rely on word of mouth. 

Zara can react and produce clothes almost instantly, and have a new fashion line in their store and on sale within 30 days. That's so impressive! They produce designs and garments every 12-15 days for a new line and creates more than 40,000 designs a year.  So that's a large number of lines just in one season. 

Having a limited supply has its drawback and advantages, as a customer can feel good because it'll be unique, but if you see a product online and go into store to find it, the chances of it being there isn't very likely. Therefore, if a customer sees a garment in there, they'll buy it almost immediately because the chances of it being there over the next few days is unlikely. That's how they stand out from their major competitors as they encourage customers to buy clothes simply in that way. It's really effective as it doesn't mean that customers put the item of clothing back down, they simply buy it. This also benefits them as a company as they manage to save on it's warehousing and inventory costs. 

Zara using 'just in time' as their production technique which is very handy as 85% of their products are kept at manufacturers, which allows them to be flexible in the amount and variety made. 

However, for us, Daintree denim, we're a brand that are fast with our fashion choices and which trends we want to be inspired by. We are a brand that is very similar to Zara and their strategy. We have a member staff that analyses trends and listens to your feedback, and we all discuss what trends we think our customers would want. Limited stock is our main aspect as we will make the product once somebody has ordered and paid for their item. Every product is unique so this allows our customers to feel individual and good about themselves. It can take up to 7-10 days to make depending on the workload, and the jeans will be sent out the next day after they've been made, as the items have to be checked. We are a UK business so our channels and manufacturers are in the UK, in our studio, meaning that we don't have to wait for our product to reach us before sending them out to customers, we simply MAKE them. However, some of our added textiles come from other countries, but we try to make sure that they are organic and are eco friendly. 

[1] http://smallbusiness.chron.com/vertically-integrated-business-model-68292.html - by Neil Kokemuller

Background research:
https://www.tradegecko.com/blog/zara-supply-chain-its-secret-to-retail-success - by Clara Lu on 4th December 2014
http://kwhs.wharton.upenn.edu/2016/02/zaras-fast-fashion-business-model/