Threadless Essay

THREADLESS

Why retailer’s offer not to be accepted?

• When Threadless accepts retailer’s offer, in order to carry large volume of its T-shirts in the retail stores, more employees need to be hired, heavy investments need to be made in printing equipment, a bigger warehouse may be required, more packaging and shipping expenses in order to meet the retailer’s guidelines and to avoid fines, should be prepared to handle risk of huge returns.
• If sold in retail stores, Threadless will be seen just like any other T-shirt; buyers in retail store may not appreciate and give much attention to T-shirt’s design as they do not know the story behind every design unlike online buyers who interact with designers, vote for the designs and blogs about the submitted designs.
• Threadless company’s brand image might get damaged if designers get to feel that by paying meagre $2000 for their designs, the company is able to make huge profits by joining hands with retail store.

Threadless should continue the business the same way because

• Over the years as the founders say, it has grown organically because of its unique community based business model; rather than companies coming up with product ideas and pushing them to customers, Threadless involves customers in creating and validating new product ideas.
• Every week it has been successful in coming up with new designs and has grown considerably with no advertising, no sales force and no professional designers.
• It has been able to achieve sky rocketing growth(able to increase revenue from $1 million in 2003 to $23 million in 2007- Exhibit-2) by selling this way and customers also get higher satisfaction buying this way.
• Their operating margin is 28%(approx. calculated from the following table) as compared to other firms in casual designer retail space

The following is calculation of profit (approximate) of Threadless

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