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Fashion Business Terms
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B2B
Business-to-Business; Transactions between businesses, as opposed to those between a business and consumer. In fashion, this can refer to dealings between fashion brands and suppliers or retailers.
B2C
Business-to-Consumer; The process of selling products directly to consumers. In fashion, this includes boutiques and online stores selling to the end user.
SKU
Stock Keeping Unit; An alphanumeric code used to identify a specific product and track inventory. Fashion brands use SKUs to differentiate between sizes, colors, and styles.
MSRP
Manufacturer's Suggested Retail Price; The price that manufacturers recommend retailers to sell their products. In fashion, it's a common pricing strategy to guide retailers.
COGS
Cost of Goods Sold; The direct cost tied to the production of goods sold by a company. In fashion, this includes raw materials and labor used to make clothing.
MOQ
Minimum Order Quantity; The smallest amount of product that a supplier is willing to sell. For fashion businesses, MOQs can affect the manufacturing cost and pricing strategy.
Direct-to-Consumer
A business model where companies sell directly to consumers, bypassing traditional retailers, wholesalers, and middlemen. In the fashion industry, this allows brands to maintain control over their brand and offer competitive pricing.
Dropshipping
A retail fulfillment method where a store doesn't keep the products it sells in stock but instead transfers customer orders to a third-party supplier who ships the product directly to the customer. In fashion, this allows for lower overhead and a wide selection of products without inventory risk.
Omnichannel Retailing
A multi-channel approach to sales that seeks to provide customers with a seamless shopping experience, whether they are shopping online or in a brick-and-mortar store. The fashion industry implements this to integrate various shopping channels like online, mobile, and in-person.
Vertical Integration
A strategy where a company expands its business operations into different steps on the same production path. In fashion, a vertically integrated company might own its own fabric mills, production facilities, and retail locations.
Private Label
Products manufactured by one company for sale under another company's brand. In the fashion industry, retailers may sell private label products alongside branded ones to increase profit margins and customer loyalty.
Capsule Collection
A small collection of fashion items that can be easily mixed and matched, emphasizing versatility and cohesion. It is designed to appeal to consumer desires for sustainability and minimalism.
Fast Fashion
A contemporary term used by fashion retailers for designs that move quickly from the catwalk to stores to meet new trends. The fast fashion model is criticized for its environmental impact and unsustainability.
Haute Couture
A French term for high-end custom-fitted clothing produced by leading fashion houses. Haute couture items are often made to order for specific customers and can be seen as the pinnacle of fashion craftsmanship and exclusivity.
Wholesale
The sale of goods in bulk at a discount to retailers or other business professionals, rather than directly to consumers. In fashion, wholesale is traditional for brands to distribute their products to a network of retailers.
Lookbook
A collection of photographs compiled to show off a model, photographer, style, stylist, or clothing line. In fashion, lookbooks serve to convey a brand's aesthetic and what their upcoming collection looks like.
Market Week
The scheduled period of time during which fashion designers showcase their upcoming collections to buyers and the press, which often takes place in fashion capitals. Market weeks are crucial for retail buyers to make their selections for the upcoming season.
Ready-to-Wear
Factory-made clothing, sold in finished condition and standardized sizes. Unlike haute couture, ready-to-wear collections are produced in large quantities and available to a wide customer audience, making them more accessible.
Gross Margin
The difference between revenue and cost of goods sold divided by revenue, usually expressed as a percentage. Gross margin is a key metric in the fashion industry to monitor the profitability of products.
Pop-up Shop
A temporary retail space that opens for a short period of time to create a lasting impression with potential customers. Fashion brands use pop-up shops to promote new collections, test the market, or increase brand awareness.
Supply Chain
The series of processes involved in supplying a product to a consumer, including raw material gathering, production, and distribution. In fashion, a well-managed supply chain is essential for timely delivery of new collections.
Trademark
A recognizable sign, design, or expression which identifies products or services of a particular source from those of others. In fashion, trademarks protect brand names, logos, and designs, which are fundamental to brand identity.
Consumer Behavior
The study of consumers and the processes they use to choose, use, and dispose of products and services. Understanding consumer behavior is critical in fashion to tailor products and marketing strategies to consumer needs.
E-commerce
The buying and selling of goods and services using the internet, and the transfer of money and data to execute these transactions. Fashion e-commerce has become a major sales channel for both established and emerging brands.
CSR (Corporate Social Responsibility)
A self-regulating business model that helps a company be socially accountable to itself, its stakeholders, and the public. In fashion, CSR initiatives might include ethical labor practices, sustainable sourcing, and charitable work.
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