Could Crowdfunding Disrupt the Fashion Industry?: Emergence of new business models due to crowdfunding, and their implications

2016

Crowdfunding is a rapidly growing phenomenon, and it has emerged as an alternative source

of external funding. It has given opportunities for common people (i.e., the crowd) to fund a

variety of different causes, such as projects in arts and science, charities and start-ups, while

getting some kind of value in return. While it has enabled new possibilities in many

industries, the research on crowdfunding is limited, and virtually no studies have looked at

the new business models that have emerged as a result of crowdfunding. We found this

curious, and wish to help start-ups by showing the new opportunities that crowdfunding

enables, specifically in the fashion industry. In this master thesis, we have therefore studied

the phenomenon in the context of the fashion industry.

By conducting semi-structured interviews with managers in European and American fashion

companies, we have been able to identify not only one, but three new business models that

have emerged in the fashion industry as a result of crowdfunding: The Gustin model, the Presale

model, and the Equity model. These business models change the way business is done in

the fashion industry. They require few resources and have low risks, which makes it easier

for start-ups to enter the market. Crowdfunding is used to generate different sources of

revenues (“revenue boost”), which can either enable the launch a product, a collection, or a

start-up, or to grow an established company. Further, all of the respective models facilitate a

strong customer engagement, and give customers the opportunity to directly influence the

industry. This creates an added value for the customers, especially early-adopters, and has

symbiotic advantages for both customers and the companies. In addition to this, the business

models offer a cost-efficient, sustainable, and ethical way of doing business. The new

business models are not only applicable for start-ups, but also have significant value for

incumbent firms. All together, the models identified challenge the traditional business models

in the industry, and have the ability to change the industry in the years to come. This master

thesis lays the foundation for future research, and facilitates that companies can exploit the

opportunity that comes with crowdfunding in the fashion industry.