Companies & Markets

The Long Tail

Fabric by Design, on Demand

What will you make today? Source: Grace Dobush/Handelsblatt Global.

Source: Grace Dobush/Handelsblatt

On a cool summer evening, a fabric design workshop was absolutely packed. Dozens of people huddled around long tables, drawing fruits with markers and watercolors, experimenting with patterns, colors and shape, hoping to come up with some motif worth printing. The renovated warehouse is nestled in Berlin’s hip Neukölln, a working-class neighborhood also known for its cool creative scene.

The host was Spoonflower, an American fabric-printing startup that opened its second factory in Germany last year. With digital printing technology, the options for customization are endless: You can create and tile your own pattern, select the exact kind of fabric you need for your project and order as little as a yard of it. If you’re not that crafty, you can select a pre-designed pattern from the community marketplace – you’ve got more than 500,000 to choose from – or even order a finished product like tea towels or a tunic, made precisely to your specifications.

Spoonflower was founded in North Carolina in 2008 and opened up its Berlin office almost a year ago to better serve the European and African markets. The employees in Neukölln work in all areas of the business, from marketing to production and fulfillment. The staffers on hand that night to help explain the process and scan artwork were, appropriately, wearing brightly patterned clothing of their own designs.

“Berlin is a definitely a rising hub in Europe in a way that London was in the last decade, but if I’m going to sign a 10-year lease, I’m going to pick Berlin,” co-founder Gart Davis tells Handelsblatt Global, citing the art and design scene, the cultural melting pot and the affordability as big draws. “People are coming from the east and the west, and it’s this 21st century hub that’s very different than it was in the 20th century.”

Founded by Davis and Stephen Fraser, Spoonflower was the first internet-based service for end consumers to design fabric. The idea was born when Fraser’s wife, Kim, wanted to sew some curtains for their home but couldn’t find the fabric with big yellow dots she was envisioning. Davis and Fraser had worked together at print-on-demand-book pioneer Lulu.com. At the time, custom fabric printing in the United States cost up to $150 per yard, and online customization was nonexistent.

Now Spoonflower offers digital printing on 25 kinds of fabrics, including knit, woven and performance fabrics, from $17.50 to $34 a yard, as well as wallpaper and gift wrap. The company reports it printed roughly 1.3 million yards of fabric last year, and 45,000 yards of that was printed in Berlin. Fabric makes up about three-quarters of the company’s business; although the company wouldn’t share exact figures, we can conservatively estimate its annual sales as at least $30 million.

“I’d like to enable individual designers and makers with the power to express themselves and find their audiences,” Mr. Davis says. Rather than taking a risk on a minimum order of 10,000 yards of fabric, anyone with an idea can just make a pattern and see how it does on the Spoonflower marketplace. It’s the long tail in action: The phenomenon of many small-volume products being just as economically important as a few bestsellers.

Printing fabric digitally cuts out many of the steps of the traditional fabric printing process. Source: Grace Dobush/Handelsblatt Global.

Source: Grace Dobush/Handelsblatt

Spoonflower is a star in its hometown of Durham, North Carolina, an area with a long history of textile production. The company raised $25 million in funding in 2015 ahead of its international expansion. While Mr. Davis doesn’t rule out another round of funding in the future, he says, “The core of the business will not defy gravity; it will respect gravity.”

When Spoonflower started, the team had one digital printer set up in a former sock mill. Now the company has 120 employees in the US office and three Kornit Allegro printers – which cost more than $500,000 a pop – that run around the clock, plus 22 employees and another Allegro in Germany.

Berlin was a strategic location: In terms of order volume, Germany is the fifth most active country for Spoonflower, despite the fact that the company’s website has only been available in English. Manufacturing within the EU also helps the company avoid pesky tariffs that would have been levied on American-made fabric. Now that the European headquarters has been established, the next step is internationalization of the website: Translating English to German, yards to meters and dollars to euros.

One of the company’s investors and board members is Russell Pyle, managing partner at the Boston-area North Bridge Growth Equity, who is also a big Berlin fan. “You can do business much cheaper there than, say, in London,” he says. “Not that London was a big choice, but when the Brexit vote happened, it made us feel much better about it.”

Spoonflower currently has four Kornit Allegro printers, which cost more than $500,000 each. Source: Spoonflower

Source: Spoonflower

“What made Spoonflower very attractive is how they figured out how to do on-demand manufacturing,” Mr. Pyle says. “People are interested in expressing themselves individually. We think it’s a market that’s big and dynamic.” And especially through the custom product arms, called Sprout and the Roostery. “We think that will be a huge opportunity to expand beyond our core maker community into people who appreciate great design but might not have the time or inclination to make the stuff themselves.”

According to handmade industry group Initiative Handarbeit, the overall market for craft supplies in Germany for 2016 was €1.25 billion, with fabric accounting for €465 million of that. In the United States, the Association for Creative Industries estimates the 2017 creative supply market at $43 billion. (The German market size focuses on traditional craft activities such as sewing and knitting, while the US estimate also includes edible arts, floral crafting, woodworking and painting.)

Angela Probst-Bajak of Initiative Handarbeit says consumers mostly buy their sewing supplies in Germany from small retail shops or at fabric fairs. The online market is growing but not yet dominant. Mr. Davis also was attracted to the fact that the smaller markets in Europe helped preserve smaller companies whose counterparts in the United States haven’t survived. “European cities have so many more small stores with unique items,” he said.

Inspiration can come from anywhere. Source: Grace Dobush/Handelsblatt

Source: Grace Dobush/Handelsblatt

It’s a tumultuous time to be a startup in the craft space. Since the start of 2017, Etsy has lost its longtime CEO and laid off 22 percent of its workforce, about 230 positions, and plans to shut down its France-specific markets. And in June, Berlin-based Etsy competitor Dawanda let go a quarter of its workers in the hopes of becoming profitable in the second half of this year. Spoonflower itself cut 18 percent of its workforce a year ago.

But the craft community is at the center of Spoonflower’s endeavor. Traditionally, fabric designers in the US earn about 5 percent per yard of wholesale fabric. By comparison, designers on Spoonflower earn commissions of 10 to 15 percent when a customer orders one of their patterns. Some superstars have emerged, like printmaker Andrea Lauren, and the passive income frees up artists to focus on more time-intensive creative work. Hand-carving a series of seashells to print in a perfectly coordinated shades of blue takes a lot of concentration. But somewhere out on the long tail, a customer finds that it’s exactly what she’s been looking for.

 

Grace Dobush is an editor with Handelsblatt Global and the author of Crafty Superstar. To contact the author: grace.dobush@gmail.com 

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