How Kate Hudson Created a Million-Member Fitness Movement with Fabletics

At the outset of her career, Kate Hudson evolved from the daughter of Hollywood royalty to a critically-acclaimed, Oscar-nominated actress. She quickly became an international superstar, with dozens of credits and worldwide success. Now, the New York Times bestselling author of Pretty Happy: Healthy Ways to Love Your Body, fashion icon and modern mom has added another credit to her name: global fashion entrepreneur.

Based in Los Angeles, Hudson’s activewear brand Fabletics has become an international operation with thousands of employees and over 1 million VIP members worldwide, all in just three short, meteoric years.

“I’ve lived in activewear my entire life,” Hudson told Entrepreneur. “And I just didn’t believe that a pair of high-quality yoga pants had to cost that much. The idea behind Fabletics was really to make fitness and fashion accessible for everyone.”

The idea caught on fast. Fabletics’ parent company—TechStyle—gained a billion-dollar valuation and unicorn status in 2014 after Fabletics saw incredible triple-digit growth in its second year. Initially built as an online brand, the ever-expanding Fabletics recently made the leap into brick-and-mortar. They’ve opened 18 stores to date, with plans to add locations as the company continues to increase its market share. In addition, the brand has seen rapid international growth in Germany, Spain, France, the UK, the Netherlands, Canada and Australia.

“Kate’s approach to health and wellness and her grassroots commitment to the Fabletics community have fundamentally changed the way women think about activewear,” says Don Ressler, co-CEO of parent company TechStyle. “She galvanized the entire industry.”

“The truth is that I’ve always been a super-active person since I was little,” says Hudson. “Just for my own sense of clarity, being active is something that I need. It’s a way of life for me. When I feel strong, I feel strong; mentally and physically. Fabletics is about shifting your patterns and being more active in your life—in whatever capacity that is.”

It’s been three years since Hudson teamed up with TechStyle co-CEOs Don Ressler and Adam Goldenberg to found Fabletics. The merging of TechStyle’s eComm know-how with Hudson’s fashion expertise is proving a winning combination when going up against giants like Lululemon, Nike and Under Armour. The keys to the partnership can be distilled to four fundamental factors.

1. Vertical integration

Fabletics is configured to go from design to delivery in just eight weeks. Keeping operations in-house guarantees Fabletics can move quickly while manufacturing at the highest standard.

By collaborating on all aspects of the worldwide business—employing top designers, working with next-generation tech, controlling production and delivery—Hudson, Ressler and Goldenberg have created a groundbreaking eComm template.

“Our brand is really well positioned. Thanks to the model we use, we’re able to basically have the same quality and performance for half the price,” says Hudson. “And because we’re so connected and engaged with our community, we can take customer feedback and turn it into tangible results in a way that other companies can’t.”

2. Create meaningful relationships with members

Fabletics has taken an innovative approach to creating lasting connections with every individual customer.

Before a customer becomes a member, Fabletics asks that prospective VIPs complete a brief Style Quiz. The quiz is engineered to quantify where a customer’s tastes lie. Soon, Fabletics is able to offer new members their own personal style recommendations.

VIPs such as Keri Gless underscore the power of the initial visit to Fabletics.com: “Personally-curated outfits based on my lifestyle and fitness activities—I was hooked on my first visit and looking forward to the next month!”

Data-driven personalization pays dividends to Fabletics and its membership base. “Thanks to our direct relationship with the consumer, we are also able to use the gathered data to de-risk the fashion space,” says Goldenberg. “We can forecast inventory demand at 95 percent accuracy, eliminate overproduction and pass the savings back to our customers.”

3. Give customers a reason to keep coming back

An online flexible membership business model doesn’t work if members aren’t inclined to return to the site. Building trust and brand loyalty are important. But keying engagement and inspiring return business requires another ingredient: urgency.

To create this urgency, Fabletics strives to consistently introduce new limited-edition looks and styles for its members. Fabletics’ breakneck operational speed, powered by vertical integration, helps keep up with demand. Ultra-competitive price points support the high-quality product, combined with VIP-focused messaging and TV and digital ads created by Hudson.

The ultimate goal: to build and nurture a true, self-sustaining Fabletics community that anticipates new releases with Nike-esque fervor. “Beyond being a clothing brand or even a lifestyle brand, we’re building a loyal community of like-minded women,” Hudson says.

4. Improve as you grow

Anytime a business is charting new territory, challenges are bound to arise. And in late 2014, Fabletics came under fire, accused of a lack of clarity regarding its membership model. Furthermore, there were concerns over a lack of inventory on certain bestselling items. VIPs were disappointed when Hudson’s newest designs would sell out in a matter of hours.

These factors combined to create a force Fabletics had yet to encounter: negative publicity. For a company built on direct communication with its customers, the criticisms stung.

Led by Hudson, Fabletics took immediate steps to clarify and simplify the Fabletics program. “You can always do better. When you’re a startup and growing fast, it’s hard to get everything right. So we took a long look at everything Fabletics does, from top to bottom, and made the necessary improvements.” Says Hudson. “We made clear communication one of our priorities; we always want our customers to feel totally informed and comfortable.”

Fabletics.com underwent a redesign and refined how it communicates all aspects of VIP membership. It invested in upgrading customer service. It recalculated how to better employ data to avoid future inventory shortfalls.

Fabletics’ efforts paid off. Within 18 months, Fabletics scored an A rating with the Better Business Bureau and customer satisfaction ranks among the industry’s best. “My mission from the very beginning was to help women feel as empowered, encouraged and excited about their health as they do about their style,” says Hudson. “I think we’re doing that, and there’s also so much more we want to do.”