INFS5885 E-Business Case Study: Threadless Community-Based Model

This case study provides an in-depth analysis of Threadless, a Chicago-based e-commerce company known for its community-based, crowdsourcing business model. The analysis covers Threadless' business model evolution from 2008 to 2018 using Osterwalder's Business Model Canvas, highlighting changes in customer segments, value propositions, and revenue streams. It explores the company's growth since 2000, its unique approach to design selection through community voting, and the motivations for both designers and customers to participate in the Threadless community. The study also discusses the pros and cons of Threadless declining retail offers in 2007 and considers the potential of physical retail distribution. A comparison is made with Design by Humans, another e-commerce organization using a similar model. The conclusion emphasizes the importance of community involvement in Threadless' success, where the community drives design, product selection, and purchasing decisions.

E-business assignment 1
Analysis on Threadless Chicago Based E-commerce Company
Student
Course
Tutor
Institutional Affiliations
State
Date

E-business assignment 2
1. Introduction
Threadless organization is a community-based online platform that got started with
$1000 by Nickell and DeHart in the year 2000. Inspired by their experience and motivated by
their success, the founders launched their own business. Their website platform works like a
never ending design competition. The organization allow community members to submit their
design online which are then voted for by the community. Threadless company select the
winning designs which they print and sell. The winner, in return get rewarded with cash for her
own purchases. This business model has greatly contributed to its success.
2a. Threadless business model in 2008 and in 2018 in light of Osterwald’s Business model
Threadless’ model can get elaborated with the help of the building blocks featured in the
Osterwald’s business model canvas as follows.
The
organization
Partners
Customers,
hosting
providers and
investors
Main activities
Managing
product
development
process,
platform
development and
maintenance
Value
proposition
Community
feeling, get
revenue shares
of the final
product
Customer
relationship
Acquiring
customers
through:
Referral
marketing,
community
Customer
segment
Investors,
entrepreneurs,
marketers,
developers.
Main resources Channels

E-business assignment 3
Support staff,
website
operators, brand,
user stock
Community
profiles,
websites, emails
The cost structure
Production on demand cost
The revenue stream
The special preorder prices
Subscription fees
In the year 2008, customers were mainly graphic designers, there were also consumers
who buy the products. In 2018, there is a wide range of customers including software developers,
consumers, designers, and webmasters to mention a few. According to the model, nearly all users
share the same goal, a strong sense of identity, and enjoyment of task as well as a feeling of
community belonging. When all users feel motivated to continue with the development of the
platform, Threadless will be at a comfortable situation to disperse its shared risks.
2 b. The evolution of Threadless since 2000 to today by comparing the two different stages
in the year 2008 to the year 2018.
Threadless has become one of the most innovative small organization in the United
States. Its history dates back to the year 2000 when it was formed by two college dropouts
namely Jeffrey Kalmikoff and Jake Nickell. Piller (2010, pp.47) tells the story of the Threadless
starting with the episode at MIT meeting where the organization’s staff offered one of their first
public presentations. The author has done a great job in documenting the history of Threadless
organization since it got started.

E-business assignment 4
From 2000 to 2004, the company’s revenue grew by 500 percent every year without any
advertisement. However, by 2006, the Threadless user base grew up to 700,000 members and
their sales reached over $18 million. The organization continued to grow in the year 2007 for an
estimated thirty million dollars in T-shirts sales (Esnaashari, Azimzadeh, Farhoodi, and Solouki,
2018, pp. 144-149). By 2008, Threadless had gotten crowned several times, community
members submitted various T-shirt designs online, which are afterward put into community vote
and the winning design is selected. By 2009 the organization was well on its way to selling over
one million t-shirts.
Currently, many people around the world know and embrace the organization as a
company as well as an online community (Nelson, Mehta, Mikrut, and Shah, Caterpillar, 2012,
pp. 13). The company has attracted over 1500 designs from over 42000 designers having over 80
million votes cast by the community to express their preference more than it did in the year 2008.
This is attributed to the advanced technology that has led to an increase in e-business.
2 c. The business model that would be more successful to Threadless organization
The crowd-sourcing business model has always been and is still the more successful
business model for the Threadless Company. This business model has gotten used for 18 years
now by the organization. The company has been able to sell millions of shirts and still sell up to
now. The Threadless designers are often asked to submit spectacular designs and they compete
against each other doing the same thing (Lakhani, and Kanji 2008, pp. 608-707). It can be noted
that there is a free argument which supports crowd-sourcing, however, the company already have
a number of dynamics that make them stay above critiques as they build multi-billion dollars
business a year.

E-business assignment 5
Due to the fact that many crowd-sourced ideas begin with the need to build a community
(Ghafele, Gibert, and DiGiammarino 2011, pp. 47). There must be a robust community in order
to get the member submissions, also, there must be a good number of folks willing to submit
their projects and get paid. The threadless organization started as a supportive community before
they got into competitions. The mentality of making community first is evident today as one
casual reading of comments will give provide a glimpse into how committed and loyal the
community is to Threadless ideas.
3 a. The motivations that make designers participate in the community-based business
A study by Brabham (2010, pp.1122-1145), through qualitative data of motivation of
participants at Threadless. The author came up with four main motivators of participation at the
organization which include: the opportunity of developing individual’s skills, the opportunity of
making money, the love of community as well as the potential to take up freelance work.
Threadless allow everyone in the community to submit his/her design through the
community design platform. It allows the community to latter vote the designs and the best
design is chosen and printed on the product sold by the organization. While the company solely
focused on t-shirts at first, currently the product range also includes shoos, hoodies among
others. All of the designs are created and judged by the community, if a design win, the designer
of the particular design gets a monetary reward of up to $5000.
3 b. The motivations for the customers to participate in Threadless community-based
business
Consumers are always very open in sharing their ideas concerning products and services
as they will further benefit from them. As far as consumer involvement is concerned, a brand

E-business assignment 6
community can be compared with the OSS design community (Brabham 2010, pp.1122-1145).
Through this, members the customers get motivated to participate in the organization’s business
as they are driven by curiosity and enjoyment.
3 c. The Threadless roles in the community-based business
The customers of the organization have shown great enthusiasm for the Threadless
organization as they have made collaboration possible, they further protect the company from
imitations and also contribute the ideas through which Threadless can be more productive and
become better from what it is currently. The organization also have main roles in return; they
focus their attention on their operations as well as further development of their communication
platform through which they interact with their customers.
In addition, Threadless also defines the rules of their game, manages all the process
involving material delivery as they also honor the customer designers whose designs are used for
production. By doing so, Threadless organization has been able to increase its productivity level
with time.
4 a. The pros and cons of declining the offer in 2007
According to the video, Kalmikoff, DeHart, and Nickell gathered in a conference room at
the Threadless headquarters to discuss an offer from major retailers like the urban outfitters and
the target. The offer was about selling the organization’s products in multiple retails stores across
the country which was least expected. As a consequence, the organization had gained some
advantages alongside disadvantages of the decision they made as displayed in the following
table.
Pros Cons

E-business assignment 7
The individual artists could get acknowledged
by their designs.
The organization lost the opportunity of
increasing its revenue.
The designs can be purchased Threadless t-
shirts at the same price as opposed to if the t-
shirts were to be sold by the retailers.
The organization lost the opportunity for
partnership with the urban outfitters.
4 b Should Threadless move to physical retail distribution?
One significant challenge that is faced by all retailers is to find a perfect blend of online
and physical distribution channels. An organization like Threadless which has gained a
considerable reputation in the digital world needs to consider making steps toward physical
retail. Besides, how does the organization want to gain presence in physical retail?
I can be against the motion as Threadless has never had employees that staff its store and
the organization has never used large staffing strategies as it does not have a design team. Also,
the retail distribution is not consistent with the quirky and unique persona that the organization
connotes since physical retail is always thought of being outdated marketing strategy (Serafin,
2012, pp.124-141; Leitner, and Grechenig 2008, p.21).
I can as well take side with the motion, the organization should have a series of traveling
pop-ups in major urban areas across the country where it has a high customer base. This offers
the beauty of having a physical retail (Kozinets, Hemetsberger, and Schau 2008, pp.339-354).
Also, it will render Threadless organization the image of being hip and trendy. As such, I think
the best idea would be to blend the physical as well as online retail.

E-business assignment 8
5. Another e-commerce organization using the same business model as Threadless
A comparative analysis was conducted by Manzoor (2018 pp. 31-38) on the Threadless
organization competitors. The process revealed the similarity and differences in the products and
services offered by Threadless organization and its main competitors. The Design by Humans
Company (designbyhumanscompany.com) is one of the organizations that use the same business
model as Threadless organization. The organization shares the same characteristics as Threadless
organization since, in the Design by Humans Company, artists also have the opportunity to show
up their talented skills like in Threadless.
Design by Humans Company also offer the same products and services as Threadless
Company since its sales are primarily based on t-shirts. Like in Threadless, the winners in
Design by Humans Company are chosen from the submitted designs and voted for by the site
members and the most popular design get printed depending on the number of votes received.
Additionally, both organization plays a significant role as they all focus their attention on their
operations and develop their communication platform where they interact with their clients.
One thing that makes Design by Humans Company different from Threadless Company,
however, is that the Design by Humans Company normally carry out innovative contests that
motivate the designers, unlike Threadless. These contests include “shirts of the day,” “shirts of
the week” and “shirts of the month” which rewards $750, $1000 and 1750 respectively. Also, in
Design by Humans Company, designers have another possibility to get paid according to the
number of t-shirts sold throughout the life of the design.
6. Conclusion

E-business assignment 9
Based on the analysis, it can be concluded that Threadless is the company of the
community, for the community and by the community. The community is the driver’s seat,
submitting the designs, voting on the designs and buying the products, and even working at the
organization. Because the community vote on the design, and decides which products are sold,
and the community is the customer, every single product produced by Threadless will always sell
out.

E-business assignment 10
Reference list
Brabham, D.C., 2010, Moving the crowd at Threadless: Motivations for participation in a
crowdsourcing application, Information, Communication & Society, 13(8), pp.1122-1145.
Esnaashari, M., Azimzadeh, M., Farhoodi, M., and Solouki, S., 2018, April, Webazma
crowdsourcing platform. In 2018 4th International Conference on Web Research ICWR, pp. 144-
149, IEEE.
Ghafele, R., Gibert, B. and DiGiammarino, P., 2011, Crowdsourcing patent application review to
capitalize on innovation.
Kozinets, R.V., Hemetsberger, A., and Schau, H.J., 2008, The wisdom of consumer crowds:
Collective innovation in the age of networked marketing, Journal of Macromarketing, 28(4),
pp.339-354.
Lakhani, K.R. and Kanji, Z., 2008, Threadless: The business of community. Harvard Business
School Multimedia/Video Case, pp.608-707.
Leitner, P. and Grechenig, T., 2008, Collaborative shopping networks: Sharing the wisdom of
crowds in E-commerce environments, BLED 2008 Proceedings, p.21.
Manzoor, A., 2018, Using Social Media Marketing for Competitive Advantage, In Social Media
Marketing: Breakthroughs in Research and Practice, pp. 21-38, IGI Global.

E-business assignment 11
Nelson, B.E., Mehta, V.S., Mikrut, D.L., and Shah, K., Caterpillar Inc, 2012, Threadless quick
connect tubular coupling release tool, U.S., pp. 12, Patent 8,336,856.
Piller, F., 2010, Open innovation with customers: crowdsourcing and co-creation at Threadless,
pp. 6
Serafin, D., 2012, Defining Prosumption for Marketing: Understanding the Nature of
Prosumption after the Emergence of Internet-based Social Media. International Journal of
Management and Economics, (36), pp.124-141.
threadless.com, 2018, Accessed on 13th September, 2018 from: <
https://www./product/41/GiftCertificates >