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Look Out, Lululemon: Nimble, Lower-Priced Ellie Aims to Make You Sweat [Updated]

Posted by Sheila Shayon on February 5, 2013 11:12 AM

Editor's note: This article has been updated with comment by lululemon.

In the $14 billion women’s athletic apparel market, heir apparent Lululemon is facing a direct challenge by Ellie, the latest startup incubated by L.A.-based Science.

Pledging the same quality of workout gear at half the price, Ellie's approach eschews sophisticated tech in favor of consumer demand gauged by social media: items are first introduced on Facebook to gauge reaction and test trend strength.

“With an on-site pattern-maker, they can showcase designs they are testing across social media to get users/fans to decide if they like them, and if it’s popular, the outfit is manufactured within four days and available for mass market retail,” a rep told VentureBeat. “That’s lightning speed for clothing manufacturing.”

Infused by a recent $2 million investment from Trinity Ventures, Rustic Canyon Partners and Blumberg Capital, Ellie is flush and hungry as it pulls out the stops in its online-only model, which blends subscription and a la carte e-commerce. 

Users can buy a la carte or sign up for a "Fit Fashionista Club membership" in which $49.95 per month brings delivery of customized cases of workout gear, all tailored to members' answers to questions about their fashion preferences and lifestyle. 

“Think of it as a Lululemon of the Month Club,” VentureBeat says.

TechCrunch's Leena Rao, in a report detailing her recent visit to Ellie's Garment District factory in downtown Los Angeles, says Ellie co-founder Marcus Greinke explained to her how his brand can offer high-quality, low-cost apparel.

She writes: “Ellie is buying the same fabrics as Lululemon, but have made the process by which the clothing is created and sold much more efficient, so these costs are not passed on. Ellie has taken a bunch of design and manufacturing processes in house (and in the U.S.). Sketching, to creating sample, to actual development of the product is done by Ellie. What usually takes four to five months now only takes less than 2 months… and of course, there are no brick and mortar stores, so that overhead is cut out as well.”

“Lululemon is regarded as the pinnacle but it’s also a luxury that many can’t afford,” Greinke added to Forbes. “That’s why we realized there’s truly no one in the market at the middle ground of $30 to $70.” A basic Ellie top is $32, compared to $68 at Lululemon; Ellie leggings are $42, compared to $78 at Lululemon.

Lululemon, a billion-dollar Canadian yoga-inspired brand founded by former surfer Dennis "Chip" Wilson in 1998, has consistently raised the bar and a few eyebrows in retail and lifestyle markets with its focus on a tight community with outlier principles. Wilson ceded the CEO helm to Christine Day last year.

The brand expanded its portfolio with a spin-off ivivva athletica line of clothing for girls age 5 to 12 in 2009, and then expanded into menswear. Day said recently that, while menswear accounted for eight percent of company sales a year and a half ago, it has grown to 12 percent — holiday sales representing 15 percent. 

The question will be whether Lululemon—which has been getting more aggressive in defending its signature yoga pants—can retain its leading position in the market as a nimble upstart makes its move.

“Making time and funds available for a superior gym and workout experience is hard enough for most of us,” Ellie's Greinke commented to Forbes. “Why should you pay $130 or more for workout clothes like yoga pants? A healthy lifestyle should be attainable for everyone, and Ellie wants to make sure you look and feel good whether you begin or end your day with a trip to the gym.”

Update: the following comment was provided to us by the P.R. agency for lululemon:

LUON is a proprietary fabric manufactured exclusively for lululemon. Ellie’s products are made from Eclon, which is NOT the same. In the attached document, you will find an official statement from Eclat Textile Co., LTD for the clarification between Eclon and Luon. We have also requested a correction fron TechCrunch.

1. Eclon is not Luon.

2. Eclon is using Nylon 6 as its raw material; Luon is using nylon 6,6 as its raw material. The two fabrics are different.

3. Nylon 6,6 is a premium material which has better performance in hand feel, color fastness, yarn strength, and durability comparing to nylon 6.

4. Luon, is a state-of-the-art fabric which is exclusive to lululemon and lululemon only.

Of equal importance is the history that lululemon has had with Ellie’s founders. Prior to launching their current brand, the principals at Ellie launched a “disposable, experimental” brand named PV Body. In marketing PV Body through social media and other outlets, the principals at Ellie made extensive unauthorized use of lululemon intellectual property, including the LULULEMON, LULULEMON ATHLETICA and Wave Design (our logo) marks, demonstrating a clear intention to trade off of the goodwill associated with the lululemon brand."

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