Fabletics, the members-only activewear company co-founded by actress Kate Hudson, plans to open between 75 and 100 new stores within the next three to five years—despite a slew of complaints from customers that its subscription-based sales model is a scam.
According to Forbes, JustFab co-founder and co-CEO Adam Goldenberg—whose ShoeDazzle e-commerce site has also come under fire for allegedly tricking consumers into recurring credit card charges—said he wants to “completely mirror the stores to the online experience.”
That means that in-store shoppers will not only be able to try on Fabletics gear in person, but they will also be encouraged to sign up for a subscription (known as a VIP membership), which offers savings of up to 50 percent compared with similar styles from competing brands.
Why all the uproar? First-time Fabletics visitors are invited to sign up for a VIP membership, tempted by the offer of a full first outfit (that is, a top and a bottom) for $25. But customers have complained that the site didn’t make it clear that this automatically okayed a recurring monthly charge of $49.95, whether they ordered something or not, and that subscriptions proved difficult to cancel.
While members do have the option to “skip” a month, they must do so by the 5th or their credit card will be charged, which a note on the company’s site refers to as a “member credit” that can be redeemed for one outfit at any time.
Fabletics, which launched online in 2013, will open its seventh store later this spring at the Mall of America in Bloomington, Minnesota. Its other locations are in New Jersey, Delaware, Maryland, Missouri, Ohio and California. But almost all of the company’s $150 million in revenue in 2015 still came from e-commerce and Goldenberg told Forbes that about 40 percent of in-store sales came from existing subscribers who wanted to check out the goods in real life before ordering.
In an effort to cut down on complaints, he said the site is redoing its “How Fabletics Works” section of the website. He added, “We want every single one of our customers to understand how the program works.”