FIGS, Inc. (FIGS): 5 FORCES Analysis [Nov-2025 Updated]

You're trying to figure out if the premium story for FIGS, Inc. still holds up after years of hype, and honestly, the Q3 2025 results show a company that's gotten smarter operationally-a 69.9% gross margin is defintely something to note-but the top-line growth is getting harder to find. With 2.8 million active customers spending an average of $114 per order, the brand moat is real, yet competitors like Fabletics are digging in. My take, based on the latest data, is that while the threat of new entrants is tempered by their community and proprietary FIONx fabric, the structural power of their specialized textile suppliers remains a key risk you can't ignore. Let's map out exactly where the leverage sits in this business now.

FIGS, Inc. (FIGS) - Porter's Five Forces: Bargaining power of suppliers

You're analyzing the supply side for FIGS, Inc., and the concentration risk here is definitely something to watch. The power suppliers wield over FIGS, Inc. is a critical lever impacting the company's cost structure, which we can see reflected in the gross margin figures.

The structure of raw material sourcing suggests a significant dependence, which naturally elevates supplier leverage. Specifically, 73% of raw material sourcing is with just three primary textile manufacturers. This level of concentration means any disruption or pricing demand from these few partners directly pressures FIGS, Inc.'s profitability.

This reliance is compounded by the need for specialized inputs, particularly for the company's signature materials. The dependence on a few specialized suppliers to produce the proprietary FIONx fabric is a key vulnerability. While FIGS, Inc. does not enter into long-term contracts with its manufacturers, the consistency and longevity of its core fabric profile strengthen the relationship with existing vendors, which can translate to supplier power.

Switching suppliers for these custom materials is not a simple plug-and-play operation. We see high switching costs for FIGS, Inc. due to custom material specifications and stringent quality control standards required to maintain the product's premium feel and technical performance. This lock-in effect gives incumbent suppliers more negotiating room.

To give you a sense of the financial backdrop against which these supplier dynamics play out, here are the latest reported figures from the third quarter of fiscal year 2025:

The gross margin of 69.9% in Q3 2025, while strong and up 280 basis points year-over-year, was achieved partially due to lower duty rates and reduced freight expenses, which suggests that external cost pressures, like those from suppliers or logistics, are a constant variable. The company also notes the impact of tariffs as a risk factor, which directly relates to the cost of sourced materials.

On the other hand, some factors work to mitigate the absolute power of suppliers:

• Geographically diverse global supply chain mitigates single-country political or logistics risk.
• FIGS, Inc. generally sources on a purchase order basis, avoiding long-term commitments that could restrict future flexibility.
• The company actively sources new suppliers to support innovation, though core fabric reliance remains.

Overall, supplier power is assessed as moderate-to-high due to limited specialized production capacity for proprietary textiles, despite the company's strong balance sheet of $241.5 million in cash as of September 30, 2025.

FIGS, Inc. (FIGS) - Porter's Five Forces: Bargaining power of customers

When you look at the power of the customer base for FIGS, Inc., you see a split personality. For the individual healthcare professional buying a set of scrubs, their power is relatively low, but for larger entities, that leverage shifts significantly.

For the individual customer, the power is constrained by the brand's perceived value. FIGS, Inc. has successfully positioned its apparel not just as a uniform but as a status symbol within the healthcare community. This brand equity allows FIGS, Inc. to command premium pricing, which is a direct countermeasure to the low switching cost inherent in the commodity nature of scrubs. If you only look at the fabric and stitching, switching is easy; but if you factor in the social currency, walking away from the brand is a bigger decision.

The size of this loyal base is substantial, which gives the company a degree of stability. As of the third quarter of 2025, the number of active customers reached 2.8 million. This large, engaged base suggests that, on an aggregate level, customers are sticking with the brand, which dampens their individual bargaining power.

We can see this stickiness reflected in purchasing behavior. The Average Order Value (AOV) for FIGS, Inc. in Q3 2025 was $114, representing a 6% year-over-year increase. This rise, driven by a higher rate of full-priced sales and product mix, shows customers are willing to spend more per transaction, further indicating that brand loyalty is outweighing the low cost of switching to a generic competitor.

Here are the key customer metrics from the Q3 2025 period:

However, you have to consider the institutional side of the equation. The threat of buyer power is much higher when dealing with large healthcare systems. FIGS, Inc. is developing its TEAMS business specifically to address this segment. Institutional customers, by nature of bulk purchasing and the need for standardization across a facility, possess significantly higher leverage to negotiate pricing and terms than any single nurse or doctor. To put this in perspective, the institutional segment (TEAMS business) is targeting an area that historically represents approximately 15% of the U.S. scrubs industry. If FIGS, Inc. fails to offer compelling value beyond just the brand, these large buyers can force concessions or standardize on a lower-cost provider.

The bargaining power dynamics can be summarized by looking at the forces at play:

• Low power for individuals due to strong brand equity.
• High potential power for institutional buyers (TEAMS).
• AOV growth suggests pricing power remains effective.
• Active customer base is large at 2.8 million.
• Switching costs are low in pure product terms, but high culturally.

The company's strategy to combat the institutional leverage involves scaling product innovation and expanding internationally, hoping to make the brand indispensable across more geographies before large-scale standardization contracts become the norm. Finance: draft 13-week cash view by Friday.

FIGS, Inc. (FIGS) - Porter's Five Forces: Competitive rivalry

You're analyzing the competitive intensity in the healthcare apparel space, and it's definitely a crowded arena for FIGS, Inc. The rivalry here is fierce, coming from two main directions: the established, traditional uniform companies that have long-standing relationships with hospital systems, and the newer, digitally native Direct-to-Consumer (DTC) brands. Think of it like this: you have the legacy players who own the B2B contracts, and then you have agile newcomers like Jaanuu and Fabletics pushing the envelope on style and direct engagement.

The market itself is highly fragmented, which means no single player, even a category leader like FIGS, Inc., has total control. Still, FIGS, Inc. has established a significant footprint. As of the trailing twelve months (TTM) ending September 30, 2025, FIGS, Inc. reported TTM revenue of $581.03 million. This scale gives them an advantage in purchasing power and brand recognition over smaller entrants, but they still have to fight for every customer dollar.

Where FIGS, Inc. really sets itself apart in this rivalry is on the cost side, specifically gross margin. Their Q3 2025 gross margin hit 69.9%. That margin is a key competitive advantage over rivals, especially when you consider that many competitors are forced to discount more heavily to gain traction. Honestly, maintaining that level of margin while competing on brand is tough work.

In a sector that isn't experiencing explosive growth-it's more of a replenishment-driven apparel sector-differentiation is everything. Brand marketing and community-building are not just nice-to-haves; they are essential for FIGS, Inc. to avoid becoming a commodity. They need to keep the emotional connection strong to justify their price point against cheaper alternatives. The rivalry is intensified because low-cost options are always available, and competitors frequently engage in promotional activity to pull customers away.

Here's a quick look at some key metrics that show the current state of play for FIGS, Inc. as they navigate this rivalry:

To combat the constant pressure from competitors, FIGS, Inc. is leaning into several areas to maintain its edge:

• Brand marketing spend was lower year-over-year in Q3 2025 compared to the prior year's Olympics campaign.
• Active customers grew 4.0% year-over-year to 2.8 million as of September 30, 2025.
• Net revenues per active customer were $209 for the trailing twelve months.
• The company is focused on product innovation with new fabrics like FINEX, FORMEX, and FIBREX.
• International expansion is accelerating, targeting markets like Japan and South Korea.

The ability to drive higher AOV, which was $114 in Q3 2025, up 5.6% year-over-year, helps offset the pressure from low-cost rivals who might compete primarily on unit price. Still, the ongoing threat of tariffs, estimated to be a roughly 440 bps annualized headwind, adds another layer of complexity to cost management against competitors.

Finance: draft 13-week cash view by Friday.

FIGS, Inc. (FIGS) - Porter's Five Forces: Threat of substitutes

You're analyzing the competitive landscape for FIGS, Inc., and the threat of substitutes is definitely lower than in many other consumer sectors. That's because the core product-scrubs-is a non-discretionary, mandated professional uniform for healthcare workers. If you work in a clinical setting, you have to wear something that meets facility standards; this requirement inherently limits the universe of viable alternatives.

The primary substitute you are fighting isn't a different type of clothing entirely, but rather the traditional, boxy, lower-cost scrubs that have dominated the market for decades. These legacy options compete almost purely on price and basic compliance, lacking the technical comfort and style that FIGS has built its entire value proposition around. The success of FIGS in late 2025 shows that a significant segment of the market is willing to pay a premium to avoid the substitute.

Here's the quick math on how FIGS' premium positioning is translating into financial strength, which acts as a psychological switching barrier. When customers invest in the perceived value of the Technical Comfort brand, they are less likely to jump back to a cheaper, less functional alternative. This brand equity is a real asset.

The high perceived value of the technical fabric and fit creates a psychological switching barrier. When you've experienced the difference in breathability or stretch, going back to an older, boxier fit feels like a step backward in professional quality of life. This is why the Net Revenue per Active Customer rose 2% year-over-year to $209 for the trailing twelve months ending September 30, 2025, even as the active customer count grew 4.0% to 2.8 million.

Also, potential substitutes could include non-scrub professional workwear, but this remains a small segment of the overall threat. FIGS is actively targeting this area, as evidenced by its focus on the Teams business, which has an estimated 15% Total Addressable Market (TAM) in the U.S. This shows the company is looking beyond just the core scrub replacement market, but the primary battle is still against the traditional scrub.

• Scrubwear net revenues grew 8.4% year-over-year in Q3 2025.
• International net revenues grew 11.7% in Q3 2025.
• Operating expenses as a percentage of net revenues fell to 63.6% in Q3 2025.
• Net income margin reached 5.8% in Q3 2025.
• Adjusted EBITDA margin was 12.4% in Q3 2025.

Finance: draft 13-week cash view by Friday.

FIGS, Inc. (FIGS) - Porter's Five Forces: Threat of new entrants

You're looking at the barriers to entry in the medical apparel space, and for FIGS, Inc. (FIGS), the brand equity they've cultivated is a major moat. It's not just about selling scrubs anymore; it's about selling a lifestyle to healthcare professionals. That community feel is expensive and time-consuming to build.

The scale of operations is another hurdle. Replicating the sophisticated DTC (Direct-to-Consumer) e-commerce platform and the global supply chain that supports it requires significant upfront capital. You can't just open a Shopify store and compete with the infrastructure FIGS has established.

Here's a quick look at the scale that a new entrant would need to match, based on Q3 2025 performance:

It's tough to build that kind of customer base from scratch. Honestly, the investment in technology and logistics alone is a deterrent for many potential players.

The proprietary fabric technology, FIONx, is a genuine technical barrier. It's not just marketing fluff; the specs are hard to match quickly. New entrants face the challenge of developing comparable performance characteristics.

• FIONx resists bacteria by up to 99.5%.
• FIONx achieves 99.9% moisture-wicking capability.
• The fabric weighs just 3.8 oz per square yard for lightweight durability.

Furthermore, management noted improvements in returns, which ties directly to product quality and fit, making it harder for a newcomer to match the post-purchase experience. While the exact low return rate you mentioned wasn't explicitly stated as 10% in the latest reports, the company cited overall improvement in return rates tied to better fit, which is a sign of product maturity that new entrants lack.

Still, the market isn't impenetrable. We saw that when a strong existing apparel brand like Fabletics entered the space around 2023. That move proves that even with high barriers, a well-capitalized, brand-focused competitor with an existing apparel footprint can challenge the incumbents. They don't have to build the brand from zero, which is a huge advantage for them.

• FIGS Inc. Market Capitalization (Q3 2025): $1.23 billion.
• International Net Revenues (Q3 2025): $24.32 million (showing global reach to defend).

Finance: draft 13-week cash view by Friday.