According to an article on Art Of Manliness, the quality of a suit is not necessarily determined by its price, it is the construction of the suit that really makes the difference. The term canvassed basically describes a layer of canvas (e.g. wool, horse or camel hair) between the wool (or whatever the suit is made of) on the outside and the lining on the inside.
The canvas is cut to your body shape and the wool is stitched (by hand or machine, thanks JeffreyD for clarifying) to the canvas. As you wear the jacket, the canvas conforms to your body's shape, creating an excellent fit.
Fused jackets on the other hand are constructed in a cheaper way. Instead of a high quality canvas, a fusible interlining is glued to the suit. This fulfills the same job, it keeps the jacket's shape, but it can also look rather unnatural and appear stiff. I remember buying an H&M suit years ago that felt like it's made of thick paper, I guess that was fused... Fusing technology has improved significantly in the past years, but there might still be problems if you bring your suit do the dry cleaners regularly. The glue might dissolve and “bubbles” form on the suit – an effect that cannot be repaired and actually makes the suit unwearable.
There is also a third possibility, namely half-canvassed suits. These have canvas around the chest and lapel of the suit, but use fusing for the rest of the suit. Having the canvas on top means you most likely won't have problems with bubbles and the suit is still rather cheap to produce for the manufacturer.
Indochino states to have fused & stitched interlining, according to the terminology established above, this would correspond (mostly) to half-canvassed suits. In 2010, a bespoke tailor by the username of JeffreyD on StyleForum (Blog: made by hand - the great sartorial debate) voiced some criticism concerning certain construction details (no canvas in the lapels). Indochino has since improved and the method used now is a unique method, similar to a half-canvas construction, but using both fusing and canvassing. See Indochino's tweet (in a response to a user) on the matter below:
@arvindgang The jacket is constructed by having the lining sewn to the interlining, then the interlining is fused to the interfacing.In 2012, Indochino's construction was updated again, the graphics now reveal more details on the process. As can be seen in the title graphic, the process indeed includes both fusing and canvassing.
— Indochino (@indochino) August 10, 2011
- by Lorenz Loidl