Fashion
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Rebecca Minkoff has some advice for e-commerce companies right now
When Rebecca Minkoff first moved to New York City, the then-18-year-old was making $4.75 an hour.
“I just kept working for this designer and someone was telling me what to do every day. I just didn’t like that. And I thought if I’m going to work as hard, it’s going to be for myself and I want to call my own shots,” she said. “I didn’t want to be told what to do, frankly.”
Self-employment for Minkoff turned out just fine; in 2001, she redesigned the iconic “I Love New York” shirt and it appeared on The Tonight Show. After a shout-out from Jay Leno, Minkoff spent the next eight months making T-shirts on the floor of her apartment and quit her job to start designing full time.
We caught up with Minkoff to learn more about how she grew her brand into a global fashion company with the help of her brother, her problem with the unicorn mentality and why she thinks the “invisible barrier” is the future of retail tech.
This interview was edited for brevity and clarity.
TechCrunch: What gave you the energy and drive to become an entrepreneur?
Rebecca Minkoff: Long story. My mom would sell these cast covers, like decorative covers for people with broken arms at the flea market. And I was like, I am going to have a booth here. So I made all these tie-dye shirts and no one bought anything but it was just this idea of like, I can make something I can sell. My mom always taught that. When I wanted a dress, she taught me how to sew a dress instead of buying the dress. And so, I just got this bug for creating things out of nothing.
The constant thread was, “I’m not going to pay for this. You’re going to learn how to do it.”
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Glisten uses computer vision to break down product photos to their most important parts
It’s amazing that in this day and age, the best way to search for new clothes is to click a few check boxes and then scroll through endless pictures. Why can’t you search for “green patterned scoop neck dress” and see one? Glisten is a new startup enabling just that by using computer vision to understand and list the most important aspects of the products in any photo.
Now, you may think this already exists. In a way, it does — but not a way that’s helpful. Co-founder Sarah Wooders encountered this while working on a fashion search project of her own while going to MIT.
“I was procrastinating by shopping online, and I searched for v-neck crop shirt, and only like two things came up. But when I scrolled through there were 20 or so,” she said. “I realized things were tagged in very inconsistent ways — and if the data is that gross when consumers see it, it’s probably even worse in the backend.”
As it turns out, computer vision systems have been trained to identify, really quite effectively, features of all kinds of images, from identifying dog breeds to recognizing facial expressions. When it comes to fashion and other relatively complex products, they do the same sort of thing: Look at the image and generate a list of features with corresponding confidence levels.
So for a given image, it would produce a sort of tag list, like this:
As you can imagine, that’s actually pretty useful. But it also leaves a lot to be desired. The system doesn’t really understand what “maroon” and “sleeve” really mean, except that they’re present in this image. If you asked the system what color the shirt is, it would be stumped unless you manually sorted through the list and said, these two things are colors, these are styles, these are variations of styles, and so on.
That’s not hard to do for one image, but a clothing retailer might have thousands of products, each with a dozen pictures, and new ones coming in weekly. Do you want to be the intern assigned to copying and pasting tags into sorted fields? No, and neither does anyone else. That’s the problem Glisten solves, by making the computer vision engine considerably more context-aware and its outputs much more useful.
Here’s the same image as it might be processed by Glisten’s system:
Better, right?
“Our API response will be actually, the neckline is this, the color is this, the pattern is this,” Wooders said.
That kind of structured data can be plugged far more easily into a database and queried with confidence. Users (not necessarily consumers, as Wooders explained later) can mix and match, knowing that when they say “long sleeves” the system has actually looked at the sleeves of the garment and determined that they are long.
The system was trained on a growing library of around 11 million product images and corresponding descriptions, which the system parses using natural language processing to figure out what’s referring to what. That gives important contextual clues that prevent the model from thinking “formal” is a color or “cute” is an occasion. But you’d be right in thinking that it’s not quite as easy as just plugging in the data and letting the network figure it out.
Here’s a sort of idealized version of how it looks:
“There’s a lot of ambiguity in fashion terms and that’s definitely a problem,” Wooders admitted, but far from an insurmountable one. “When we provide the output for our customers we sort of give each attribute a score. So if it’s ambiguous, whether it’s a crew neck or a scoop neck, if the algorithm is working correctly it’ll put a lot of weight on both. If it’s not sure, it’ll give a lower confidence score. Our models are trained on the aggregate of how people labeled things, so you get an average of what people’s opinion is.”
The model was initially aimed at fashion and clothing in general, but with the right training data it can apply to plenty of other categories as well — the same algorithms could find the defining characteristics of cars, beauty products and so on. Here’s how it might look for a shampoo bottle — instead of sleeves, cut and occasion you have volume, hair type and paraben content.
Although shoppers will likely see the benefits of Glisten’s tech in time, the company has found that its customers are actually two steps removed from the point of sale.
“What we realized over time was that the right customer is the customer who feels the pain point of having messy unreliable product data,” Wooders explained. “That’s mainly tech companies that work with retailers. Our first customer was actually a pricing optimization company, another was a digital marketing company. Those are pretty outside what we thought the applications would be.”
It makes sense if you think about it. The more you know about the product, the more data you have to correlate with consumer behaviors, trends and such. Knowing summer dresses are coming back, but knowing blue and green floral designs with 3/4 sleeves are coming back is better.
Glisten co-founders Sarah Wooders (left) and Alice Deng
Competition is mainly internal tagging teams (the manual review we established none of us would like to do) and general-purpose computer vision algorithms, which don’t produce the kind of structured data Glisten does.
Even ahead of Y Combinator’s demo day next week the company is already seeing five figures of monthly recurring revenue, with their sales process limited to individual outreach to people they thought would find it useful. “There’s been a crazy amount of sales these past few weeks,” Wooders said.
Soon Glisten may be powering many a product search engine online, though ideally you won’t even notice — with luck you’ll just find what you’re looking for that much easier.
(This article originally had Alice Deng quoted throughout when in fact it was Wooders the whole time — a mistake in my notes. It has also been updated to better reflect that the system is applicable to products beyond fashion.)
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Moda Operandi, an online marketplace for high-end fashion, raises $100M led by NEA and Apax
Moda Operandi, an online marketplace that specialises in right-off-the-runway luxury fashion, accessories and home decor, is today announcing a high-priced event of its own: it’s raised $100 million, a mix of equity and debt that it will use to invest in its platform and technology as well as to continue growing business overall. Founded in 2010, it offers products from some 1,000 brands and designers and ships to 125 countries.
“For the past eight years, Moda has disrupted the way people shop for luxury fashion,” said Moda Operandi CEO Ganesh Srivats in a statement. “This investment will enable us to build on that innovation, investing further in the client and designer experience and connecting more of the world’s best fashion to more people.”
The financing is being co-led by NEA and Apax Partners, both previous investors in Moda Operandi, with participation also from the Santo Domingo family (connected to Lauren Santo Domingo, who co-founded Moda with Aslaug Magnusdottir), Comerica Bank, TriplePoint Capital and other unnamed investors.
The company’s valuation is not being disclosed, but in its last round, in 2017, Moda Operandi had a post-money valuation of $650 million, according to data from PitchBook. It has raised $345 million to date.
High-end fashion might not be the first thing that comes to mind when you think about online shopping, but it has actually been a ripe market for the e-commerce industry.
While those in the know (and in the money) might attend catwalk shows, and bijou boutiques in swish locales are likely to be around for many years to come, there is a massive population of people who have the income and inclination to shop for luxury fashion, but might not be in the right place, or have the time, to do so.
For these shoppers, websites, mobile apps and, most recently, new channels like Instagram and messaging services have become a key route to browsing and buying, leading to the rise of huge businesses like Farfetch, Net-a-Porter and more.
That trend has helped to buffer Moda Operandi up to now, but it’s also the one that will be interesting to watch down the line.
We’ve written about the rise of direct-to-consumer brands and how that has played out specifically in the world of fashion, which in turn becomes a new group of competitors to aggregating marketplaces like Moda Operandi.
Similarly, the growing trend of targeting consumers wherever they happen to be also represents a rival business model, with some fashion retailers now foregoing websites altogether in favor of using third-party messaging apps to reach their target customers. Will Moda Operandi change with the times to do more of this kind of selling, too? Like fashion, what’s in today might be out tomorrow, so even the best channels are moving targets.
In any case, Moda Operandi has most definitely shown that it’s prepared to evolve and upset the status quo. The company got its start in 2010 as part out of an aha-moment from Santo Domingo, a socialite, former model and former editor at Vogue.
As someone who had worked for years in the luxury fashion industry, fully immersed as a consumer to boot, she knew that only a small, rarefied group of people ever got full access to a designer’s runway collection.
Moda Operandi was her solution — a platform to broaden that out, giving access to a full trunkshows (as the runway collections are called) to a wider selection of possible buyers and improving revenues for designers and brands in the process, as they no longer had to rely just on more traditional channels, namely buyers for retailers. The site had some catches — for example, as we pointed out at the time, you could shop a runway look, but still had to wait months for the piece to actually arrive, as those items would have yet to be made; but it caught on with a loyal following.
Over the years, the site’s basic remit has expanded, covering not only runway collections but also extending into jewelry, accessories and home decor. (We asked what size the business is today, and whether Moda Operandi can share any details on how that has changed over time, but a spokesperson said the company would not be sharing these or other financial details today.)
In any case, it has remained a compelling enough business to have brought in a hefty round of growth funding from its previous backers.
“We continue to be impressed with the power of Moda’s brand and its positioning in the luxury market,” said Dan O’Keefe, managing partner of Apax Digital, in a statement. “Moda has been enhancing its technology capabilities as a world leading platform for fashion discovery and is led by a world-class team. We look forward to continuing to support their expansion.”
“Moda Operandi has really disrupted the traditional ecommerce model, using technology to give people unprecedented access to fashion,” added Tony Florence, general partner and head of technology investing at NEA, in a statement. “It was a really big idea when we led the Series A, and today Ganesh and the team are executing on that data-enabled retail model at scale. We are thrilled to continue supporting the company in this latest round.”
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Alfred Lin, the Sequoia VC and former Zappos COO, thinks this retail startup could be a generation-defining brand
When the storied venture firm Sequoia likes a deal, it will sometimes not only lead one of its financing rounds but fund it exclusively — no matter how that impacts earlier investors. Given the firm’s powerful brand, it’s hard to complain (too much), even if it means that earlier backers see their stakes diluted.
Such looks to be the case with Dolls Kill, an eight-year-old, San Francisco-based online boutique for “misfits” and “miss legits,” that began selling platform shoes and other club-type clothing and has apparently grown like a weed, alongside the festivals that its customers attend, from Burning Man to Coachella.
The company has just raised $40 million in Series B funding from Sequoia, and when we talked yesterday with co-founder and CEO Bobby Farahi about the deal — which brings Dolls Kill’s funding to roughly $60 million — he said there was “no room” for earlier backers, including the consumer-focused venture firm Maveron.
He quickly added that the company’s board members — specifically Maveron partner Jason Stoffer, along with former Hot Topic CEO Betsy McLaughlin — have been instrumental in helping the company “think through growth while maintaining authenticity.”
It’s easy to appreciate enthusiasm around the brand, which employs around 400 people, has retail stores in both San Francisco and LA and sells its own clothes under an array of different labels, as well as sells the clothing of third parties whose aesthetic happens to fit that of Dolls Kill at any particular moment in time.
As says Farahi, “Right now there’s a resurgence in ’90s fashion, but in another year, we could move on to other third-party brands that we believe will resonate with our customers.”
Farahi doesn’t break out how much of the company’s clothing is made by the startup itself — in China and the U.S., among other “international” locations, according to Farahi. He shies from sharing many metrics at all, in fact. But the company, whose counter-culture approach began at the fringes of society, has seemingly gone mainstream as young shoppers increasingly ditch logos and look to express who they are through what Farahi calls their “inner IDGF.”
Adds Farahi, “The macro world changed a lot to give us a lot of tailwinds.”
Dolls Kill also has — for now, at least — a deep connection to its customers, thanks partly to its creative approach. When the company told its three million Instagram followers earlier this year that it would drive an ice cream truck filled with a particular combat boot called the Billionaire Bling Boot to dozens of U.S. cities, customers “four blocks long” waited in line to buy them, says Farahi.
In another inventive twist, it opened its LA location — which looks more like a nightclub — to shoppers at midnight on Black Friday and it stayed open the following 24 hours.
Sequoia — which reached out to the company directly — told Farahi that it had looked at a lot of fashion brands and “they said we believe you’re the next generation-defining brand, the way The Gap was in the ’80s,” recounts Farahi. “I think they see the company not just as a brand but also a movement.”
Certainly, Sequoia’s Alfred Lin — who as Zappos’s COO helped grow the company into the giant that Amazon acquired in 2009 — understands such things, given the famously strong early emphasis at Zappos on company culture and growing while remaining true to its early employees and customers.
As for the name Dolls Kill, the brand was the idea of Farahi’s wife and co-founder Shoddy Lynn, who liked the “dichotomous words, one very soft and one very hard,” says Fahari, explaining that while “the brand is very girly, these girls aren’t taking shit from anybody.”
Adds Farahi, “And the domain was available.”
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Source: Nike has picked up Russell Wilson’s Tally/TraceMe in a rare acquisition
Nike has long been synonymous with premium sneakers and other sports gear, but now it seems that the company could be extending its brand into another area — digital media — thanks to the rumored acquisition of a Seattle-based startup.
TechCrunch has learned from a source that the multibillion-dollar sports giant has acquired TraceMe, which originally built an app to let fans engage with sports stars and other celebrities before later pivoting into a service called Tally, a platform aimed at sports teams, broadcasters and venues to help fans engage around sporting events.
TraceMe was originally founded by Russell Wilson, the champion quarterback of the Seattle Seahawks, who was the executive chairman of the startup. The company had raised at least $9 million from investors that included the Seattle-based Madrona Venture Group and Bezos Expeditions (Amazon CEO Jeff Bezos’ fund), as well as YouTube co-founder Chad Hurley and others, and it was last valued, in 2017, at $60 million.
Our source said the deal closed in recent weeks and that “it was a good outcome” for the company and investors. It involved both IP — the main interest, the source said, was in TraceMe’s tech rather than Tally’s — and the team.
Indeed, at least eight of them, including TraceMe’s CEO Jason LeeKeenan, an ex-Hulu executive, are now listing Nike as their place of employment. LeeKeenan describes his new role as the head of Nike Seattle. Others on the team now have taken roles that include software engineers, head of product and product designers.
No one at TraceMe and Nike that we contacted has responded to our requests for comment, but just a little while ago GeekWire (which likely had the same tip we did) published a post noting that it had a source that confirmed the deal.
The athletic footwear giant Nike is no stranger to the world of technology: it has been a longtime collaborator with the likes of Apple to develop apps for its devices and has been an early mover on the concept of bringing and integrating cutting-edge (yes, possibly gimmicky) tech into its footwear and other gear. And that’s before you consider Nike as an e-commerce force.
But while the dalliance between sports, tech and fashion is well established, this deal opens up a different frontier for the company. It’s very rare for Nike to make an acquisition, but it makes sense that if it were going to do some M&A, it would be in the area of digital media and picking up engineers to execute on a wider vision in that area.
The company is best known, of course, for its shoes and related sporty clothes, which it has for a long time created in co-branding with the biggest sports stars and has more recently started to extend to a wider circle of celebrities and hot brands in a spirit of sporty street style. These have included the likes of so-cool Supreme, Travis Scott and seemingly tentative forays into music culture.
Nike overshadows all other sports shoe brands in size, with its current market cap at nearly $117 billion, more than twice that of its closest competitor, Adidas . But Adidas has been stealing a march when it comes to partnerships with a wide network of celebrities (even if Drake prefers checks over stripes).
While it isn’t clear yet how and if Nike will be using the startup’s existing services, you could see how a deal like this could help Nike start to think about how it might leverage the collaborations and endorsements it already has in place into experiences beyond shoes, advertising and athletic performance. In this age of Instagram and influencers playing a massive role in shifting consumer sentiment (and dollars), this could give Nike a shot at building its own media platform, independent of these, on its own terms.
This is a bigger trend that we’re seeing across a lot of digital media. Consider how companies like Spotify have extended beyond simple music streaming, investing in building tools to help artists on its platform with marketing and expanding their brands: selling shoes means selling a concept, and that concept needs to have a foothold in a digital experience.
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Wedding dress customizer Anomalie raises $13M as bridal stores crumble
David’s Bridal once owned 50% of the $36 billion wedding gown market before it filed for bankruptcy last year. Brides were growing sick of the lack of styles and sizes plus high prices at expensive brick & mortar shops. The industry was destined for disruption by software that would replace overhead costs and inflexibility with direct-to-consumer personalization.
That’s why I profiled a new custom wedding dress startup back in 2016 called Anomalie despite little funding or traction. The rise of Instagram meant every bride wanted to look unique on a budget, not pay $5000 for a cookie-cutter $200 dress that happened to be white. Anomalie was willing to embrace software to offer 4 billion design permutations and break the markup cartel by selling gowns starting at $1000.
2.5 years later, Anomalie has begun to prove that cheaper doesn’t have to look cheap and custom doesn’t have to cause a headache. 13% of US brides, 275,000 out of 2.1 million, created an Anomalie account in the last year. With David’s Bridal looking shaky and wedding dresses being a seven-times larger market than bedding and mattresses, investors eagerly proposed to Anomalie. Today the startup announces a $13.6 million Series A led by consumer product VC Goodwater Capital .
“I don’t think I’ll ever get tired of working with brides. Other companies would kill for this costumer. She’s so obsessed with every detail of her wedding dress. it’s just a perfect environment to collect data” says Anomalie co-founder and CEO Leslie Voorhees. “Long lead time, high margin, this industry that’s completely f*cked up — it’s the perfect place to start this mass customization engine beginning with the wedding dress” she tells me, hinting at the startup’s potential to customize other clothing too.
Anomalie is also flexing its tech muscle today with the launch of its new dress sketch visualizer. Choose between a few options on shape, cut, color, pattern, and fabric, and you’ll see an algorithmic sketch of your dream dress appear instantly. Anomalie then pairs you with a squad of its designers to finalize the details, ship swatches, and get you your gown with a 100% refund policy if it’s not right.
The startup’s nest egg will go towards hiring more engineers plus bringing more of production in-house to offer additional features like this. But Voorhees insists that “I don’t think we’ll ever completely automate away the stylists. Customer don’t care about AI or machine learning, but they want to trust us to pull the ideas out of their heads.”
Anomalie co-founder and CEO Leslie Voorhees
Anomalie was woven out of Voorhees’ frustrations picking her own wedding dress. She’d been managing factories and supply chains in Asia for Nike and Apple, and it made no sense why slapping “bridal” on a dress could make it up to ten-times more expensive.
Her investigation uncovered that most brands were outsourcing their manufacturing, so she did an end-run, contacted factories directly, and got her dress made custom for a fraction of the price. So many of her pals demanded help doing the same that the Harvard Business School grad soft-launched Anomalie with her husband Calley Means [Disclosure: who I know from college] in the summer of 2016.
The startup’s gowns now average $1,400. Growth has been swift since weddings are so photographed and shared, with Anomalie reaching an outstanding net promoter score of 91. A friend of mine recently bought her dess through the company and it looked stunning and one-of-a-kind without breaking the bank. And since they’re custom, Anomalie makes inclusivity and advantage by offering larger sizes absent elsewhere
Meanwhile, Anomalie’s incumbent competitors have struggled. Gap and J.Crew abandoned the wedding dress business in the last few years. David’s Bridal emerged from bankruptcy with its 300 retail stores still operating, but it’s slipped to 30 percent US market share. It’s now owned by lenders including Oaktree Capital Group, which is a bad omen given that firm was responsible for driving Toys”R”Us into liquidation instead of keeping it open. No other players have a sizable foot or well-known brand besides super high-end designer Vera Wang.
Anomalie capitalized on David’s troubles by poaching its head of bridal production Angela Ng, who now leads the startup’s Hong Kong team and relieves Voorhees of constant trips to China. It also hired former Sephora VP of digital Marcy Zelmar and former TrueCar VP of engineering Aaron Tavistock. Their goal is to sell more dresses to get Anomalie more data, more factory modularization, and more control over its manufacturing.
Anomalie’s dress visualizer turns a few style selections into a sketch of your potential gown
The new funding round that builds on its $4.5 million seed round was joined by Signia, SoGal Ventures, Lerer Hippeau’s BN Capital Fund, and Fin’s Sam Lessin also includes strategic angels like former Stitch Fix CTO Jeff Barrett and ThirdLove underwear CEO Heidi Zak. At Anomalie’s San Francisco headquarters, mannequins sporting design prototypes stand beside software teams optimizing the new dress visualizer. And when I say the dresses are custom, I mean they can get about as weird as you want. Anomalie is finishing up a dress with lyrics from the couple’s favorite song embroidered in a secret language from their favorite TV show…and it still looks beautiful.
“One of the coolest things about Anomalie is that they’re not just using digital as a distribution strategy, but to also deliver a differentiated product experience” says Goodwater partner Eric Kim. “Anomalie’s sketch-builder is a great expression of this emphasis on product and customer centricity.” Wedding dresses have been largely ignored by startups despite the market being bigger than luggage ($34 billion), or shaving ($21 billion), oral care ($10 billion) and hair loss ($4 billion) combined.
The challenge is that unlike those products, bridal gowns are “a zero failure game. This is like airplane engines and heart rate monitors” Voorhees stresses. Anomalie must maintain perfect quality, times, and customer experience to avoid ruining someone’s big day. “Never messing up a dress or losing a dress — we take this really, really seriously.” She knows a few viral disasters could sink the ship. It also has to stay ahead of fresh entrants like COUTURME, a new Y Combinator startup making custom evening gowns as well as wedding dresses.
Anomalie’s SF headquarters. Photo by Summer Wilson
Anomalie sees global demand for a better experience, and thinks it can apply its data set to wedding dresses for more cultures as well as additional types of clothing. “We are building up a large repository of female measurements and creating tech plus operational processes around ‘mass customization’ that can be applied to other garments” Voorhees reveals. “Our aspirations are around bringing more body inclusivity + customization to women’s fashion, not just bridal.”
And while Anomalie could always find a retail partner to get more exposure, it’s tough for brick & mortar brands to operate online without cannibalizing their sales. “We think the women’s closet of the future contains staples from Stitch Fix, rotating dresses from Rent the Runway, and signature custom garments from Anomalie.”
The Anomalie just needs to educate brides that they can actually have the dress of their dreams, and now it wants to inspire that dream on-site too. Full of ambition and verve, Voorhees concludes, “What’s Pinterest valued at when it’s basically a wedding dress search engine?”
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Depop, a social app targeting millennial and Gen Z shoppers, bags $62M, passes 13M users
The rising popularity of omni-channel commerce — selling to customers wherever they happen to be spending time online — has spawned an army of shopping tools and platforms that are giving legacy retail websites and marketplaces a run for their money. Now, one of the faster growing of these is announcing an impressive round of funding to stay on trend and continue building its business.
Depop, a London startup that has built an app for individuals to post and sell (and mainly resell) items to groups of followers by way of its own and third-party social feeds, has closed a Series C round of $62 million led by General Atlantic. Previous investors HV Holtzbrinck Ventures, Balderton Capital, Creandum, Octopus Ventures, TempoCap and Sebastian Siemiatkowski, founder and CEO of Swedish payments company Klarna, all also participated.
The funding will be used in a couple of areas. First, to continue building out the startup’s technology — building in more recommendation and image detection algorithms is one focus.
And second, to expand in the U.S., which CEO Maria Raga said is on its way to being Depop’s biggest market, with 5 million users currently and projections of that going to 15 million in the next three years.
That’s despite strong competition from other peer-to-peer selling platforms like Vinted and Poshmark, and social platforms that have been doubling down on commerce, like Instagram and Pinterest. On the other hand, the opportunity is big: A recent report from ThredUp, another second-hand clothes sales platform, estimated that the total resale market is expected to more than double in value to $51 billion from $24 billion in the next five years, accounting for 10% of the retail market.
Prior to this, Depop had raised just under $40 million. It’s not disclosing its valuation except to say it’s a definite up round. “I’m extremely happy,” Raga said when I asked her about it this week.
The rise of the bedroom entrepreneur
The funding comes on the heels of strong growth and strong focus for the startup.
If “social shopping,” “selling to groups of followers,” and the “use of social feeds” (or my headline…) didn’t already give it away, Depop is primarily aimed at millennial and Gen Z consumers. The company said that about 90% of its active users are under the age of 26, and in its home market of the U.K. it’s seen huge traction, with one-third of all 16 to 24-year-olds registered on Depop.
Its rise has dovetailed with some big changes that the fashion industry has undergone, said Raga. “Our mission is to redefine the fashion industry in the same way that Spotify did with music, or Airbnb did with travel accommodation,” she said.
“The fashion world hasn’t really taken notice” of how things have evolved at the consumer end, she continued, citing concerns with sustainability (and specifically the waste in the fashion industry), how trends are set today (no longer dictated by brands but by individuals) and how anything can be sold by anyone, from anywhere, not just from a store in the mall, or by way of a well-known brand name website. “You can now start a fashion business from your bedroom,” she added.
For this generation of bedroom entrepreneurs, social apps are not a choice, but simply the basis and source of all their online engagement. Depop notes that the average daily user opens the app “several times per day” both to browse things, check up on those that they follow, to message contacts and comment on items and, of course, to buy and sell. On average, Depop users collectively follow and message each other 85 million times each month.
This rapid uptake and strong usage of the service has driven it to 13 million users, revenue growth of 100% year-on-year for the past few years and gross merchandise value of more than $500 million since launch. (Depop takes a 10% cut, which would work out to total revenues of about $50 million for the period.)
When we first wrote about Depop back in 2015 (and even prior to that), the startup and app were primarily aiming to provide a way for users to quickly snap pictures of their own clothes and other used items to post them for sale, one of a wave of flea-market-inspired apps that were emerging at that time. (It also had an older age group of users, extending into the mid-thirties.)
Fast-forward a few years and Depop’s growth has been boosted by an altogether different trend: the emergence of people who go to great efforts to buy limited editions of collectable, or just currently very hot, items, and then resell them to other enthusiasts. The products might be lightly used, but more commonly never used, and might include limited-edition sneakers, expensive t-shirts released in “drops” by brands themselves or items from one-off capsule collections.
It may have started as a way of decluttering by shifting unused items of your own, but it’s become a more serious endeavor for some. Raga notes that Depop’s top sellers are known to clear $100,000 annually. “It’s a real business for them,” she said.
And Depop still sells other kinds of goods, too. These pressed-flower phone cases, for example, have seen a huge amount of traction on Twitter, as well as in the app itself in the last week:
Ordered a new phone case off this woman from depop who makes them with pressed flowers n she sent me this :’) pic.twitter.com/oBtRtQ1MJc
— megan (@__meganbenson) June 1, 2019
Alongside its own app and content shared from there to other social platforms, Depop extends the omnichannel approach with a selection of physical stores, too, to showcase selected items.
The startup has up to now taken a very light-touch approach to the many complexities that can come with running an e-commerce business — a luxury that’s come to it partly because its sellers and buyers are all individuals, mostly younger individuals and, leaning on the social aspect, the expectation that people will generally self-police and do right by each other, or risk getting publicly called out and lose business as a result.
I think that as it continues to grow, some of that informality might need to shift, or at least be complemented with more structure.
In the area of shipping, buyers generally do not seem to expect the same kind of shipping tracking or delivery professionals appearing at their doors. Sellers handle all the shipping themselves, which sometimes means that if the buyer and seller are in the same city, an in-person delivery of an item is not completely unheard of. Raga notes that in the U.S. the company has now at least introduced pre-paid envelopes to help with returns (not so in the U.K.).
Payments come by way of PayPal, with no other alternatives at the moment. Depop’s 10% cut on transactions is in addition to PayPal’s fees. But having the Klarna founder as a backer could pave the way for other payment methods coming soon.
One area where Depop is trying to get more focused is in how its activities line up with state laws and regulations.
For example, it currently already proactively looks for and takes down posts offering counterfeit or other illicit goods on the platform, but also relies on people or brands reporting these. (Part of the tech investment into image detection will be to help improve the more automated algorithms, to speed up the rate at which illicit items are removed.)
Then there is the issue of tax. If top sellers are clearing $100,000 annually, there are taxes that will need to be paid. Raga said that right now this is handed off to sellers to manage themselves. Depop does send alerts to sellers, but it’s still up to the sellers themselves to organise sales tax and other fees of that kind.
“We are very close to our top sellers,” Raga said. “We’re in contact on a daily basis and we inform of what they have to do. But if they don’t, it’s their responsibility.”
While there is a lot more development to come, the core of the product, the approach Depop is taking and its success so far have been the winning combination to bring on this investment.
“Technology continues to transform the retail landscape around the world and we are incredibly excited to be investing in Depop as it looks to capture the huge opportunity ahead of it,” said Melis Kahya, General Atlantic head of Consumer for EMEA, in a statement. “In a short space of time the team has developed a truly differentiated platform and globally relevant offering for the next generation of fashion entrepreneurs and consumers. The organic growth generated in recent years is a testament to the impact they are having and we look forward to working with the team to further accelerate the business.”
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Rent the Runway opens physical store in San Francisco
Rent the Runway, the fashion startup that began as a rental service for special occasions and has since evolved into a service for people also looking to spice up their everyday wear, just opened up its fifth physical, standalone location. The new location, in downtown San Francisco, enables Rent the Runway members to try on clothes, rent and return them.
Rent the Runway’s launch of a standalone brick-and-mortar location in San Francisco comes after it first opened up a location inside Neiman Marcus. With a standalone location, the company is able to offer longer hours for its members. Instead of opening at 10 a.m. and closing at 7 p.m., Rent the Runway can now stay open from 9 a.m. – 8 p.m. Monday through Friday. It also, of course, has weekend hours.
Thanks to some technology Rent the Runway developed within the last year, it has essentially “legalized shoplifting” for its members, Rent the Runway COO Maureen Sullivan told me yesterday ahead of the store’s launch. Toward the front of the store, there’s a self-return process that enables anyone to quickly return their items. A little farther back in the store, there’s a handful of self-checkout kiosks that let members quickly scan their items and leave.
Photo by Miha Matei Photography
Since its launch about nine years ago, Rent the Runway has launched two additional product offerings. In addition to its standard Reserve product, a one-time rental, Rent the Runway now offers two subscription products. The first is called Unlimited, which lets members rent four items at a time on a constant rotation (meaning you can swap them out as much as you want) for $159 a month.
The second is called Update, which lets you rent just four items for the whole month for $89 per month. In the event someone really likes what they’ve rented, they always have the option to purchase the item at anywhere from 10 percent to 75 percent off. Today, the subscription products make up 50 percent of Rent the Runway’s revenue, with San Francisco as the third largest subscription market.
Photo by Miha Matei Photography
In the nine years or so Rent the Runway has been around, a number of other services have cropped up around fashion. Stitch Fix, which went public last November, and Trunk Club by Nordstrom are two of the big ones. But what differentiates Rent the Runway from the likes of Stitch Fix is that, “they’re trying to get you to buy stuff,” Sullivan said. “You’re still buying things that accumulate in your closet.”
The vision with Rent the runway is to get to the point where 50 percent of your closet is rented, and therefore less cluttered. Rent the Runway, for example, has some customers who wear rented clothes 120 days out of the year.
Rent the Runway currently partners with over 500 brands, and operates as a new type of distribution channel for them. What Rent the Runway offers for brands is marketing and discovery, and customer data.
Down the road, Rent the Runway does envision getting into men’s clothing Sullivan said, but right now, there’s “unprecedented growth” in women’s clothing, so that’s where the focus will be for now.
Back in August, Rent the Runway partnered with Temasek for a $200 million credit facility. Before that deal, Rent the Runway had raised more than $200 million from traditional investors like KPCBC, Highland Capital, Bain Capital, TCV and others.
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Movado Group acquires watch startup MVMT
The Movado Group, which sells multiple brands, including Lacoste, Tommy Hilfiger and Hugo Boss, has purchased MVMT, a small watch company founded by Jacob Kassan and Kramer LaPlante in 2013. The company, which advertised heavily on Facebook, logged $71 million in revenue in 2017. Movado purchased the company for $100 million.
“The acquisition of MVMT will provide us greater access to millennials and advances our Digital Center of Excellence initiative with the addition of a powerful brand managed by a successful team of highly creative, passionate and talented individuals,” Movado Chief Executive Efraim Grinberg said.
MVMT makes simple watches for the millennial market in the vein of Fossil or Daniel Wellington. However, the company carved out a niche by advertising heavily on social media and being one of the first microbrands with a solid online presence.
“It provides an opportunity to Movado Group’s portfolio as MVMT continues to cross-sell products within its existing portfolio, expand product offerings within its core categories of watches, sunglasses and accessories, and grow its presence in new markets through its direct-to-consumer and wholesale business,” said Grinberg.
MVMT is well-known as a “fashion brand,” namely a brand that sells cheaper quartz watches that are sold on style versus complexity or cost. Their pieces include standard three-handed models and newer quartz chronographs.
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YC-backed Ropeo brings on-demand fashion to Latin America
As ecommerce grows here in the United States, there are still some significant hurdles for the Latin American market. Credit card penetration is lower than the U.S. and there isn’t the same infrastructure for shipping, meaning that returns are far more tedious. That’s where Ropeo comes in. Ropeo was founded by Alejandro Casas, Santiago Gomez, and Luis Huertas, who saw that the… Read More
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