So far, the majority of fashion start-ups that have sold — Bonobos to Walmart, True & Co. to PVH Corp. and Gilt Groupe to Hudson’s Bay Company, for example — did not deliver returns worth bragging about. Gilt competitor HauteLook is one exception. After raising just $40 million, the flash sale site’s 2011 acquisition by Nordstrom for $270 million, once seen as a premature exit, is now viewed as not only as prudent, but downright savvy. […]
So, which of fashion and beauty’s most talked-about start-ups are best poised to rise above the rest? BoF surveyed the market, pinpointing the most memorable flameouts, the most likely break-outs and those with potential to go either way.
On Stich Fix:
Founded in 2011
Estimated Revenue: $730 million in 2016
Estimated Funding: $42 million
The profitable personal styling service — which sends customers boxes filled with recommended products, which they can buy and keep or return at no costs — filed for an IPO at the end of July 2017, according to a report from tech industry trade site Recode. Its unique business model, which uses quantitative and qualitative data to help compose individual-specific boxes, is considered by many to be the modern solution to multi-brand retail. In the past year, Stitch Fix has expanded its offering into men’s, plus-size and higher-end contemporary brands to complement its private label and low-to-mid priced product offerings.
Other break-out hits according to Business of Fashion: Farfetch, Warby Parker, Rent the Runway, Beautycounter and MatchesFashion.
There is also enthusiasm around several fast-growing businesses — including trainer-maker Allbirds, cosmetics-label Glossier and kids’ clothing subscription box Rockets of Awesome — although these still-nascent brands may face challenges with scale once the customer- acquisition well has run dry, or becomes too pricey. Beautycon, which combines a robust event program with a subscription box business to generate different streams of revenue, could be an interesting acquisition prospect for an entertainment or media company, while Drybar — the Starbucks of blow-dry salons — has room to continue to scale both in the US and internationally.
The logoless, unisex merino wool shoes come in one athletic style (plus a newer slipper-like iteration) and sell for $95. They’ve been seen on everyone from Larry Page to Marissa Mayer.
But the 18-month-old company is ready to venture outside the tech bubble. Today the company is announcing $17.5 million in Series B funding, led by Tiger Global Management, bringing its total equity funding to $27.5 million. With this newest infusion of capital, Allbirds will open a store in New York City, the company’s most popular market, on September 14th with plans to open more locations across the country in 2018; its first store opened, in San Francisco, in May. It will also begin shipping internationally, and by the end of this year, Allbirds will expand into the kid’s market by launching a version of its wool sneakers for children. […]
[Allbirds co-founder Tim Brown, who used to be a professional soccer player:] “I used to get sponsored by Nike, and I got a ton of free gear, and one of my huge frustrations was that everything had a logo on it,” he said. “The insight that kicked this whole journey off was, ‘Could you make a very, very simple sneaker that wasn’t adorned with branding?’ It felt like it was very, very hard to find.”
If anything, StitchFix and Allbirds both make very obvious the sheer range of possible business models that can now be pursued in online fashion today. The potential of specialization is staggering.
Also: Do you believe a marketplace player like Amazon could potentially serve all those markets itself as good as those dedicated, very distinct companies? I, personally, don‘t think so.
Business of Fashion also lists in its overview candidates on which the jury‘s still out (for example: The RealReal) and, of course, the flame-outs.
- MatchesFashion Goes to Apax for £800m
- UK-Based Asos Is Killing It in the US
- The RealReal’s CEO Says Company’s Goal Is to IPO “Someday”
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