We hear about new fashion tech startups popping up left and right every day. But what we don’t hear about is how the industry is like right now. Everything is a haze. Numbers are tossed around, but there’s no clear way to keep track of them, or even to keep tabs on trends. With all the information available on the web, it’s easy to get lost in the sea of data.
Liza Kindred, our founder, took this bull by the horns at this past Tuesday night’s “The State of Fashion Tech” keynote event, sponsored by Condé Nast, LIM College, and Cayrum – and put our questions to rest. Here is her presentation broken down to a pseudo Q&A format. (You can follow along on Liza’s slides here if you like.)
So, what is fashion tech?
In the Third Wave Fashion definition, it’s a space for web-based fashion companies. They embrace social, cutting edge technologies, and disruptive business models, with the occasional wearable tech, beauty, or interior company crossing our radar as well.
The fashion tech space is becoming overly saturated with new startups, but is definitely solid and still growing. Brands, including luxury brands, can have big wins in the space, providing they seize the opportunities available. Everyone in the industry needs to keep learning and working together to make it all it can be.
How does Third Wave Fashion come into play?
Next week, we are launching the Fashion Tech Database: it’s the first comprehensive, searchable database offering information about fashion tech companies, as well as their founders and funders. We already have over 10,000 data points on over 650 fashion tech companies, with information on 370 investors, 880 people, 36 categories, and 50 tags– and this is only the beginning.
To give you a sneak peek, categories include image sharing, marketplace, virtual closet, subscription commerce, and pre-order.
Additionally, we are keeping track of failed startups in a category called “R.I.P.”; it’s just as important to pay attention to failed companies and what’s not working as it is to track what’s successful. The best lessons can be learned from failure and mistakes, so we are embracing that.
What are some examples of categories/companies that we should be taking note of?
Liza presented five categories: re-commerce, algorithmic shopping, content and commerce, direct-to-consumer, and mass customization + bespoke.
Recommerce, as Liza defines it, is both eco-friendly and recession-friendly – and it is definitely a force to be reckoned with. Poshmark, a peer-to-peer recommerce platform, handles $100 million in inventory with 2 million social interactions per month, and is backed by $15 million in funding. Bib + Tuck is about giving and taking, and shopping with virtual currency called “bucks.” Vaunte is a buzzy, high fashion recommerce site selling curated closets from prominent industry leaders such as Vogue editors, and adds incredible value to the closets with their highly editorial approach.
Algorithmic shopping, when done right, should show more gamification on the front/consumer-facing end, but be crunching valuable data on the back-end. Poshly, for example, cleverly turns their recommendation engine into giveaways and contests while still collecting consumer data. True & Co. makes fit recommendations without the user having to actually measure themself. Bombfell leverages social media data, together with fit and style, to give better recommendations.
We all know that merging content and commerce is the next big thing, and Liza honored Avenue 32, Of A Kind, Joyus, and Far Fetch for having compelling, beautiful editorial content while balancing great commerce and sales.
Direct-to-consumer companies are using the internet to forgo the traditional retail path, and instead building relationships directly with consumers. Warby Parker, Everlane, Frank & Oak, Bonobos, Elizabeth & Clarke, Sole Society, BaubleBar, Combat Gent, and Harry’s all received Liza’s mentions – and should essentially be household names in the fashion tech space by now.
Albert Ming, Propercloth, and Bespoken Clothiers fall into the mass customization and bespoke category. Liza pointed out, however, that many of the companies in this category leaned towards menswear– entrepreneurs out there who want to do something with womenswear, take note.
What about luxury brands – surely they must be doing something right, too?
As pointed out by BCG Consulting Insights and mentioned by Liza last night, luxury is a $1.3 trillion industry, making it the world’s 13th largest economy. Oscar de la Renta embraced tech with True Fit technology, showing users how well the clothes on the site will fit once they create a profile. Peter Som has 3.4 million Pinterest followers, and attributes his social media success to himself: he apparently pins everything himself. Luxury Daily reported that sales went up by 100% for Rebecca Minkoff after leveraging their Instagram fanbase to create their first advertisement.
A few words of advice from Liza for luxury brands: Don’t be scared of diluting yourselves by engaging with the masses on social media, as long as you retain the final say. Also, learn how to take value and brand equity from pre-owned goods.
Brands– luxury or not– should embrace tablets. Liza mentioned that 31% of households have tablets, but nearly 50% of households making more than $75,000 a year do. Fast Company reported that web usage on tablets surpassed web usage on smartphones for the first time ever, with 70% more page visits in the former. That’s quite a lot of ad space.
Now that you’ve read up on the status of fashion tech companies and what people are doing right, it’s time to dive into the numbers and the biggest industry questions that Liza Kindred, our founder, raised then answered. Where is fashion tech headed, and where are we now?
The ultimate question: is there a fashion tech bubble?
The official Third Wave Fashion/Liza answer: NO.
Let’s look at some numbers. Nearly $200 billion was invested in fashion tech in the last month alone, with $48.3 million given to tool-based fashion tech services alone. 70% of those companies invested in were based in the US.
Glossybox, the UK’s answer to Birchbox, raised more than $70 million and shipped over 2 million boxes in just 1.5 years. Nasty Gal earned nearly $100 million last year, with high conversation rates and a loyal following to boot. ASOS has over 1 million visits per day, earned $755 million last year, and carries over 60,000 product lines with 1,500 new lines added every week. JOOR is on track to hit 350 million wholesale transactions this year.
Forrester Research shows that online retail sales are continuing to grow, and projects that we will be spending $370 billion online by 2017.
Seeing is believing.
Let’s take a step back from numbers: what is the fashion tech scene like?
It’s still relatively small, but it’s growing: there are 20 meetups in 8 cities in the US, with seven dedicated conferences. Third Wave Fashion has clients in New York City, Los Angeles, San Francisco, Iowa, Ohio, and even in Kazakhstan, Spain, and Australia. Talk about a global phenomenon!
It’s a toss-up between New York and Silicon Valley though: while New York City has Wall Street, brands, publishers, and more investments, San Francisco has much more tech talent and big-ticket investors.
What are some of the fashion tech trends we should know of?
Mobile is most definitely a space to watch, and the numbers don’t lie: $8 billion in retail smartphone sales last year, $12 billion this year, and a projected $31 billion in 2017 – and all of that still adds up to only 9% of total online commerce sales.
Brands are now publishers, and online commerce moves offline with brands such as Piperlime, Warby Parker, and Bonobos setting up offline presences with buses, stores, showrooms, and pop-up stores. And finally, while it might sound counterintuitive, but while the economy is down, luxury prices have gone up.
Looking ahead, we can expect to see “The Internet of Things:” where now we’re turning “dumb,” every day objects into “smart” objects by connecting them to the internet. There’s augmented reality and slow fashion, where conscious, eco-friendly fashion is taking the stage. Storytelling will take a new form with videos, and blogger influences will remain. Liza also pointed out the huge “showrooming” trend: showcasing products offline/in-person and buying them online, or vice versa.
What are the next steps for fashion tech?
We need more collaboration and partnerships, and to share more information and case studies with each other. Third Wave Fashion’s database and upcoming industry trend reports are the first steps, but everyone needs to be open to sharing.
Liza also emphasized the importance of “keeping it real:” while fashion tech may be the sexy new thing, the space needs real content and real experience. In other (loosely paraphrased) words: if you’re a Wall Street dropout and have no experience in fashion or retail, you probably shouldn’t be doing a fashion tech startup. Or, at the very least, you should bring in someone that does.
There needs to be less launch buzz: while new entries are important, so are current successes, and one shouldn’t have to give way for the other. The focus on investments and venture capital should also take less precedence; it’s only one measure of success, and not a guaranteed one at that. And lastly, there needs to be less duplicate businesses, especially in marketplaces and subscriptions. A person can only use so many.
Liza also encouraged the ban on words such as e/m-commerce (“because commerce isn’t an alphabet soup”), social shopping (“shopping itself is social and doesn’t exist in a vacuum”), and Fashion 2.0.
The final takeaway?
Companies need to solve real problems, and tap into existing communities and networks. They must be able to create then capture value, and always keep an eye on the future.
A quick shout out to everyone who came out to support this event and a huge thank you to our amazing partners: Condé Nast, LIM College and Cayrum. If you’re in NYC or SF, you can come to our meetups.
Third Wave Fashion has been your fashion tech think tank since 2011. We publish the first ever printed fashion tech magazine, Third Wave. Follow us on Twitter or subscribe to our newsletter to stay on top of the latest in fashion tech + wearables. You can also check out Liza’s slideshow now available via SlideShare. The state of fashion tech saga continues.
Jaclyn Siu is a Third Wave Fashion contributor. She’s currently a student at NYU, a fashion journalist, and the founder of wearhou.se. You can follow her on Twitter here. Third Wave Fashion has been your fashion tech think tank since 2011. We publish the first ever printed fashion tech magazine, Third Wave. Follow us on Twitter or subscribe to our newsletter to stay on top of the latest in fashion tech + wearables.