Disruptive Start-ups Connect Emerging Designers Directly with Consumers

Emerging Designer CC Kuo, The Black Stripe | Source: Lookk.com

NEW YORK, United States — Blogging and other forms of social media are surfacing emerging designers faster than ever before, bringing greater transparency to a previously underexposed part of the market and empowering consumers to discover new names. But the emerging fashion businesses which stand to benefit most have long faced significant distribution barriers and unfavourable economic terms that make bringing their product to market problematic.

Because young labels can rarely afford the huge investments associated with opening their own bricks-and-mortar stores, their primary path to market has been selling pieces at wholesale prices to multi-brand boutiques and department stores, who traditionally mark up items 2.5 to 3 times before selling them to end consumers, taking 60 to 70 percent of the retail value. But for emerging brands, even this is far from guaranteed, as risk-averse retailers typically wait a few seasons before buying a new designer in order to first confirm that the brand has proven its ability to generate consumer demand, creating a kind of “Catch-22.”

In recent years, the growth of internet retailing has enabled smaller brands to route around retailers and earn more favourable margins by establishing direct-to-consumer sales channels online, at a fraction of what it costs to build a physical store. But for the majority of emerging fashion businesses just entering the market, the costs associated with implementing their own e-commerce presence have traditionally been too high to make a directly-owned and operated online sales channel a viable immediate option.

Now, a number start-ups are aiming to disrupt the traditional retail model by changing the way emerging fashion designers break into the market. Launched in October 2010, London-based Boticca is a curated online marketplace for fashion accessories that enables emerging designers, hand-picked by the Boticca team, to sell pieces directly to end consumers, earning 75 to 80 percent of retail value, nearly twice as much as they would make via traditional wholesale channels.

“Independent designers were really up against some major distribution barriers and facing adverse conditions in the retail environment,” said Kiyan Foroughi, CEO and co-founder of Boticca. “Platforms like Boticca are completely transforming the way designers approach distribution by making online the preferred immediate channel for scaling their brand and sales globally from the get-go, as well as by providing them with a sustainable commercial route where they enjoy the lion’s share of the retail economics and connecting them directly to a global customer base,” he explained.

In its first year, Boticca has grown swiftly. Last May, the company closed a $2.5 million (£1.5 million) Series A round led by French investment fund Isai and their site has since scaled to approximately 5,000 products from more than 210 designers in over 30 countries, including Turkey, Iran and Estonia. “Boticca truly connects customers all over the world with inspiring designers in far-flung places,” said Foroughi. “It’s not unusual for individual designers to have customers on five continents.”

Not Just a Label, a London-based marketplace that has worked with Damir Doma, Mary Katrantzou, Rad Hourani and Patrick Mohr, was one of the first and fastest growing platforms of this type. “We allow users and customers to bypass middlemen and antiquated systems that make it so hard for designers to break through,” said founder Stefan Siegel. Launched in 2008 and representing over 6,000 designers in 94 countries, the platform offers young brands easy access to e-commerce via Not Just a Label’s online store and takes a 30 percent commission on resulting sales. “The idea was to increase a designer’s profit margin,” said Siegel, who achieved break-even without seeking external investment and reported a “six-digit turnover” for 2010.

But alongside e-commerce, platforms like Boticca and Not Just a Label also offer emerging fashion businesses tools and services for marketing and PR. “By insisting that no young designer should be forced to pay a large sum to get the exposure they deserve, we provide designers with an all-encompassing digital space to kick-start their careers,” said Siegal, whose company editorialises the product it sells and even acts as a liaison between designers and press. “We also support the independent designers we work with in how they market and merchandise their work, and provide PR resources to help tell their stories to a wider audience,” said Foroughi of Boticca, which also features a blog that spotlights the designers it carries.

Still in the early stages of fundraising, New York-based Wondermode offers selected designers a fast and inexpensive way to set up their own simple e-commerce business, complete with web-based tools for managing payment, shipping logistics, analytics, email marketing and social media, in exchange for 20 percent of retail sales and a “product upload charge” of $0.50 per style per season, for up to four product images. “It’s a ‘one-stop shop’ sales and marketing platform,” said founder and CEO Aaron Duncan. Wondermode, which is still in beta, even offers designers the option of buying add-ons like a photo shoot service.

But the recently re-branded Lookk.com, a 2010 Seedcamp winner formerly called Garmz, which recently raised a seed round led by Eden Ventures and has staff in London, Vienna and Sofia, is perhaps the most ambitious and promising start-up in the space. “Each week new designers are featured in countless blogs,” said Andreas Klinger, co-founder and COO of Lookk. “New trends and names surface more often and quicker than retail and seasonal cycles could ever adapt to,” he continued. “This leaves an untapped potential: new designers with proven demand, but without the tools to follow through and reach greater parts of the market.”

Like the other platforms exploiting this potential, Lookk is a curated marketplace where selected designers can reach a global customer base. “We do not believe in completely open marketplaces as they usually leave the consumer unsatisfied with production quality and product price,” said Klinger. Similarly, Lookk also offers designers web-based tools to manage marketing and fulfillment.

But unlike other players in the space, Lookk offers emerging designers a genuine end-to-end solution that goes all the way to manufacturing, a powerful differentiator for young labels for whom sourcing reliable and cost-effective production is a constant challenge. Lookk empowers designers to not just promote and sell, but also produce pieces, using the company’s in-house production facilities and network of manufacturers. “When we enter into a contract to manufacture, the designer will receive 5 percent commission on the retail price of each piece sold — very competitive considering we handle all associated retail, distribution, marketing and customer care costs,” said a spokesperson for the company, who declined to reveal the commission the company charges brands who have already established their own production, stating only that “buying and wholesale prices are worked out on individual terms with each designer and are competitive with industry standards.”

Critically, Lookk has also far surpassed competitors in fundamentally reimagining fashion retail in the context of the open social web, harnessing the voice of the end consumer to quickly understand market demand and drive more effective business decisions. When designers upload lookbooks to the site, consumers feed back their preferences via a voting mechanism, generating valuable data that directly influences which pieces Lookk’s panel of buyers decides to put into production and sell via the online store.

“We want to build a retail model which truly leverages the possibilities of the internet,” said Klinger. “If we see market demand in a new designer’s products, we can control the full process from design to finished product up to the moment of delivery,” he added. “By directly bringing consumers and designers together and controlling key elements in the resulting value chain we can lower risk and make quicker decisions when bringing new products to market.”

Indeed, the kind of detailed consumer demand data generated by Lookk, combined with shorter production cycles, means the business can produce in smaller, demand-driven batches, significantly reducing risk and improving efficiency. But ultimately, the benefits of this approach extend beyond balance sheets alone. If adopted more widely, this type of social retail model could have powerful and far reaching positive effects on diversity and creativity in the fashion industry at large, enabling traditionally risk-averse retailers to embrace many more emerging designers and still turn a tidy profit.

Vikram Alexei Kansara is Managing Editor of The Business of Fashion.

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20 comments

  1. Unfortunaly I can’t agree with the comment that Lookk or Garmz is the most
    promising of all the start ups. It is a company which searches to receive as many hits on the webpage as possible and earn money that way instead of really helping the designers. If you read the terms and conditions you will realise that ones again the designer gets the raw end of the deal!
    I deleted my account!

    Sabina from United Kingdom
  2. Excellent article!!! I’ve been “schooled”!

    susanne francis day from United States
  3. Not so sure about the amount of disruption going on here. In curating emerging designers & picking who gets exposure, aren’t they acting just like the middleman buyer at Barney’s?
    And the online platform with bundled services isn’t exactly disruption either (Amazon, Etsy).

  4. Oh well… it starts out masked as a critical, objective piece listing and comparing stats and figures, but then the author gets carried away into hyperbole with “critically … surpass(ing)”, “reimagining fashion retail” etc. when moving on to Lookk.com, which is a far cry from analysing a business in a critical way and thus reads like a paid advertorial. Alas, there is, for example, also no mention of the fact that Not Just A Label was the first of its kind and is the market leader in helping new designers. The fact that half of the article deals with Lookk and the company also provides the accompanying image shows that the author used all other start-ups merely as an entree, overshadowing the other companies mentioned.

    Jamie from London, London, United Kingdom
  5. I see Lookk’s business model as flawed. It’s re-appropriation of a designer’s property and rights if he or she only sees 5% of the retail price without laying a hand on production. The only thing the designer has ownership of is their name. The other platforms mentioned hold true to supporting young designers because they are stepping stones in establishing independent labels. Lookk takes away that independence. I cannot support a company that only claims to support young designers monetarily and publicly, but fails to do so.

    susie from London, London, United Kingdom
  6. As mentioned by other people, perhaps there are flaws and things not quite right with some of the companies mentioned, but to be honest I can’t help but feel pleased that there are people helping new designers and companies. Placing less focus on the catwalk and getting stocked in a retail environment and more on creating a direct relationship with your customer.
    Allowing the consumer to find and support new design in the UK is needed. I believe this is only the start of things to come.

  7. In China, we have Taobao, but still needs exclusive e-boutique store for designer brands, though YOOX has entered China with corner.cn, we need more!

    Lisa from Shanghai, Shanghai, China
  8. For the sake of clarity, and to avoid any doubt, The Business of Fashion does not take any sort of payment from subjects or companies featured in our content, as explicitly stated in our CONTACT page.

    http://www.businessoffashion.com/contact

    ADVERTISING AND SPONSORSHIP

    We work closely with sponsors and advertisers whose content, products and services will be of interest to our community. We provide sponsorship opportunities on the BoF website on a monthly basis and also have tailored sponsorship opportunities built around BoF LIVE events. We do not publish text links in exchange for payment and we do not create ‘advertorial’ content or paid posts.

    Imran Amed, Editor from Europe
  9. I’ve written about Lookk a few times, once after working with them on a brief consultancy basis prior to their relaunch (fully disclosed), and two times prior to any formal relationship. I was never paid for any coverage, and at least during the time I worked with them (I don’t now), paid coverage was never part of their publicity/marketing strategy. I’ve submitted guest posts to the Business of Fashion before, and neither Vikram nor Imran have ever asked for payment to influence content placement.

    I’m not sure what was lost in the coverage, but I think a number of commenters are missing the forest looking at a tree.

    @Sabina, if they didn’t drive traffic to designers’ lookbooks, what would be the point? Why would anyone upload their collections to a site that no one is going to visit? For the record, very few stores make money based purely on the number of “hits.” Lookk isn’t running advertisements, so whatever they make is not directly tied to “hits.”

    @fashionfunded any of the sites mentioned probably offer more than Amazon just through targeting. Designers who do well on NJAL or Boticca might not do as well with the audience on Etsy. Maybe a buyer from Barney’s sees similarities with the NJAL designers and decides to buy from one, whereas they didn’t take notice of the same person’s shop on Etsy. Middlemen, even at an early stage, aren’t totally worthless.

    @Jamie, perhaps the details were softened too much but here’s why I think they got all of the glowing adjectives: marketplaces like Not Just a Label, Boticca are valuable in terms of press, and for some people sales. But, they can only serve designers who already have sufficient production capabilities, and they can only tell you what people like after they buy something. Part of what Lookk is doing is using feedback to get an indication of what pieces people like before they’re produced.
    If you’re a designer without a large budget, and you know that lots of people loved a certain dress, but not as many liked a coat, you can produce lots of dresses and not as many coats, which hopefully saves on leftover inventory. Better planning hopefully means fewer pieces sitting in a box 6 months later. The fact that they’re trying to provide that information before production and not after is something different. Perhaps why Vikram labeled them as most promising.

    @susie The site started as a sketch site, where production was based almost entirely on sketches (still a part of the site), and that’s where the 5% comes from. For a designer who does have production, admittedly that doesn’t sound as attractive, but for someone who doesn’t have production capabilities, it’s not as bad as it sounds. The designer retains rights to their sketch/design, but Lookk essentially has a license. Larger brands do this all the time (the H&M, Target, Topshop collaborations are all examples). Why do you feel that offering designers not in a position to do those type of collaborations takes away their independence?
    .
    Often, the Lookk team helps on a lot of the non-creative parts of producing collections – sourcing materials, modifications for bulk production – as well as selling the items. Short of H&M or Topshop, there aren’t many retailers who would take on those hassles for an unproven designer.

    And to answer the inevitable question, no, I was not paid to respond, no, I do not work for Lookk.

  10. I think its a good idea especiall for designers in uncaring countries like kenya where ‘mitumba’-secondhad clothes- are still being imported. This is cripplin the upcoming young designers using the traditional methods to reach product users and get that needed exposure. Kenyan surretitious leadership needs to wake up and stop this monster ‘mitumba ipmport busness’ forthwith. My conclusion is lnternet will go a long way to help designers in kenya in the meantime.

    Suiluj karish from Kenya
  11. Direct-to-consumer is a force to be reckoned with, but I’m not sure these third-party websites are doing designers any favors. The reason luxury RTW designers continue to need traditional retailers is the relationships they have with customers. Net a porter has shown that you can sell designer clothes online – but that does not mean there’s room for scores of me-too websites selling pricey goods from young unknowns.

    St.Valentine from San Francisco, CA, United States
  12. As one of the founders of LOOKK and after catching up with the comments (a bit late, sorry!), I would like to add a couple of things. Also, thank you YM Ousley for taking on most of the comments already and your constructive voice within this discussion!
    .
    We are big fans of all companies gathered in this article, sharing the same mission! All of us have different approaches but the ultimate goal is the same – exploring new ideas on how the potential of the internet can stir up and rethink some of the models and systems of how fashion “works”. New energy and discourse, benefiting equally designers and consumers. And this is just the beginning for new models and ideas to emerge… fantastic future!
    .
    Adding to the reply of YM, I would still like to clarify some aspects of our model…
    Whenever we measure interest around a designer and his/her designs and therefor work on bringing their designs to the shop, we have a varied set of offers on which parts of the value chain we can assist with. So production is just one of several offers/relationships. I.e. if the designer has his/her own production in place, we buy at industry rates and procedures, therefor focusing mainly on distribution, fulfillment and customer care.
    .
    This approach is led by the belief that – opposed to classical marketplaces – we can guarantee a consistent shopping experience and it’s quality when it comes to customer service. Trust is key.
    .
    If something was left unanswered – just hit me up via email anytime: gw[a]lookk.com
    Thanks!

  13. Interesting article. Many argument have be raised in this article. Pro and con of the opinion of article caused it look more interesting issue to debate. For my own opinion, fashion 2.0 definitely will change the traditional way of fashion world doing business or approaching end user. More more fashion giant emphasized the web influenced toward their branding and end user. This horizontal the space between fashion and end user / client to more nearer extent. For me, having a platform for emerging designer to marketing their talent, concept and product become important step for developing their brand name in the fashion world. Like stated in an article, consolidation effort from some website/company to form a bigger picture of new fashion element is a great step to prosperous the fashion world become more variety and competitive. Incidentally saw this article when on tweet, share some personal opinion only.

  14. all of the sites you mention are quite frankly rubbish from a consumer, and designers, point of view. if i shop online i want net-a-porter quality service and layout. the only platform for new designers that offers that is avenue32.com i cant wait for the full version, its on beta testing right now…

    fashionkitten from Manchester, Manchester, United Kingdom
  15. I have checked out Avenue 32 and am extremely disappointed. They seem to have good brands (most of them new and upcoming and pretty unknown), but the page is just a desaster! So boring and just the opposite of what was promoted in the past weeks (months actually). Not very intuitive to deal with in the first place…

    Fashionista Paris from United Kingdom
  16. I do not think that Lookk is taking anything away from the designers by taking full responsibility of all production of the garments. I have worked in Fashion production for years and more often than not, new designers massively underestimate the amount of knowledge and work that is involved in mass production, at the very least it involves hiring a production manager and assistants, fabric sourcer, many hours work for a professional accountant and costs of travel to and from factories many of which will be based abroad not to mention language difficulties and arranging legally binding contracts. I agree that for the designers it is important for them to have control of the quality being produced not only for the end product but for self development and creative design but in the meantime I think the service on offer by Lookk is impressive to say the least. It is a choice to utilize it and it wont suit all designers but for those in the very beginning stages it eradicates many financial and logistical problems that may eventually stop them designing at all.

    Ida London from London, London, United Kingdom
  17. Other than NJAL, wonder mode and Lookk, there’s also another website called Can You ‘Ear Me? which sells for emerging designers and new brands. If designers want an alternative to those websites mentioned above this is a good place to start as you don’t have to pay anything unless you sell and they are quite socially active and can raise some awareness of your brands. If you’re interested check it out: http://www.canyouearme.co.uk I have been selling there and seems a good place to start…

    Patrick from London, London, United Kingdom