Antique Elevator | Source: elevatorpreservation.com

In our final post in a week of articles on e-commerce innovation, we are pleased to launch Elevator Pitch, a recurring feature on BoF that will showcase one exceptional fashion-technology start-up per month and provide valuable feedback from a panel of fashion, technology and investment experts, as well as the BoF community.

LONDON, United Kingdom – Ever since the early days of BoF, we have taken a keen interest in the exciting emerging activity at the intersection of fashion, technology and entrepreneurship. From the first article we published about Gilt Groupe back in November 2007, when the company had only 5 employees, to our four-part series on FashionStake, which last week announced its acquisition by Fab.com, to our early features on platforms like Pinterest and Tumblr, which have gone on to attract tremendous attention from the fashion community, BoF has a track record for being the first to spot and support the most innovative start-ups making a mark in the fashion space.

As we have examined over the last few days here on BoF, we are currently witnessing a veritable surge of innovation and venture capital interest in the fashion-technology space. Amongst e-commerce start-ups alone, we have seen the emergence of new business models like curation, subscription retail, social merchandising, mass customisation, retail gaming and collaborative consumption.

What business models will be next to emerge? Who will be the next Net-a-Porter, Gilt Groupe or Pinterest? If you have a promising business idea in the fashion-technology space or are already working on a start-up and looking to raise your profile or attract funding, we are putting out a call for your Elevator Pitch: concise pitches that you might give to a potential investor, partner or key hire if you bumped into them in an elevator.

For entrepreneurs wishing to participate, please respond to the questions below for the opportunity to have your pitch featured here on BoF and receive valuable feedback from a panel of fashion, technology and investment experts.

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Modcloth screenshot | Source: Modcloth

In Part I, we examined the innovations and infrastructural advances that have improved the historically poor economics of e-commerce and set the stage for a renaissance in online retail. Today, we explore some of new and exciting business models taking shape, the companies exploiting them and the challenges they face.

SAN FRANCISCO, United States — For years, e-commerce suffered from capital inefficiencies and complexities that pushed investors away. But in recent years, major infrastructural advances and the success of innovative start-ups like Gilt Groupe have rekindled investor interest and set the stage for an explosion of promising new business models including personal subscription, social merchandising, mass customisation and collaborative consumption.

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Fab.com Screenshot | Source: Fab.com

Yesterday, BoF was first to bring you the news of the recent $18 million investment in Farfetch.com. Today, we continue a week focused on e-commerce by examining the historical challenges faced by online retailers and how recent innovations and infrastructural advances have fundamentally improved the economics of e-commerce, setting the stage for a renaissance in online retail.

SAN FRANCISCO, United States — Following the burst of the dot-com bubble in early 1999, e-commerce suffered from a lack of venture capital investment. The unrealised, over-hyped expectations for e-commerce — at a time when the market, consumer technology and infrastructure were less evolved — and the subsequent burns left venture firms with a nasty aftertaste. Perhaps the most spectacular fashion e-commerce failure was that of Boo.com, which launched in the Autumn of 1999, burned through $135 million in venture capital in just 18 months and was liquidated in 2000.

But on closer inspection, e-commerce has also faced additional complexities and capital inefficiencies that, for years, continued to push investors away.

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Gilt Groupe warehouse | Source: Fantabulously Frugal

Today, BoF takes an in-depth look at the past, present and future of Gilt Groupe’s business model and speaks with Gilt Groupe CEO Kevin Ryan on his plans to continue the company’s ascendance.

NEW YORK, United States — Back in November of 2007, BoF was amongst the very first media outlets to write about Gilt Groupe, the New York-based start-up that went on to dramatically reshape the online retail market for fashion, building a community of high value consumers around limited-time, members-only “flash sales” for designer apparel at steeply discounted prices.

The timing of Gilt’s launch couldn’t have been better. In the months that followed, fashion and apparel brands began to feel the impact of a global recession that would ultimately give rise to one of the most challenging macroeconomic environments in the history of modern retailing. Seemingly overnight, wholesale inventories became unmovable as retailers drastically reduced product assortments and orders.

As a consequence, many fashion brands were forced to liquidate excess inventory positions, causing a sudden and significant supply glut for “cut out” goods. Prior to the Great Recession, brands would have sold this excess inventory through off-price channels like Loehmann’s, T.J. Maxx and Century 21. But as the economy sank, these retailers were asking for discounts as high as 90 percent, while merchandising clothes in a haphazard fashion which did nothing to protect the high-end image brands had spent years cultivating.

What’s more, the extreme market conditions of the Great Recession created an acute financial imperative for retailers — off-price, as well as full-price — to convert their own excessively large inventory positions into cash, leaving many brands almost without any viable sales channel, let alone one that would protect brand equity.

Gilt charged onto the scene like a knight on a white horse, providing a novel, efficient and brand-sensitive way to liquidate excess inventory and enjoying explosive growth in the process. Based on this momentum, Gilt Groupe raised $138 million last May in a new round of financing, valuing the four-year-old company at $1 billion.

But fast-forward to the end of 2011 and flash sales are facing significant challenges. Here, BoF examines the rise, stumble and future of Gilt Groupe’s business model.

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NEW YORK, United States — At a news conference Monday morning, livestreamed on YouTube and emceed by the actress Anne Hathaway, Valentino Garavani and long-time business partner Giancarlo Giammetti unveiled the Valentino Garavani Virtual Museum, a downloadable desktop application that showcases almost five decades of the designer’s work, drawing on a database of over 180 videos and 5000 images, including Valentino’s original sketches. A fashion first, the digital museum invites users to navigate a series of immersive galleries, organised by theme and rendered in 3-D, that in the physical world would stretch over 10,000 square meters.

Funded entirely by Mr. Giammetti and Mr. Garavani at a reported cost of several million dollars, the virtual museum, which is free to access, serves no direct commercial purpose — the duo no longer have a financial stake in the Valentino business, which is owned by private equity firm Permira — and exists for the sole aim of securing the designer’s legacy.

But the Valentino museum launch comes at a significant moment for the industry. Public interest in fashion exhibitions is surging. This summer’s record-breaking Alexander McQueen exhibition at The Metropolitan Museum of Art attracted over 650,000 visitors. Meanwhile, big luxury brands like Louis Vuitton, Chanel and others are moving to control and communicate their heritage by staging large-scale exhibitions at major museums in emerging markets. Gucci has even opened a private museum of its own in the heart of Florence.

While lacking some of the inherent experiential value that comes with exploring a physical space, the Valentino virtual museum offers obvious advantages in terms of cost and reach — no small points in the context of today’s globalised and uncertain economy — and the initiative’s strengths and weaknesses are sure to be examined closely by other fashion brands in the weeks and months to come.

Having previewed the Valentino Garavani Virtual Museum in the days prior to launch, BoF sat down with Mr. Giammetti just before the press conference to discuss the vision behind the world’s first digital fashion museum.

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