LONDON, United Kingdom — Are traditional showrooms a thing of the past? If a wave of digital wholesaling platforms has its way, it just might happen.
Ordre, a start-up that aims to remove friction from wholesale buying in the luxury fashion market with a digital ordering platform, is moving one step closer to this goal with a fresh round of funding from Alibaba. Neither party would confirm the scale of the investment, though sources close to the deal said it was less than $20 million.
The Chinese e-commerce giant, which took a minority-stake in Ordre, is a relatively new player in the luxury sector. Last year, it launched Luxury Pavilion, an invite-only area for premium and luxury brands on its business-to-consumer shopping site Tmall.
While rival wholesale platforms like Joor have digitised the ordering process to make assortment and merchandise planning easier, chief executive Simon Lock said Ordre set itself apart with features like 360-degree views of clothing and virtual reality fashion shows, eliminating the need to travel to fashion weeks and make showroom visits.
“It’s chaos. They can’t be everywhere all the time,” said Lock. “Buyers can look at Ordre, see everything, see interviews with designers, and order there. We’re a facilitator.”
The reality of packed buying periods means brands prioritise large department stores at the expense of smaller boutiques and younger brands, which can’t always afford showroom overheads and are overlooked. And the problem is only amplified for buyers and brands in far-flung geographies.
Lock, known for founding Australia’s Fashion Week, said he knew how hard it was to lure buyers to Sydney after the global financial crisis and that developing an online platform to ease friction was, in his words, “bleedingly obvious.”
Lock launched Ordre in 2015 with his wife Kirsten, a former stylist and Harper’s Bazaar style director. Today, 2,700 fashion retailers buy wholesale on the platform, including Saks Fifth Avenue, Lane Crawford, Barneys New York and Net-a-Porter. The platform sells about 150 designers, from Stella McCartney and Paule Ka to Angel Chen and Charles Jeffrey’s Loverboy.
Ordre is not yet profitable but by the end of the year, Lock expects the platform to hit $500 million in gross merchandise volume, a more than ten-fold jump from 2017. The company generates revenue from designers, who are charged a monthly fee based on the number of product SKUs they offer on the platform, a service charge on the volume of orders they make and a 7.5 percent commission on new business, significantly less than the typical 20 percent commissions taken by physical showrooms.
Key to Ordre’s appeal has been the development of a three-dimensional laser-scanning tool that allows designers to photograph high resolution, 360-degree images of collections at scale. Buyers on the site can also use virtual-reality headsets to watch fashion shows as if sitting in the front row.
Jillian Xin, a senior buyer at Lane Crawford in Hong Kong, said she has discovered many young designers on Ordre. “I think Ordre have really levelled the playing field for emerging designers, empowering them through technology. Their 360 imagery and in-showroom technology also enable us to buy much more confidently without a fit model.”
Ordre set itself apart with features like 360-degree views of clothing and virtual reality fashion shows.
Angela Luo, senior buyer at the new 1,000 square-foot store Only Mode in the prestigious K11 Mall in Guangzhou China, said she had used Ordre to buy 100,000 RMB ($158,000) worth of stock from brands outside of China including Italian label No. 21, British brand Joseph and Korean GVGV. “Ordre save me a lot of time sourcing brands. Presentation on the website is much vivid than the order materials I get from the brand side.”
Still, some high-profile stores that spoke to BoF declined to comment specifically on Ordre, citing the relative newness of the platform, which has yet to become integral to how they purchase. Physical showrooms are still key to their process, though even high-profile multi-label showrooms like Tomorrow, Riccardo Grassi, Polly King and Rainbowwave are in talks with Ordre to move more of their activities online.
Ordre has registered over 2,700 retailers. But it is still missing many of the most high-profile brands, though Lock says he meets twice a year with Ian Rogers, LVMH’s chief digital officer, as well as executives at Kering and Richemont, in the hopes of convincing them to join the platform. Meanwhile, rival Joor sells brands from LVMH, Kering and Richemont, and counts players like Neiman Marcus, Bergdorf Goodman, Harrods, Printemps and 24 Sèvres as clients, according to chief executive Kristin Savilia. Joor is also extending into more mass-market segments.
Of course, servicing fashion’s wholesale market is not without risk. While it is undoubtedly the largest sales channel for personal luxury goods with around two-thirds of total volume, according to Bain & Company, more and more younger brands are avoiding the ailing department store sector and adopting direct-to-consumer strategies, which offer higher margins and greater control over brand experience. But Lock is unmoved: “Wholesale will always be an important part of our industry.”
For its part, Alibaba wants to put some of Ordre’s technology to use to sell directly to consumers, said Jessica Liu, president of Tmall fashion and luxury. “We want to create a new growth engine and relatively ideal place to communicate with the younger consumer. The most important goal is to cater to the younger persons needs so [this includes] luxury product, this is why we want to invite luxury brands to co-operate with us,” Liu explained. Sixty percent of the active consumers on Tmall are under 30 and are “huge fans of new technology, they love 360 views and innovation is very important.”
While luxury is increasingly important to Tmall and its Luxury Pavilion now sells 50 brands including Givenchy and Burberry, many have been slow to adopt the platform, fearing counterfeit goods, grey market re-sellers and discounting. Smaller rival JD.com also has its own luxury platform, Toplife, which sells Saint Laurent and La Perla, and last June it bought a stake in fashion e-commerce unicorn Farfetch for $397 million.