Ecommerce

Dragging Fashion Wholesalers Into the Digital Age


Dragging Fashion Wholesalers Into the Digital Age

Photograph by Dann Tardif/Gallery Stock

(Corrects the amount of merchandise sold on NuORDER in the third to last paragraph and the location of Modalyst in the penultimate paragraph.)

Since launching her women’s clothing line in 1995, designer Trina Turk has relied on paper forms to handle millions of dollars worth of orders. This summer, when Turk learned about JOOR, a new website trying to streamline the process, she signed up, posting hundreds of photos and descriptions of her 50-employee Los Angeles company’s sportswear, dresses, and jewelry.

“We’re trying to give up handwriting purchase orders,” says Turk’s vice president of sales, Claudine Covolo, who estimates the site has resulted in more than $120,000 in orders. By being able easily to track what’s selling, it helps designers keep in-demand items in stock and revise styles, she says. “With JOOR, we have it all online.”

JOOR isn’t another consumer fashion site such as Net-a-porter, Shopbop, or Piperlime (GAP). Shoppers can’t use it or similar sites like NuORDER or Modalyst to buy retail. These new online middlemen are limited to designers and retailers who want to find sales venues and clothes to carry—and manage ordering. They make money by charging designers a small percentage of each transaction. Buyers pay no fee.

Last year U.S. shoppers spent $141 billion on clothing in brick-and-mortar stores and more than $17 billion online, according to market research firm NPD Group. While handling the back end for the wholesale market isn’t as sexy as selling directly to consumers, it’s a significant innovation, says Roopal Patel, a former fashion director for Bergdorf Goodman who is now a fashion industry consultant in New York. JOOR and its ilk “really [help designers] to simplify their business and allow them to manage it at a much more strategic level,” says Patel. “From the buying end, it helps organize crucial information.”

The traditional way of doing business via trade shows and showrooms isn’t going away soon, says Vincent Quan, a former buyer for such brands as Saks Fifth Avenue (SKS) and Perry Ellis (PERY) who is now an associate professor at the Fashion Institute of Technology in New York. “In this business we gotta look, see, and touch.”

Last year Battery Ventures led a $2.25 million venture capital round in JOOR, along with Bobbi Brown, Lerer Ventures, and others. Battery led an additional $3.25 million round this July. In November, NuORDER grabbed $3.6 million from investors that included Greycroft, Creative Artists Agency, and Rachel Zoe.

JOOR’s founder, Mona Bijoor, a 35-year-old former buyer for Chanel, Elie Tahari, and Cynthia Rowley, acknowledges her business is “not a replacement channel but a complementary channel.” A buyer may interact with a designer on her site and then visit their trade show booth or showroom, or vice versa, and that translates into an online order, she explains. And remote retailers who lack travel budgets and use it can find new brands. Trina Turk’s sellers use JOOR’s iPad app to target boutiques when they’re on the road.

Buyers have ordered $25 million worth of merchandise since JOOR was launched in 2010, and its revenue was just shy of $250,000 last year, Bijoor says. Because the amount of merchandise sold on it has quadrupled, she expects $1.2 million in revenue this year. She says the site now has 500 designers and brands, including Diane von Furstenberg, Rachel Roy, and VF Corp. (VFC), and serves buyers from 10,000 stores. Buyers use the site for free, and designers pay a one-time $3,500 subscription fee. JOOR takes 3 percent of each transaction.

Los Angles-based NuORDER, which was launched in 2011, started off selling premium denim brands and has expanded to other types of clothing. “It shows high-quality pictures with prices, and we place wholesale orders as you would if shopping for yourself,” says James Hammonds, a senior buyer for American Rag. “And there are fewer mistakes because you’re not transcribing over and over. At some point, we’ll look back and say, ‘I can’t believe we used to do this.’ It’s changing the way we do business.”

NuORDER’s chief executive, Heath Wells, 32, says his system is crucial to making reorders more efficient, thereby increasing sales. “Retailers in brick-and-mortar stores sell out hot styles quickly and then try to get them back in,” he says. “By the time they call the rep on a Monday and fill out handwritten orders, they’ve lost the next weekend when they could have sold that product. As a customer walks out the door with that size 32 jean, don’t worry, because you can jump on to our solution and reorder that style.”

He says NuORDER has sold $40 million worth of merchandise since its launch and has signed 150 brands and 45,000 retailers. Brands pay $6,000 for the basic package, and buyers use the service for free.

Planning to launch a beta version of its site in January, Modalyst, based in New York, showcases bag and jewelry designers. What’s making its 80 designers and 200 boutique buyers “super excited,” says co-founder and CEO Jill Sherman, is how the site is working on a way around designers’ minimum order requirements to ensure small stores with limited capital can still carry their accessories. “Boutiques in Austin, Boston, and San Francisco may service a similar demographic or carry a similar brand, yet they don’t know each other,” says Sherman. “So we will match them to create buying circles, which allow them to ‘cluster buy.’”

Entrenched habits remain the sites’ biggest hurdle, says Wells, who estimates that 95 percent of brands are still considering whether to switch from paper or spreadsheets to sites like his. “We want to get rid of pen and paper,” he says. “It’s stupid.”

Frenkel is a Bloomberg Businessweek contributor.

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