New Shopping Sites Combine Personalization And Social Media, But Experts Warn of a Bubble
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look in your virtual closet for gift ideas. “WingTipIt is Twitter meets your universal wish list,” says co-founder Carla Holtze, a Columbia MBA classmate of Skelton’s who previously worked in the finance and corporate divisions of Lehman Brothers.
FashionStake also cultivates a community approach to shopping, though one that’s more focused on uncovering the hottest new designers. The site is the brainchild of Harvard Business School students Vivian Weng and Daniel Gulati. Weng is a former fashion consultant and Gulati a techie with an obsession for crowd-sourcing.
When the two met at Harvard, Weng figured Gulati was just the guy to help her solve a problem she saw in the fashion world. “It’s one of the industries that has gatekeepers,” she says. “In fashion, the gatekeepers are buyers [for stores]. They decide what the customer sees.” Weng wanted to invent a Web site that would eliminate those gatekeepers, and let fashion-forward consumers decide amongst themselves what new designers they wanted to support.
You can browse FashionStake to see the latest offerings from more than 25 young designers. You can buy straight from the site, and also vote for the pieces you think will become the most popular. Selections that receive the most votes get highlighted as crowd favorites. Customers who consistently vote for the items that end up as crowd favorites are rewarded—with discounts and the like. “We’re crowd curators,” Weng says.
FashionStake’s site has only been up since September, but the company has already picked up some big-name support. The founders raised a seed round of just under $1 million, led by Battery Ventures. Among the other investors are fellow Harvard graduate Alexis Maybank, co-founder of the popular flash-sales site Gilt. Maybank has been “a great advisor,” Weng says.
FashionStake isn’t the only shopping site raising money. On April 6, accessories retailer Send the Trend revealed in an SEC filing that it has raised $2.5 million of an equity-based funding round that could hit $3 million.
Visitors to Send the Trend’s site fill out an 8-part questionnaire designed to reveal their unique look. Then they get an instant selection of earrings, rings, scarves, and sunglasses—all of which cost $29.95 a piece. “I created Send the Trend because everyone needs a way to accessorize their look with panache and ease,” writes founder Divya Gugnani on the site. (The company’s top executives did not respond to an e-mail request for interview.)
Send the Trend is relying on a bit of star power to draw buyers to its site. The company’s chief curator is Christian Siriano, who won the fourth season of the television reality show Project Runway.
But can all these new fashion sites compete for eyeballs—not to mention wallets—in a still-struggling economy? Forrester analyst Sucharita Mulpuru says that’s a legitimate question. “We’ve seen a bunch of these startups, and they’re all about user-generated content,” Mulpuru says. “The biggest challenge they’re facing is people finding them. Fashion is really crowded online, and people don’t have a lot of hours in the day to shop.”
Mulpuru says she’s surprised fashion sites have been able to raise money at all. According to Forrester’s data, online retail sales grew 12.6 percent in 2010 to $176.2 billion and are projected to grow at a compound annual growth rate of 10% through 2015. Online fashion sales are growing a little faster than that, Mulpuru says, but not enough to guarantee success for every startup. “We’re absolutely in a bubble,” she says.
WingTipIt’s Holtze believes all the support from the financial community bodes well for her startup team, which has raised a seed round from family and friends but has yet to make its big pitch to potential investors. “I see great companies getting funded, and I think it’s very positive,” she says. “Funders are seeing the innovation and welcoming it.”