Buying fashion online is very hard. On the one side you’ve got a huge choice of online fashion stores that offer everything ranging from high-end designer clothing on sites like Net-a-porter or Farfetch to the other extreme of stores offering convenience items like socks at competitive costs such as Archiduchesse. And on the other side now, every fashion label has launched its own online boutique and emerging designers increasingly use market places, such as France’s Carnet-de-Mode, UK’s Lookk or Hong-Kong based Shop-des-Createurs to access the online consumers.
Everything is just one click away and the choice overwhelming. Trendy boutiques like NastyGal, TopShop or ASOS ship to almost any destination on the globe. While this explosion of online fashion items might feel like heaven for hard core fashionistas, it certainly is hell for the average consumer, who wants to buy a stylish outfit and is looking for the right inspiration prior to making his choice.
A fragmented market needs aggregators
It’s no surprise that in the past few months a variety of startups across the globe have emerged, all aiming to position themselves between the consumer and the stores to remedy this situation. When in other vertical markets you would typically see price comparison or consumer review sites, in Fashion you find sites in magazine-style that want to inspire consumers with very visual content and try to generate traffic for brands and merchants.
I have started one myself, Hypeed which was acquired in 2011 by Ykone. Thus I know from personal experience that competition in this space is very fierce, the market truly global and extremely fragmented. In my view one of the first and still one of the best crowd-sourced inspirational fashion sites is Lookbook followed by Polyvore. They are built around very large communities; however, because of this they are lacking the true shopping approach.
Then a new type of startup appeared that tried to fix that shopping issue: TheFancy of which I am big fan of, Svpply, Discoveredd, Nuji, TheCools or Wheretoget.it [Disclosure: I was a co-founder]. And there are many others that I won’t mention here – you get the idea of how competitive this space is.
Likely the best example is Google’s approach with Boutiques which they started after the acquisition of Like.com, which originally was an image recognition solution. Google stopped Boutiques after a few months in beta, despite significant marketing investment in media and flying bloggers around the world, likely because they couldn’t make the equation work.
But there is one startup that stands out: Lyst
This originally UK-based startup is almost two years old and has just announced an important step in it’s development: Series A funding as reported by Techcrunch last week. Besides the cash injection, Lyst also gained DFJ Esprit as new shareholder, after it already counted Accel in the UK, who led the seed round, amongst its supporters as well as other influential investors in the fashion space.
Lyst’s CEO is Chris Morton, a former VC at London’s Balderton Capital who turned entrepreneur. We first met 18 months ago at New York’s #Fashion140 conference and since then have debated regularly about the right approach in Fashion aggregation and inspiration, knowing that whoever gets it right has a huge market opportunity ahead of him. I did not get it right myself, but speaking to Chris, I believe that he and Lyst have very strong assets, a solid strategy and also strong investors (and now a war chest). I have started using Lyst myself more and more and I believe there is something to it.
Here’s Why: They’re Focused.
Ever since Lyst started, they wanted to fix the problem of fashion discovery from a consumer perspective. But instead of building a community of fashion-lovers trying to share their style and inspire other consumers, they went to fashion retailers and asked them to provide data feeds of available products. That was technically a more complicated approach knowing that Fashion is characterized by highly unstructured product catalogues and lacking a central product reference database; in addition product-trees completely change at least twice a year when the collection changes from Spring/Summer to Fall/Winter. However, Lyst has now a unique system in place, which provides an advantage compared to many others sites. They know almost in real time the stock level and thus what is available for purchase in hundreds of partner stores.
They Worry About UX.
Lyst has gone through 4 major releases in the past 2 years and through many many more iterations of improvements. Every time the site changed it became more useful to its members. Chris insists a lot on the personal experience for his users and the fact that in Fashion you can’t serve all consumers the same way. The average duration on Lyst is 14 min per visit.
As a user you don’t know how much of the site is personalized, but what you know, is if the content matters to you. As far as I am concerned the relevancy level of products in my personal Stylefeed on Lyst is very high. Millions of people use the service every quarter according to Chris.
One of the reasons I personally like TheFancy so much is the personal fit. I know that every time I open it, I’ll see some very nice pictures of stuff that I like. But TheFancy isn’t focused on Fashion; Lyst is! Chances are that I start switching to Lyst now every time I want to find a relevant fashion inspiration.
They are already global and now aim to become more local.
As much as I regret as a Frenchman that Lyst wasn’t started in my country, I acknowledge that through their London-origin and growing office in New York, they are on the best way to set a global footprint. With the new funding, Lyst will be able to expand its operations on both continents. Chris mentioned to me that he will spend himself 3/4 of his time in the US to support personally the dynamics that they are experiencing in North America.
Today Lyst has a single english UI, but already provides its users with localized content based on your location. This is almost invisible to the user, but contributes a lot to a richer experience even if you are living in France, Germany or Italy – and, of course business wise, this supports higher conversion rates and client satisfaction. Sales generated through Lyst doubled each month for the past three months. Lyst users only see products that are available in their region, presented in the relevant currency. This is just the first step of localization, but it’s a smart one; and more is to come.
Last but not Least – The Team.
Addressing a huge market opportunity like online fashion requires a team that is capable of making the right strategic decisions and also execute well. Chris and his team were smart enough to start acquiring premium brands and high-end stores, such as Net-a-porter or Luisaviaroma to position themselves in the right segment. This leaves them now the possibility to broaden the approach if they want to. The same would not have been possible if they had started with the low-end (and maybe easier to convince) retailers. The margins are with the high-end fashion labels, and they got it right.
It’s still early days and many things can happen in the space of social Fashion discovery. Lyst has proven to be different from most others. Through permanent iterations and improvements they created a service that provides value to the average consumers, beyond the fashionistas, and also good return to its retail clients. Every quarter Lyst already generates multiple millions of sales for the affiliated retail clients says Chris Morton, Lyst’s CEO.
Let’s see where the fresh funding gets them. Congratulations to the Lyst team for this Series A.