Well perhaps not entirely fail, but don’t get serious traction. Sure, we’ve seen activity overload in the fashion startups space during the past few years – entrepreneurs are jumping on the bandwagon to reinvent this industry online; investors rushing to put their money into unfamiliar space, attracted by billion dollar valuations like in the case of Gilt Groupe. Each week, I receive emails from fashion startup founders asking for advice or a partnership with my company, Style Coalition. Many of these talented founders raised seed rounds from leading VCs, some even have celebrity investors, but how many of them got to the next round of financing or made significant exits? Not many. We’ve seen e-commerce companies thrive, and flash sale sites having their ride, but most of the fashion specific social or technology platforms haven’t had major success.
While I still believe the fashion industry is one of the most exciting industries for technology innovators, I also think it is one of the toughest to crack. After doing business in the space online for the past 5 years, trying multiple business models (and finding one that works) I came to a few realizations as to why it requires an extra effort to succeed.
1. The fashion audience is hard to please. People who are naturally drawn to fashion tend to have a critical eye. A big part of having taste is knowing what is NOT tasteful; therefore this audience is used to looking at new products, sites and apps from a critical perspective. It takes a lot to get praise or even a nod from the fashion audience, not to mention mass adoption.
2. People who are interested in fashion are individualists and don’t like following the masses. One of the reasons they do use mass social networks is to express themselves creatively in front of a large audiences and keep their status as trendsetters. They don’t want their own social network; they want to be among the small influential audience on the large networks.
3. The fashion audience is always on the lookout for the next cool thing. It is hard to keep their attention to the same product or online destination, unless you continue to innovate and surprise. This is perhaps true for our entire generation, but when targeting trendsetters, it is particularly challenging.
4. It is hard to gain the fashion audience’s trust, unless you are a known brand. This might look like a stereotypical statement, but labels are extremely important to fashion conscious audiences, especially when we are talking about the online world, where it’s harder to make people trust you. Labels may refer to clothes they wear, sites they sign up for – brand association is important. This is the reason I believe so many startups focusing on emerging designers are not getting mass traction. It is harder for people to trust an unknown label online. With the brand name comes quality reassurance. People are willing to spend small amounts on new brands (hence Etsy’s success), but when it comes to emerging high-end designers, people are still more reserved to open their wallets. The same goes for new sites – the only way to get them to trust a new brand is via some sort of endorsement from an influential person.
5. Fashion startups get distracted by the glitz and glamour of the industry. They try to cater to that high standard – putting together events and attracting celebrity names, instead of focusing on perfecting their product. Of course that helps, but if you don’t have any value proposition for your audience, no labels or names will help.
These are the main lessons I learned from my own mistakes and observing others. There is still so much room for innovation in this industry and so many problems to be solved, which will continue to attract talented entrepreneurs. I hope they learn from these mistakes.