Agenda-setting intelligence, analysis and advice for the global fashion community.
Watch out buyers, editors and merchants. StyleHop, one of a new breed of Internet start-ups, is attempting to disintermediate you. Or, at least, StyleHop is trying to make your job easier.
According to President David Reinke, a business school classmate of ours, women are craving an honest, accurate, democratic rating system in fashion that can help them cut through the clutter and show them highly-filtered lists based on individual preferences.
Customers, he says, know that the editorial pages of fashion magazines are biased by a need to please advertisers and other external influences. So, they would prefer to turn to the wisdom of crowds (i.e. masses of other people just like them) to help them pick out the best styles.
In addition, StyleHop asserts that fashion companies need a more quantitative way to supplement the intuitive decisions made by buyers and merchants on which products to buy and in what quantities. This has always been a bit of a mysterious process, with certain merchants being able to divine the future, using a combination of experience, gut instinct and sometimes, data.
Stylehop's MarginFeeder (TM) tool will change all of this and support their decision-making processes with real data and consumer feedback.ADVERTISEMENT
However, StyleHop sceptics may suggest that fashion moves too fast and styles change too quickly for this kind of customer feedback to add any real value. Others may say that the role of designers, editors and buyers is to move consumers in new directions, not just give them what they already want. We sat down with David to address these and other issues to get the first scoop on StyleHop.
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BoF: Why does the fashion world need StyleHop?
In a recent study by Forrester Research, 5000 online consumers were asked what they looked for in a site. User ratings and reviews topped the list, with 64% of consumers requesting the function. 80% of consumers say their purchases have been directly influenced by other consumer’s reviews.
People have just come to expect user reviews to help them make decisions in many categories: think Zagat for restaurants; Amazon for books; TripAdvisor for travel; and CNET for electronics. However, even though women want consumer reviews in fashion, they really don’t exist. StyleHop is going to fill that void.
BoF: How do you think this will impact the current fashion cycle and way of working in the future?
Today the fashion industry relies on individual merchants to determine which styles to produce and in which quantities. Aside from the designs themselves, everyone in the business knows that the merchants’ ability to predict consumer needs has the single greatest impact on the profitability of an apparel line. Her qualitative judgment is what makes or breaks a season for most fashion companies. And, unfortunately for consumer fashion today, there just aren’t a whole lot of Mickey Drexler’s left out there.
Once StyleHop becomes good at helping consumers pick fashion, it will be a natural evolution for us to start helping merchants pick fashion, too. From our internal modeling at StyleHop we’ve found that helping merchants and buyers move beyond using just gut and instinct to make style-level unit commitments has the potential to save the industry billions of dollars currently lost in markdowns.
BoF: But isn't one of the roles of merchants and buyers to push consumers to try new things?
We are not pretending we can serve the edge of fashion, that's for sure. However, the vast majority of fashion sold in the US and around the world is derivative. I agree that editors, buyers and even celebrities play an important role warming consumers up to the latest trends. What's missing, though, is a counterbalancing feedback mechanism that helps the industry more quickly identify which specific style-level interpretations resonate most with each consumer group. Often times, by the time the apparel companies have figured out what works for their target consumer, the trend is over. It's a huge waste. I know firsthand there is broad scepticism in our industry to consumer feedback. I personally think it's a glaring void in the fashion ecosystem and am building StyleHop to try and fill it.
BoF: How does the Internet figure into your approach?
Before entering the fashion world I worked at Procter & Gamble. We regularly would spend $200,000 for product launch market research that would tell us both the market viability of a product as well as give us an accurate demand forecast. The market research firms in this space had long histories in each product category so they were pretty good at estimating demand using consumer polling.
We’ve never had this in fashion because it cost too much and takes too long. It simply cost more to collect the data than you can make on an individual style – in fashion there are just too many styles with too short of shelf lives to justify sku-level market research.
The internet changes all that. At StyleHop we are building the capability to very quickly and inexpensively bring fashion companies sophisticated analytics and pre-screened predictive consumers to support their style-level forecasting. StyleHop is going to meaningfully help merchants do their jobs. In the future, we expect this will be a tool that all merchants and buyers use to support their demand forecasting activities.
BoF: What is the value proposition as far as the brands are concerned...everyone from young designers to major fashion labels?
We really aren’t sure yet – that’s going to be a work in progress. Our sense is that any apparel brand that wants to get closer to its target audience is going to benefit from our consumer collaboration tools. Of course we aren’t focusing on anything bordering on replenishment since prior sales are the best forecasting tool for those items.
Since we are a venture-funded entity there will be a focus on going where the money is, so to speak. In other words, we will be targeting big, mass apparel brands that serve large markets. However, I’m personally interested in finding ways to effectively serve the up-and-coming market, too. With so little training or pipeline left for merchant development, it would bad for the industry to keep this tool from getting into as many hands as possible. At StyleHop we want to help make the fashion industry much more responsive to consumers. I’m committed to that.
BoF: What stage are you at in your business development, fundraising and team-building?
We just started building our website in January and have a long way to go. A lot of what we are doing is typical early-stage development work. We’re meeting with potential investors, interviewing for open positions and building out the key elements of our consumer website. Six months from now I expect everything will shift – we will be focused on marketing the site and bringing our forecasting capabilities directly to fashion companies.
The response from investors has been very encouraging. It’s allowed us to be picky which is a real luxury for a web startup company. As we close out this seed round over the next month or two, we continue to be interested in both individual and institutional investors that really understand the fashion space. They seem to be the ones that intuitively understand the potential of StyleHop’s business model.
If you have more questions for David, please feel free to post them in comments and we will follow-up to learn more. Images courtesy of StyleHop and Tony Diefell.
© 2008 Copyright Imran Amed - The Business of Fashion