Why I am excited about the online apparel and fashion vertical

On the day that Boo.com died in March 2001, not only did the Internet bubble burst but selling fashion and apparel over the Internet seemed dead for forever. So it is exciting to see that fashion and apparel is now one of the most exciting e-commerce categories where tons of innovation is happening. Think the success of private sales (vente privee) sites like the Gilt Group, the emergence of online-only brands like the “oh-so-cool-pants-maker” Bonobos or our own portfolio company Indochino that has developed into the leader for tailor-made suits. All these successes are based on 4 major advantages that the Internet has as a distribution channel for apparel:

  • Low or no inventory: one of the biggest problems in traditional retailing is the cost of carrying inventory that might not sell in time before the new clothing line arrives. Online apparel retailers not only have a much larger demand base (not needing to decide which clothes to ship to which store) but can also introduce “made-to-order” for higher priced items like suits (and therefore completely eliminate inventory risk)
  • Fast fashion: H&M and Zara have been very successful in driving customers repeatedly into stores by coming up with new clothes every 4-8 weeks and “fast fashion” has been one of the buzzwords in apparel industry since. Online apparel brands can speed up the process from clothes design to making it available to customer even more (e.g. Indochino only needs 3 days to design a suit until it is ready to be ordered online).
  • Customization: customization has been a driver in many categories but had been limited in the apparel category to t-shirts in the past (Threadless). Now sites like Indochino offer customization for suits from the size of pockets to the type of buttons.
  • Convenience: there are millions of people out there that hate shopping in a traditional retail environment. Purchasing clothes online can potentially be a much more convenient experience, especially if the customer has stored their preferences or measurements.

I am certain that we will see even more innovation in the apparel space in the upcoming years. Perhaps the next big apparel brand will be an online-only brand, perhaps new intermediaries will make shopping online an even better experience, perhaps every online retailer will offer some sort of customization. The advantages of the Internet as a distribution channel just seem to be too large.

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