Influencers Take on Yet Another Role: Store Merchant

In fashion marketing, working with the right influencers has long been a key to achieving success. Now, in a crowded and competitive market, with novel store concepts launching left and right and customer acquisition costs on the rise, a new wave of retailers is leaning on celebrities and tastemakers to not only promote products but to curate them, too — the way a merchant might.

That’s part of the appeal behind a new entrant in the online marketplace race, In-House, which is not only using tastemakers to curate products but stocking its site solely with celebrity-influencer brands. Co-founded by Rob Lubin, Maz Obuz and Tucker Radecki, the New York-based site, which goes live March 12 with its first drop, will officially launch at the end of the month with more than 20 lines, including rapper Smokepurpp’s 6 Dead Bats, Wiz Khalifa’s Taylor Gang and Riot Hill, backed by The Weeknd.

“We’re the facilitator,” Lubin, the company’s chief executive, said.

In-House, which has raised under a million dollars to date, is just one of several new online retailers taking the tastemaker-led approach. The Lobby, a San Francisco-based retailer that launched in 2018, is populated with videos and lists created by fashion influencers, from Claire Most to Harling Ross, that recommend products available on the site, mostly from independent and direct-to-consumer labels like activewear line Girlfriend Collective or fashion-editor favourite Paloma Wool.

Another start-up, the Los Angeles-based Basic Space, launched in September 2020 and invites creative types with big personal brands — including Sporty & Rich founder Emily Oberg, comedian Ali Weiss and director Harmony Korine — to become site “sellers,” creating lists of products that shoppers can follow.

This is a modern evolution of traditional buying.

“If you want to reach a certain demographic, you go to the people who influence them because they’ll buy everything they suggest,” said Jessica Couch, co-founder of retail consulting firm Fayetteville Road. “This is a modern evolution of traditional buying.”

The specific business models for these stores vary. In-House — which operates a traditional marketplace, where products are drop-shipped (or shipped directly from the brand), takes a commission on sales. It has also launched an incubator for new labels in the vein of Farfetch’s “brand accelerator” unit, New Guards Group. Called “Originals,” In-House will co-own these labels, helping to guarantee the site is fresh with a drip-feed of new products.

The Lobby operates on a mix of wholesale, consignment and drop-ship — with varying commission or margin structures — to create a flexible brand-retailer relationship.

“Having a hybrid model allows us the flexibility to work with different types of brands,” said founder Abigail Holtz. “We use drop-ship to expand our assortment and learn quickly, then lean on wholesale and consignment to make more revenue when we have confidence a product will sell well.”

Basic Space founder Jesse Lee said the site holds all its inventory — both new and second-hand — although it operates on a consignment basis instead of wholesale, which he said allows him to take a bigger percentage of sales than a drop-ship model would afford. (Usually, commission on drop-shipped products is between 20 and 30 percent.)

“This guarantees best customer experience for a variety of reasons,” he added, arguing that the approach allows Basic Space to better control quality, shipping and logistics. He envisions a system where brands can upload available-to-buy goods onto a back-end platform and “sellers” can choose what they want to claim as a part of their mini-store. Sellers currently receive a commission on goods sold through the site via their links, so they are incentivised to promote these items on their own platforms, too. The same goes for The Lobby, which offers influencers a commission on every product sold via their links.

But does the tastemaker-led approach result in higher sales conversions? At Basic Space, 48 percent of its customers have made second purchases. The Lobby said using influencer content can lift conversion on a product page by anywhere from 20 to 100 percent.

Meanwhile, for tastemakers, it’s an opportunity to promote and amplify their own brand within a different context.

“Talent, from music and culinary and beyond, are looking for new ways to engage with their fanbase and create new streams of revenue,” said Marc Beckman, chief executive of DMA United, a firm that represents a range of talents in fashion deals. “There is value in creating these types of affiliations. If you look at it from a retailer’s perspective, it makes sense that these types of business models are being born from a difficult time period.”

Picking the right influencers is key to growth. “You can’t just bring in any rapper or any athlete if there is no connection to your customer,” Couch said. “Retailers have to consider the right influencers for the right customer segment and then scale according to the response.”

In-House is confident in its ability to scale given the breadth of the audience already tracking its tastemakers, like The Weeknd’s nearly 30 million Instagram followers and Wiz Khalifa’s 32 million. “We want to create something that will really speak to everyone,” Lubin said.