Software Is Reshaping Fashion's Back End

NEW YORK, United States — From e-commerce to social media, digital has revolutionised the consumer-facing front-end of fashion, reshaping sales and marketing. Yet, for years, the industry's less glossy back-end systems — used to manage everything from production to excess inventory — have remained relatively untouched.

“Brands and retailers have been focused on what’s sexy,” says Ronen Lazar, co-founder and chief executive of Inturn, which helps brands more easily unload unsold inventory to off-price retailers. And while new platforms can certainly offer advantages, “technology in general creates really serious demands on time, from managing data flows and storage to [sharpening] accuracy and flexibility,” he adds. “Everyone has been putting it off to the side.”

Now, as more millennials and executives trained in other sectors join fashion companies, expectations are rising and brands and retailers are rethinking their back-end solutions. What’s more, in a challenging retail environment, there is more demand than ever for software that, once up and running, can save both time and money. In the past month alone, more than six start-ups offering back-end solutions geared to fashion companies have raised venture capital.

But which of these companies will provide fixes to fashion’s key back-end inefficiencies? BoF identifies seven back-end problems and the companies aiming to solve them.

Placing wholesale orders at showrooms and tradeshows is still often done with pen and paper.

Solution: Walk into any bustling showroom in New York or Paris, or a Las Vegas trade show, and you're still bound to find buyers with pens in hand, marking down which items they're looking to order on printed sheets secured with large clip boards. When orders are placed on paper, brands must then input those requests into their systems manually. However, a handful of companies have materialised that aim to automate this process while also offering data-driven feedback.

The New York-based Joor, which has raised over $20 million in venture capital funding from the likes of Advance Publications and Forerunner Ventures, has emerged as an industry leader that offers a solution for both brands and retailers. Joor's platform allows buyers to place orders at more than 1,200 brand showrooms via an iPad app or on the web. Retailers like Saks Fifth Avenue and Nordstrom are using the company's mobile application to write all of their orders, standardising the process on their end regardless of whether or not the brand itself is on the platform. (If a brand doesn't use Joor, it can still input the information from the retailer's purchase order.) Joor also offers integration services so that the data can then be easily uploaded into purchase-order systems. "We are becoming the industry standard for wholesale fashion," says founder and chief executive Mona Bijoor. "Now, it's about data in and data out."

The London-based Ordre is another wholesale platform that makes placing orders easier. For Ordre, the objective is to allow buyers who might not be able to physically visit a showroom — or don't have time to sit and place orders while they're there — an opportunity to view and purchase product from anywhere in the world. (Brands on the platform include McQ, Dries Van Noten and 3.1 Phillip Lim.) Chief executive Simon P. Lock, the founder of Australia Fashion Week, launched the company in 2014 after observing a change in the audiences at runway shows. "We noticed the numbers of buyers dropping out of fashion week," he says. The company is now set to launch Ordre Orb, which offers 360-degree line-sheet visuals.

Online marketplaces offer brands and retailers another avenue to sell their goods. But the inventory input process is often manual, requiring daily uploads.

Solution: Online marketplaces, from Lyst to Amazon, have long offered an additional selling channel for brands. But more and more traditional retailers, including Macy's, are beginning to offer "vendor-direct" programmes that operate in a similar way. For brands, however, being part of an online marketplace is a laborious process that requires daily product uploads and updates, typically done through Excel spreadsheets. The recently launched RevCascade aims to automate the process by plugging into a brand's inventory management system. By using the software, brands can upload items more quickly and also find new marketplaces where they might want to sell their goods. "If you think about the success of all the marketplaces in e-commerce, it's a massive trend but most retailers have not really embraced it," says RevCascade chief executive and co-founder Josh Wexler, who spent several years developing real-time bidding for online advertisements at the Rubicon Project. "We see the future being a continuation of their purchase order business...but our technology enables retailers and the brands they carry to extend their relationships in a way that helps both of them generate significantly more revenue."

Buying and selling excess inventory has always been a manual process.

Solution: Selling excess inventory to off-price retailers has long required brands to send through alphanumeric spreadsheets with no images, a time sink for sales staff that provides little visual context for off-price buyers. While RevCascade's aim is to automate the brand-to-marketplace process, Inturn's is to automate the off-price process, allowing brands to sell more product in a shorter period of time.

For instance, one buyer says she was able to order $500,000 worth of product — on an iPad, no less — in just 20 minutes, a process that may have taken a half a day in the past. Here’s how it works: Inturn pulls information from a brand’s inventory management system, spitting out product attributes — including price, universal product code, and imagery — which lets sellers better track excess inventory. “It allows them to be proactive instead of reactive,” says Inturn’s Lazar. “One well-known off-price retailer told us Inturn is saving each of its buyers 100 hours per month.” Some retailers are also using Inturn — which has raised $13.55 million in funding from the likes of Beanstalk Ventures and Jose Marin — to move product between their own regular price and off-price channels.

Planning and managing inventory to achieve the perfect stock mix remains difficult.

Solution: Brands and retailers have never had more access to customer data. But how can they better use purchase information to help them determine what should sit on the sales floor in the future? The UK-based startup Anatwine, which just raised $12 million in funding, helps retailers better plan stock. The company, founded in 2013 by former Superdry e-commerce director Chris Griffin, connects brands and retailers through a single integration of product procurement and order fulfillment, making it easier to tweak the online stock mix based on real-time sales data instead of historic sales. Clients include German e-commerce behemoth Zalando (which is also its main investor), as well as Adidas, Next, Harvey Nichols and Shangpin.

Most brands do not track the post-sale lifecycle of products, missing out on rich data that could help inform future merchandising decisions.

Solutions: As consumers become more comfortable with the "Internet of things," using smart tags to track a product long after it has been purchased will become commonplace. Not only for authentication purposes, but also to help better understand the length and extent to which an item is used. Enter Awear, which utilises smart tag technology to monitor items post-purchase, and to engage with the customer beyond the till. To make smart tags more palatable for a weary consumer, Awear has developed an app that aims to be the equivalent of a "frequent flier programme," according to co-founder Liron Slonimsky, triggering VIP experiences and special offers. (Awear's technology can also be incorporated into a brand's own app.) "It's a way to tailor communication, but also to see how they wear their purchases and where they wear them," she adds. "The post-sale behavior analytics are really like nothing the industry has seen."

There is no universal system for managing the production and shipment of a product.

Solutions: In fashion, there are more than a dozen systems used to manage the logistics behind selling, ordering, producing and shipping a product. While it's unlikely that the industry will adopt one system across the board, certain platforms are emerging as favorites. For instance, SAP Fashion Management, launched in 2014, has been implemented by Brooks Brothers, Armani, Under Armour, Luxxotica and more. The service is an "end-to-end" solution, meaning that it manages the wholesale, retail and manufacturing processes. The goal is to help users coordinate and deploy resources along the supply-chain journey. In theory, a one-stop solution not only creates efficiency, but also makes it easier to cull meaningful data. "With SAP Fashion Management, brands can now identify, collect and act on critical data to achieve a 360-degree view of their ideal customers worldwide," says Lori Mitchell-Keller, global head of consumer industries at SAP. "This positions the brand to engage more meaningfully with their customers while enhancing perception."

Brands have difficulty measuring the impact of influencers, both in terms of awareness and conversion.

Solution: Formed in January 2016, Launchmetrics represents the merger between Fashion GPS — a system used by publicists to track everything from samples to runway show seating assignments — and "influencer software" Augure, which helps said publicists determine which of their media partners are best at delivering their brand message. For instance, if a certain Instagram star is great at driving conversion for a certain brand, then the brand can build a strong relationship with that influencer by loaning them clothes, inviting them to events and advertising with them. "We take an analytical approach by finding influencers that will match with your audience and recommending what a brand should be doing during fashion week, but also in between," explains chief marketing officer Arnaud Roy. "The idea is to monitor and put an economic value on earned media."

In August, just in time for the Spring 2017 shows, Launchmetrics will launch an updated version of GPS Radar — the system editors, buyers and influencers use to RSVP to events — with an overhaul of the entire platform scheduled for October.

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