The Big Opportunity in Fashion Tech Is Behind the Scenes

11/13/2014
Though much of the energy in fashion tech focuses on consumer-facing applications, the real "heart and soul of where there's opportunity" lies in planning, demand, production, logistics, and other aspects of the supply chain, according to Rebecca Minkoff CEO Uri Minkoff, who urged attendees and entrepreneurs at the Startup Weekend Fashion Tech Panel, hosted by Google, not to neglect this critical side of the industry.

Indeed, a fashion company's biggest risk often resides in inventory, which almost always requires high minimums and calendar-stretching lead times when working with overseas suppliers, and wields tremendous influence on both the business's profit margins and stock prices as some investors buy or sell shares solely according to inventory holdings. "I don't know about startups that do planning, but designers ask for that all the time," notes Liz Bacelar, CEO of Decoded Fashion, a New York-based company that connects fashion and retail decision-makers with innovative technology solution providers.

"If someone came to me and said ‘you can save $500,000 by buying this a position on this leather today' and we're going to use it all next year, you've just changed my world," says Minkoff, "because that half-million-dollar savings has a huge bottom-line impact."

While business-to-business solutions may be more "boring" than working on a hot customer-facing app, Minkoff believes fashion needs critically important tools and solutions that assist the business side of the house. "The data and analytics side of fashion has been sorely underserved," he notes, adding that this kind of technical savvy still is fairly new for many brands, which traditionally have relied on the merchant's intuition to conjure up magic and sales each season.

Minkoff points to customs as one example of an area particularly ripe for fashion tech investments. When the company's finished goods are shipped to U.S. distribution centers from suppliers in Asia, Rebecca Minkoff pays any applicable customs. But if the product is then sold back to a customer in Asia, Minkoff argues that the company should be reimbursed the customs fee it originally paid because the end user also pays customs and duties — but there's currently no system to track these data points. "That's found money," Minkoff explains. "There's a whole business opportunity right there."

Rebecca Minkoff has invested a healthy six-figure sum this year in new technology tools, including SKY IT Group's SKYPAD platform, a cloud-based retail analysis solution that Minkoff describes as a "brilliant service" that tracks all of its wholesale outlets and reveals on a real-time basis what's selling by location, item and SKU. "The amount of feedback that has for a brand is amazing," he says. "It's not just this selling report in an Excel spreadsheet that comes in at the end of the week that you spend hours correlating."

A merchant with the fashion brand was so passionate about SKYPAD that she approached Minkoff and said she couldn't work for the company without it. "So I had to go buy it, whether I wanted to or not," Minkoff explains, noting that while he may have found other services and solutions that he personally wanted, he was unable to find an internal sponsor who shared his enthusiasm. That's why such outspoken champions as that merchant can be invaluable assets in fighting for new technologies, explains Minkoff, especially when many departments are jockeying for limited dollars.

As a relatively young brand, Rebecca Minkoff isn't saddled with legacy systems and doesn't even employ a full-time IT professional, instead leveraging best-of-breed solutions, many of which are cloud- or services-based. The company leveraged this fast-and-nimble philosophy in Japan, where it maintains a robust business, and shifted its marketing budget from traditional channels — which were performing adequately — to a "personality blogger" with a strong following. The result? Sales jumped threefold in just two months.

"It was phenomenal what she was able to do," Minkoff notes.

Minkoff also encouraged fashion tech entrepreneurs to fine-tune their pitches and maintain a laser focus on their value proposition. For instance, startups can gain significant ground by cutting a deal for early-adopting brands — because once they reach a critical mass of participating companies, clients down the road will have to pony up for the full fee. "There are startups that approach me and say they have a $50,000 a year service," Minkoff says, adding that he immediately evaluates the price/value ratio of what's being offered. "If I'm spending $36,000 a year on Magento, and that's running my e-commerce, let's get a relative scenario of where these costs should be.

"If you want me to spend more on your startup solution than what I spend on my ERP that runs my whole business and sourcing and production, we're going to have a problem right away," he continues.

Rebecca Minkoff will transition from web-based to mobile POS once it launches its first U.S. brick-and-mortar stores in New York City and San Francisco in November, followed by an L.A. shop slated for later this year.

A company that "loves being pioneers in social," Rebecca Minkoff believes social media is ripe with monetization opportunities, though platforms such as Snapchat are best for engaging with its most rabid and loyal customers. If a customer is following the brand on every possible social channel, Snapchat becomes a useful tool to leverage "pent-up demand around access," notes Minkoff. For example, the brand shot "grainy" behind-the-scenes video at New York Fashion Week last year and wanted to share that inside look with its most engaged fans — but without sullying the perfectly polished feeds on its other social platforms.

Being able to offer that kind of sneak-peek content to diehard fans helps to break down the usual barrier between company and customer, according to Minkoff. "I can't have all of you in my studio," he says of the brand's followers, "but I'm trying to give you as much access as I can to be in our kitchen cooking with us."

—Jessica Binns is a Washington, D.C.-based freelance writer.
 
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