Are publishers becoming the new retailers? Will social curation start-ups replace fashion editors? Can f-commerce boost up sales?
In the fourth part of our series of interviews about the future of fashion retail, we get to discuss with Nicola McClafferty, CEO and Co-Founder of Covetique.
It’s all about smart shopping
Consignment shopping has undeniably become much more chic and mainstream than it was a few years ago. While the economic downturn has played a great role in strengthening this trend, the most important factor seems to be the ever-growing affair between fashion and technology.
First of all, social media sharing and the popularity of street-style blogs have made it easier for consumers to be inspired by the real wardrobes of real people. Now, potential buyers are being constantly exposed to the coolness of desirable items worn by style icons who they can identify with. It comes as no surprise then that start-ups like Material Wrld are offering people the chance to buy pre-owned items by popular, yet approachable, tastemakers like Leandra Medine (of the blog Man Repeller).
More importantly, though, thanks to easier implemented e-commerce models, countless shops can now offer an abundance of easily accessible sartorial temptations to an international clientele. There are literally thousands of sparkling clothing items and accessories just a few clicks away. Who can resist the temptation? And what’s better than funding your next purchases by selling all of your unwanted items to eager buyers from all over the globe?
Nicola McClafferty calls this the ‘smart shopping movement.’ She founded Covetique, a luxury online consignment shop, in 2011 after she transitioned from investment banking to online retailing due to her passion for fashion. When she realised that people willing to sell their luxury items would not want to go through the hassle of eBay (the learning curve it requires, as well as dealing with chores such as photographing your items and going to the post office), she set up a platform with a simple transaction process. Sellers decide what they want to offer and a courier picks up their designer items. Covetique then reviews and prices the items in agreement with the seller, puts them up for sale, and gets a commission when an item is purchased. Nicola’s concept in one line? “It’s Net-A-Porter meets eBay!”
Q: How did you come up with the idea of Covetique?
My background is in venture capital, so I spent five years looking at start-ups and meeting with interesting entrepreneurs. I always found the online fashion space particularly promising, with a growing demand for great value luxury brands. At some point I had one of those personal ‘light bulb’ moments, where staring at my wardrobe I thought that if I had the time to use eBay I could make a little bit of money by selling items. It sort of came from an evolution of my experience working with online businesses and realizing the need for a hassle-free, ‘non eBay’ way of extracting value from one’s wardrobe, while offering buyers access to a platform of luxury brands at good prices.
Q: What does your company bring to the fashion consumer’s table and what kind of needs does it address?
Our buyers and sellers are two different groups, both with different needs. From the seller’s side, there is a clear need for an easy way of selling, while raising their awareness of utilizing their own assets to make money. Essentially we are talking about a movement towards smart fashion, changing the way consumers engage with luxury items and creating a simple platform to sell their designer pieces.
On the other hand, we try to create as close to a “luxury retail experience” as possible for the buyer. That means really nice packaging, good customer service, returns and being a trusted brand. We guarantee the authenticity of all of our items and our customers need to trust our level of curation and quality.
Q: You say that Covetique is a community as well as marketplace. How do you achieve that?
All of our items are pre-owned, so there is an individual story behind them that adds interest to the transaction. We have created the ‘personal online wardrobe’ — all of the sellers’ items get uploaded into their own personal profile, which they can then personalize by telling us about their style, designers they like, etc. This gives the buyer an idea of the woman behind the piece she’s purchasing. Buyers can follow individual wardrobes — if you bought from a woman in the past, chances are you share her style, size and taste in brands, so you can connect with her and be notified as soon as she’s offering new items.
Q: What was the biggest problem that you had to solve on launching your company. Was it logistics?
Seamless logistics and workflows. Our model is quite unique — we are not a marketplace like eBay because we physically hold the stock. However, we don’t buy the stock, so we are not a traditional retailer. We are a very much a hybrid model, which still has to act like a physical retailer in some ways. We also needed to understand the core needs of our sellers, as we have a very wide network across the UK. So for us it was about gaining access to all of the amazing pieces sitting in amazing wardrobes all over the UK, and doing it in the easiest way for the seller. We had to focus on ensuring an easy experience for the seller from end to end.
Q: How does social media influence the way people interact when it comes to shopping? What kind of selling models do you see emerging due to this trend?
Social shopping is something that everybody talks about. There is no doubt that shopping as an online experience is becoming a lot more social, but I still don’t see these social platforms being very strong transaction platforms yet. We saw that a number of brands and retailers that set up shop on Facebook quickly reduced their level of investment there.
What is really powerful is using social shopping to create influence and recommendations. More people are using their friends as influencers regarding the transactions they make. Rather than seeing what a celebrity is wearing, they want their friends to tell them what they should buy. The influence and the sharing capability of social media has a strong impact when it comes to e-commerce models…
Q: Do you see any actual selling models?
There are certainly interesting sales models but what is really key on social platforms for businesses, is to connect with your customer and to build brand identity and trust. I think they are very powerful selling tools in a sense that social media allows retailers to engage with customers in a different, more creative way than you can do on your own site, with your own products.
Q: Do you see any disruptive innovations in the fashion field?
What all these start-ups do is allow people to access and consume fashion in different ways. What we have seen so far are new retail models, like the subscription-based selling model and now the consignment model and that is something that changes how people engage with fashion. If you look at what the subscription guys are doing, it’s a different way of building loyalty and therefore sales.
Q: But have they been doing well? There have been some lukewarm or even negative reports regarding profits and sale volumes.
I think some are doing well. Technology overall is enabling better interaction, which offers a better retail experience online. We’re seeing a lot of great discovery and curation platforms, or new technologies emerging to deal with issues like fit and size. It might not necessarily go on to fully disrupt the retailers; what it will do is to help online retail grow in the next few years. People are still conservative when it comes to transacting high values online. These start ups are getting people much more comfortable in engaging with high fashion on the internet. As for the luxury brands themselves…
Q: They were quite hesitant to embrace technology.
Indeed, however all of their value is in their brand. Therefore, when a platform emerges that is somewhat of an unknown entity, they have no idea of the impact it’s going to have on them, so they are understandably, very protective and worried about brand dilution. They don’t want to risk their brand equity. However brands need to be more flexible and adapt quickly to where their customers or potential customers are. Some brands are using social media now in a much smarter way and there are very few left that feel they can ignore it.
Q: Chuck Townsend of Condé Nast said in WSJ: “My eyes are wide open. I don’t consider [the traditional ad-revenue model] to be a perennially sustainable stream of revenue.” We see brands becoming publishers and publishers stepping into retail sales (for example, Telegraph’s ‘FashionShop’). Is this the beginning of a new era for these industries? How do you see the relationship between media and retailers developing in the future?
There’s no question that the line between media and retailer is blurring, and it’s going to become even more so. We have seen the online retailers move much more quickly to become the media players, rather than the other way around.
Q: Like Net-A-Porter?
Exactly. You only need to look at the hires that have happened, the big names going to the online retailers, to see the direction they are taking. And I think that makes so much sense. We should see the media companies doing the same thing, but as they are more traditional businesses, with longer term established business models, they will probably be slower moving. The competition for eyeballs is so fierce now.
Fashion consumers, particularly in the UK, are really sophisticated, so retailers need to create a really interesting platform to stand out from the competition. It’s fascinating to see how far they will take it. Net-A-Porter has their magazine, which is amazing, but the website still doesn’t look and feel that much different than it did five years ago. The magazine exists and it’s there, but it’s not the first thing that you encounter when you land on the website. However, there’s a huge amount of change still to come.
Q: What do you think is going to happen to the media companies?
Some of the newspapers were surprisingly quick to adopt and build a strong presence in fashion, like the Telegraph and the Times. They have strong fashion properties and have become big influencers. These media businesses, from newspapers to glossies are still the biggest influencers with regards to what the UK consumer is buying.
Q: Do you think they could directly intervene with sales, like setting up shops on their websites?
Some are doing that.
Q: Will they lose their influence if they start promoting very specific brands?
I think it’s about achieving a balance and focusing on your core strengths.
Q: They will jeopardize their integrity…
Not necessarily but like I said, fashion buyers are sophisticated consumers, they know where they want to go to consume fashion content and where to go to discover and be influenced into, to read about who is doing what. There are interesting ways that media companies are working with retailers that is a win/win for both. I just don’t see a consumer buying a dress directly from a media publisher but these publications can be hugely influential style bibles with their curated picks, best of the web, best of the high street, etc.
Q: Which trends do you identify with most strongly in the world of e-commerce?
Smarter fashion – so buying and selling! Consignment is nothing new, but in New York women engage with consignment much more than they do in London, it’s quite interesting. Women in New York consign as a matter of habit. I’ve spoken to a bunch of New Yorkers who consider consignment as a part of their monthly income, it’s just how they live. It hasn’t got there yet in the UK, but it’s very much starting to. So, this is a kind of movement towards women thinking a little bit differently. The other thing that is interesting is the need for really good discovery engines. Like we said before, the space is becoming quite crowded, there are lots of different retailers. How do you find products that are relevant to you, how do you discover new brands, how do you engage with the content that you know is going to be most relevant to you?
Q: Have you found a discovery engine that you could use right now?
I still think that space needs work. But it is moving quickly. Pinterest is not the solution by any stretch, but it speaks to the need for people finding and discovering great new content. We have all seen the numbers, Pintererest is driving strong transaction volume through to retailers. That’s because people are finding products or seeing products in a new way that they haven’t necessarily before. Also, Polyvore — while not new — and what Chris Morton is doing with Lyst, are both very interesting and redefining discovery.
However, the gap lies where I am looking for a very specific product and I’m open to where I buy it from or what brand it is, that is something that’s still tricky to find. So, discovery is an interesting area and as a lot of people are looking at it, we will see more innovation coming through in the short term.
Q: What is the biggest challenge for a relevancy-based search engine? Finding the right stores or understanding the user’s needs?
It’s got to be understanding the user’s needs, as there’s such a huge volume of content. The important thing is relevancy and how you can convey it in a search.
If I’m looking for a black dress, I should be able to describe it (maybe this is where semantic search could come into play more), name the price I am willing to spend and search for it in a friendly, productized way. It’s about finding the most relevant item to your personal taste, without having to sign up to every single thing using Facebook and having a platform decide what my personal taste is. What I post on Facebook isn’t necessarily going to tell you anything about the very specific style of dress that I’m looking for. The challenge is about refining relevancy for the user in the mire of all the products that exist online.
Q: How is online fashion shopping going to be like in the near future?
In general? Bigger and much more personal and shared experience. It seems almost silly to still talk about general growth in online retail, but the amount of money that is online when compared to the overall British brick-and-mortar retail sales is still very small. More people are getting comfortable with buying online but there are still barriers. So what we will see is an improvement in the buyer experience as a total, with things like good customer service and seamless returns.
The last couple of years some of the pure players have done such a good job in customer service that forces everybody else to step up and offer a really premium experience. People won’t wait more than 24 to 48 hours for a product. If they have to, you’re providing a bad service. Businesses will prioritize their service level and then they will focus on creating a more engaging experience, with relevant content coming to the fore.