One of the words you become familiar with very quickly when you enter the start-up community is ‘scale’. It’s the term used to describe the ability of a company to reach a vast number of consumers or users very quickly and is often the benchmark by which we measure the initial success of a start-up. For start-ups with venture capital-backing in particular, scale is the means by which you establish the leverage you need to turn your idea into revenue, whether that’s by advertising if you’re Facebook, subscriptions if you’re Spotify and so on.
Yet there’s more than one way for a start-up to reach scale, and the one I want to talk about today is brand partnerships. These are incredibly important if, like us, you’re entering a mature market with lots of established brands who already have excellent relationships with their customer bases. It’s especially the case when your business model depends not so much on disrupting a market as solving a problem that limits its efficiency. In our case, that’s online fashion retailing.
As we’ve explored in previous columns, Donna and I created Dressipi in order to solve a problem common to all women: finding the right thing to wear at the right time. We didn’t set out to change the fashion industry, but rather create a recommendation service that made locating and buying clothes from your favourite brand more efficient and personalised. To achieve this, we needed scale in the form of members who had completed our ‘fashion fingerprint’ and, to get them, we had to make a choice. We could either acquire them organically, which we knew would be a long and expensive process, or we could broker partnerships with household name retailers that would give us access to the millions of women who used their websites every day.
Happily, Dressipi had one thing from which we knew retailers would benefit: our recommendation service. Our technology’s ability to crunch whole inventories of clothes and compare them against the fashion fingerprint of individual shoppers to recommend suitable clothes for them offered retailers a powerful new tool for their websites. Instead of making shoppers scroll through pages and pages of garments looking for the right one for them, they could narrow down the selection to those that they could be sure would fit and flatter the wearer.
Our response was to develop a version of Dressipi’s technology that could be seamlessly plugged into retailer websites, which is now on trial or in use on some of the UK’s biggest fashion retail websites. These are partnerships that have big benefits for the retailer and for us. The retailer gets vastly improved recommendations on-site and can personalise the way it communicates with customers via regular email bulletins, leading to higher conversion rates, bigger basket sizes and lower return rates on online transactions. It also gets access to a wealth of data insight about its customer base (at an aggregate level). In return, Dressipi’s fashion fingerprint can be exposed to a significantly larger and wider range of consumers than we could reach organically.
To give you an idea of the power of brand partnerships, at the start of 2013 we had the fashion fingerprints of around 250,000 women. Thanks to high profile partnerships with retailers such as eBay and M&S, we will start 2014 with close to a million.