Category: e-commerce

Top 10 E-Commerce Startups in L.A.: #9 Shop Hers

Last week I started digging deeper into My Top 10 List of e-commerce startups in LA. I am going to attempt to pound through the rest of the list during the next week, so tune in.

Today I’ll take a closer look at Shop Hers, the #9 startup on my list. Shop Hers is a marketplace where women can buy and sell premium brand pre-owned clothing and accessories. Shop Hers hasn’t officially launched yet, so some of their product details are still under wraps. In essence, imagine a social-commerce peer-to-peer marketplace where women can view and potentially shop each other’s closets. This level of engagement will create an amount of trust that should add significant value to the peer-to-peer ecosystem. Check out their site when it launches, it will be very interesting from a social-commerce standpoint.

There are several startups working to innovate in the peer-to-peer market, especially around fashion. The one that immediately comes to mind is in NYC. My wife, Natalie, helped out at TheCools earlier this summer and she remains involved remotely as needed, so TheCools is inherently top of mind.

Shop Hers’ team consists of the previous CTO from Shoedazzle, Thanh Khuu, a former Internet Design Manager from Nordstrom, Jenna Stahl, and the previous Head of the New Faces Division for Vision Models, Jaclyn Shanfeld.

The company has received an undisclosed angel amount from Brian Lee (founder of LegalZoom and Shoedazzle), Paige Craig, Mike Hirshland, Shana Fisher, and Ryan Steelberg.

Key Points:

  • Location: Santa Monica, CA
  • Founded: February 2012
  • Launched: Pre-Launch
  • Initial Venture Investment: Undisclosed Angel Round
  • Investors: Brian Lee, Paige Craig, Others

Totsy Completes Series B: Raises $18.5Mil

I am extremely late on this news story: announced on July 17, that it has completed its Series B, closing on an additional $18.5Mil. This brings their total funding to ~$23.5Mil. Congratulations to the team at Totsy!

I had a fantastic time interning at Totsy earlier this summer (see here). Totsy has a great team that is working on some fantastic initiatives. Of course, I am a little biased as the project I worked on will be launching soon.

Look for Totsy to make additional waves as the best site for moms to discover great deals and new products, from children’s clothing and toys to maternity clothes and baby accessories.

In the meantime…checkout this WSJ chart about the flash sales space…note Totsy’s growth compared to the competition (second to only Fab).


Top 10 E-Commerce Startups in L.A.: #10 Little Black Bag

Over the next couple weeks I’ll be taking a closer look at the companies in My Top 10 List of e-commerce startups in Los Angeles. Today I’ll start with Little Black Bag, the company at number 10 on my list.

First, it’s worth mentioning that Little Black Bag has the potential to quickly move up this list. Little Black Bag is still very early in its history; the company was launched on January 31, 2012.

LBB’s business model is a hybrid of the numerous subscription “box” startups (e.g. Birchbox, BarkBox, RocksBox, GlossyBox, Wittlebee, et al). The main difference with LBB is that customers can view the items they are going to receive and even trade them with other customers before they are shipped. This generates much more social engagement then other subscription services. In addition customers can pay a $10 premium and try out LBB without signing up for a subscription

To quote LBB’s Press Kit:

“On Little Black Bag, shoppers take an interactive style quiz & are offered a personalized mystery bag filled with the best in women’s fashion & beauty products. Shoppers then have a week to search the Little Black Bag marketplace & trade with others to assemble their perfect bag of items. Once trading is over, the products in the bag are shipped out. Trading is fun & exciting, as shoppers discover new brands & see what products are trending. In addition, select users can win “Delights”—hot seasonal products worth 4-5 times the price of their bag.”

Little Black Bag was co-founded by Dan Murillo, Sasha Siddhartha, and David Weissman. David Weissman was recently an executive at GSI Commerce (sold to EBay for $2.4Bil). The co-founders clearly have a big vision for Little Black Bag and anticipate using it as an entry point to build a larger social commerce company. Co-Founder Dan Murillo was quoted as saying “When I came across this idea, I thought it would be the perfect starting point from which to build a truly interactive community around eCommerce.”

Little Black Bag has raised $2.75Mil from GRP Partners, DCM, David Tisch, and others.

Key Points:

  • Location: Santa Monica, CA
  • Founded: Fall 2011
  • Launched: January 2012
  • Initial Venture Investment: February 2012
  • Amount Raised: $2.75Mil (Series A)
  • Investors: GRP Partners, DCM, Chamath Palihapitiya, Tim Kendall and David Tisch

My Top 10 List: E-Commerce Startups in L.A.

Below is my list of the Top 10 e-commerce startups based in Los Angeles. Over the next couple of weeks I will provide a closer look at each company.

  1. Beachmint – BeachMint is a social commerce company specializing in celebrity-curated direct-to-consumer products.
  2. JustFab – JustFab designs and sells its own brand of shoes, jewelry and handbags, and charges subscribers a flat $39.95 for each item.
  3. Nasty Gal - Nasty Gal is a global online destination for both new and vintage clothing, shoes, and accessories.
  4. The Honest Company - The Honest Company is a consumer products company that delivers non-toxic, eco-friendly diapers and biodegradable wipes, organic bath/skin care and green cleaning products. Co-Founded by Jessica Alba.
  5. Shoedazzle – ShoeDazzle offers personalized shoe, handbag and accessory recommendations chosen by a team of A-list stylists, including co-founder Kim Kardashian.
  6. Daily Look – DailyLook sells one new fashion look every day for under $100.
  7. Wittlebee – Wittlebee is a kids clothing club that creates custom packages for parents based on their child’s age, color preferences, geographic location and more.
  8. Dollar Shave Club – The Dollar Shave Club is a service that delivers fresh razors to your doorstep, monthly, for a fraction of the cost of the grocery-store equivalent.
  9. Shop-Hers – Shop-Hers is a socially-inspired, user-driven, e-commerce, marketplace where women sell and buy premium label, pre-owned clothing and accessories
  10. Little Black Bag – Social shopping and trading for designer handbags, jewelry, accessories, beauty and home decor

Eleventh Man Award: StyleHaul – StyleHaul is the largest original video content network on YouTube for fashion and beauty. Not quite e-commerce but relevant and interesting.

Twelth Man Award: Omaze – Omaze is not a traditional e-commerce/retail company, but it’s worth taking a look at. Omaze, in its simplest form, is an online raffle company. Omaze raises money and awareness for charitable initiatives by offering everyone the opportunity to win once in a lifetime experiences that can’t be bought.

More + $105Mil: No Longer a Flash-Sales Site

The Wall Street Journal reports that closed their Series C, raising an additional $105Mil at a $600Mil valuation. This compares to the Series B of $40Mil they raised in December of 2011 at a reported $200Mil valuation…3x isn’t bad for seven months. Not to mention that it has barely been a year since the company pivoted from being a gay social network to a flash-sales site.

Writing on the companies blog, Jason Goldberg mentions that they intend to use the money to expand internationally, build more fulfillment centers, and most importantly continue to build their platform from the ground up. The last two are most important to me: building out their fulfillment centers and logistics are a clear sign that they have matured past flash-sales, and they must continue to innovate their platform, as it has served as a constant and evolving  example of what e-commerce should be.

Fab’s recent round was led by Atomico (Skype founder, Niklas Zennström’s fund). Also participating in the round were Fab’s previous investors: Andreessen Horowitz, Menlo Ventures, First Round Capital, Baroda Ventures,  ru-Net Technology Partners, Pinnacle Ventures, Docomo Capital, Mayfield Fund, and Troy Carter.

This latest round is clearly a bet on Fab becoming a multi-billion dollar business and much more than a flash-sales site. Honestly, I have a hard time disagreeing with this conclusion. Their platform includes numerous revolutionary social shopping features that are consistently ahead of their time. Most recently, Gilt copied Fab’s “recent purchases feed” (Internet Retailer Article: here).

Interestingly, Fab was one of the last companies to the flash-sales space, and they are on pace to be the first one to fully mature past flash-sales. While writing this article, I conducted a random survey of 20 items on I found that the average advertised markdown was 25%, which is clearly not flash sales territory. That said, there are still some items marked down > 70%, especially within the furniture category, but there are also items that are not marked down at all.

Congratulations to the Fab team, and here’s to Fab becoming a multi-billion dollar company. It’s a BIG market.

Bonus Coverage:
To give you an example of Fab’s innovation and customer focus: I recently received the below email encouraging me to manage my email subscriptions and to unsubscribe from those I didn’t want. Most e-commerce companies are constantly watching their opt-out rate to ensure they are maintaining their customer list. I was surprised when I saw this, and of course didn’t choose to opt-out.


The Affluent Male

I recently listened to the iProspect webcasst: “The Affluent Male: What His Online Behavior can Teach Luxury Brand Marketers”. I had previously read through their research and reported on it here, but I thought it would be worth sharing some more of their statistics.

The most interesting takeaways were that affluent men: visit Amazon more than any other site, are more influenced by sponsored links than banner ads, and prefer video and search ads to other forms.

Don’t forget there are 19Mil affluent men shopping online and they spend an average >$4K a year; that is an estimated market of $76Bil. Who says men don’t shop online?

Check out the below slides, and review the full deck here.


The Birth of Retail As A Service: A Trunk Club Review

Numerous e-commerce startups have recently launched utilizing a business model derived from the offline personal shopping experience provided by high-end retailers. These startups are using e-commerce tools to build an entire retail business around personal shopping. Under this model, consumers no longer have to shop; curated outfits are delivered to customers based on their style preferences, leaving customers free to spend their time doing something other than hunting for things to buy (i.e. shopping). In essence, these companies are building service businesses based on the traditional retail model, which is why I call them Retail As A Service (RAAS) companies.  Trunk Club is the clear front runner in the men’s RAAS category. Other companies utilizing this business model include: UnScruffBombfell, GentlemanSquare, and CakeStyle (for women). Below is a brief summary of Trunk Club’s history and a review of their current service offering.

Trunk Club was founded in 2009 as a personal shopping service for men who don’t have the time or desire to shop. Originally, the company used a remote network of personal stylist to make product recommendations via Skype calls. These remote stylist were then paid a commission based on the product sales they generated. Purchased products were then drop shipped from the manufactures or distributors to the customers.

In 2011, Trunk Club hired Brian Spaly, one of the co-founders of Bonobos, as their CEO. Spaly quickly moved to make changes to the company’s business model. His overarching change was to adopt a retail business model rather than a product recommendation model. The retail business model that he choose is exactly what I am calling Retail As A Service. The change in business model required numerous changes to Trunk Club’s key activities. These changes included: purchasing and storing inventory rather than having it drop shipped, locating all stylist (personal shoppers) at the company’s headquarters rather than remotely throughout the U.S., having stylist work with customers through email and phone calls rather than Skype, and – most importantly – sending customers curated boxes (“trunks”) of ~10 clothing items rather than making individual online product recommendations. Learn more: TechCrunch, TechCrunch, RedEye, and Forbes.

I recently sampled Trunk Club’s current service (photos below). Overall, it was a very enjoyable experience. The online style survey, which is used to make recommendations, was engaging and quick. My personal stylist (shopper) called me soon after I completed the survey to discuss my style preferences. She then completed my trunk of ten items and had it shipped to me via second day air. They did not charge for shipping in either direction, this is consistent across most RAAS companies, and my trunk of 10 items arrived within 2 days.

The average MSRP of the items in the trunk was $160.40 (range: $36-$348). Most notably, all items were sold at MSRP. This is especially important as consumers (incl. me) have gotten used to discounts over the past 3 years. Based on Trunk Club’s business model, they are clearly banking on customers purchasing enough merchandise per trunk to recover the cost of shipping, fulfillment (it is a NICE box), and the inventory holding cost while customers make decisions. To give you some perspective, each trunk contains roughly $1,000-$1,500 in “value”, and if you assume that shipping, fulfillment, insurance, and other costs amount to roughly $50 per box, then based on an assumed gross margin of 40% (e.g. Nordstrom’s GM is ~40%), the company’s contribution margin breaks even if the average customer keeps one average priced item. It should also be noted that if the average customer keeps 2.5 average priced items then the contribution margin from each box is roughly $110 (GM*Q-S&H = $64*2.5-50). Please note, these numbers are completely speculation.

As noted above, this model creates a substantially high LTV, especially if the average customer keeps 1-3 items, and remains comfortable paying MSRP. I would add that this model is much more scalable than the traditional retail shopping model. As one example, a RAAS company doesn’t have to maintain a broad selection that can be shopped.

My biggest concern for Trunk Club, and the RAAS business model, is that men’s shopping habits are changing due to e-commerce tools. Affluent males (Trunk Club’s target market) are using the efficiencies of e-commerce to shop smarter and more often. In fact this very trend is at the heart of this blog’s focus (see post).

In order to fight this trend, Trunk Club should provide an online price guarantee. I understand the need for the company to keep its margin’s high and to differentiate based on service not price. That said, the one item I liked the most in my trunk was a blazer from Bonobos, and when I price matched it online it was $90 cheaper on I quickly chose to buy it from Bonobos instead. To be fair, I didn’t ask them to match the price, so there is a chance the may have. Regardless, it should be something that is advertised in the box, because at the minimum it reinforces that they aren’t gouging you from a pricing standpoint.



What’s in a Name: Why the Name Gentleman Standing?

Believe it or not, the name Gentleman Standing didn’t come from a random name generator or from a tireless search for a URL that wasn’t already taken (the latter is only partly true). The name Gentleman Standing was chosen to indicate a focus on e-commerce and men’s fashion, especially on the growing trend of men shopping for fashion online.

The ability to shop efficiently from the convenience of a computer or mobile device is attracting more and more men to rediscover fashion and to spend more time shopping. Robert Murray, Global Chief Executive Officer of iProspect, recently stated that “The old adage that men hate to shop is being upended by the digital experience. Not only are affluent men shopping online more, but this demographic is doing extensive research, shopping and then purchasing online…”

iProspect recently released a report that there are 19Mil affluent (>$100K HHI) men on the internet, and 98% of them shop online, while 27% make online purchases on a weekly basis and 13% spend more than $30K online on an annual basis. Over half of these men spend at least $4K online per year. There are more fascinating statistics in the iProspect report than I can list in this post, so check out the full report here.

Also, spending on luxury goods by men is outpacing spending by women. Bain & Co reports that spending by men on luxury goods is growing at 14%, while spending by women is growing at 8%. Jean-Marc Bellaiche, a consultant at Boston Consulting Group, stated that “Menswear…remains very underdeveloped compared to the woman’s market, so there is a lot of catching up to do.”

These trends are the core focus of this blog, but it is also an expression of my general interests and life experiences. The name Gentleman Standing wasn’t completely scientific, but hopefully it represents the content of this blog.


Internet Week NY: Recap

This past week I had the privilege of attending the Internet Week NY conference. I want to first thank the Internet Week NY organizers for making a student pass available. If only TechCrunch and Business Insider would offer a discount to their conferences as well (wishful thinking).

Internet Week NY is more of a crowd-sourced festival than an actual conference. Founded in 2008 in conjunction with The NYC Mayor’s Office of Media and Entertainment the week long event includes speeches and classroom sessions at IWNY headquarters in SOHO, and numerous other networking and educational events throughout the city. The conference kicked off with a speech on big data from Billy Bean, General Manager of the Oakland A’s. It was fascinating to hear the story of “Moneyball” first hand.

The other highlight was hearing Mitchell Baker, co-founder of Mozilla, speak about the future of Mozilla and Firefox. She seemed to have a clear vision of how Mozilla can become a larger player in the mobile space. The strategy includes using HTML 5 apps to let Mozilla become a platform for future devices. This shouldn’t be a surprising strategy at this stage, but it was intriguing to hear her discuss the future of the platform.

I was also able to attend a few e-commerce specific events: 1.) Recreating Retail: Bringing the In-Store Experience Online, 2.) Etsy: Transforming Search in the Digital Marketplace, and 3.) The Power of Content: How Women Connect, Catch Up and Share Online (relevant to my current internship at The panels unfortunately confirmed my general dislike for panels. I believe only one comment during the Recreating Retail panel was actually relevant to the topic. The majority of the discussions were dominated by one or two people, and in both cases it was the people who added the least value. I continue to dislike panel discussions.

Overall it was a  great 4 day event and it was good to mix it up with the NYC startup scene during the short time I will be in the city. Now on to TechCrunch Disrupt.


Vente-Privée: Still Losing the Popularity Contest in the U.S.

Founded in France by Jacques-Antoine Granjon in 2001, Vente-Privée originated the flash sales model in Europe long before it was popular in the United States.  Mr. Granjon’s company recently entered the U.S. market in 2011; long after other competitors had grabbed major footholds.

Flash sales were first introduced to the US market in 2007 during the financial downturn. Ideeli was first on the scene launching in the spring of 2007, and was then quickly followed by RueLaLa, Hautelook, and Gilt. These flash sales sites were originally focused on high-fashion items for men and women, but they have now branched out to other categories, including wine, travel, kids clothes, and home furnishings. Numerous other flash sales sites have also launched that are singularly focused on one category (e.g. One Kings Lane, Lot18, Totsy, etc.). As I mentioned in a previous post, Business Insider estimates that flash sales in the U.S. will grow from a $1.5Bil market in 2011 to a $6Bil market by 2015. Obviously, Vente-Privée would have been foolish to sit on the sidelines in Europe during the rapid expansion of the U.S. market.

When entering the U.S. market in 2011, Vente-Privée partnered with American Express, and to Mr. Granjon’s credit, he has admitted that it will take time for Vente-Privée to build up its presence in the United States. Prior to the launch, Mr. Granjon was quoted by Business Insider as saying “This is the US. There’s tons of competition, there’s an entrepreneur everywhere, there’s always someone who can do what you do better and cheaper. We have to be very humble. But our goal isn’t to flip this in two years. Our goal is to build something big over the long term.” Granjon was also quoted by as saying “…I want to continue growing…but it is not the main purpose. For me the main purpose is quality of service and having a good offering.”

Although Granjon isn’t focused solely on growth, I can’t imagine he expected the company to grow this slow in the States. As the below chart shows, Vente-Privée is losing the popularity contest by a long shot.

The above chart measures popularity based on unique visitors. This metric doesn’t say anything about the company’s conversion rate or current membership, but as the chart shows, Vente-Privée is only attracting 22k unique visitors a month. This pales in comparison to its six leading direct competitors, who all attracted over 500k UVs. Obviously, using unique visitors as a metric has its flaws, but it is interesting to note how few visitors Vente-Privée is getting on a monthly basis. Ultimately, it is impossible to convert visitors that don’t come to your site.

*UV data from