My-Wardrobe secures $9 million Series A lead by Balderton to expand abroad

Next Story

Get A White iPhone 4 Right Now — If You Have Money, Steady Hands, And No Fear

E-commerce continues to provide a rich seam of businesses for European tech investors and this is represented today by a series A funding in an online retailer of ‘affordable’ designer fashion. My-wardrobe.com today announces a $9 million Series A investment round led by Balderton Capital, the first institutional investor in the company, supported by existing angel investors.

Dharmash Mistry, partner at Balderton Capital, will join the board joining existing members: Nick Wheeler, CEO of Charles Tyrwhitt; Carol Duncumb, former Intimas CEO; Jean-Marc Bouhelier, executive chairman of my-wardrobe.com; and founder and CEO Sarah Curran (pictured).

The site offers what it calls ‘accessible luxury’ womenswear and menswear ranges from over 180 of the world’s leading designer brands such as Mulberry, Polo Ralph Lauren, Paul Smith, and Joseph. In practice that means discounted items, but the difference is that my-wardrobe.com only sells current season collections.

The company plans to use the capital injection to add more premium brands, improve the product and drive into international markets. So far it says it’s attracting over 800,000 visitors to the site every month, up 110 per cent from last year, and has had some success with “click-to-buy” video content. The company has 85 employees in London and Nottingham.

Curran left school at 18, eventually becoming a a sub-editor for the Times Online, but she left to open a London fashion boutique, Powder. While living in France with her husband, she launched a more virtual business, my-wardrobe.com, in December 2005 and by late 2006 it was outperforming Powder in monthly sales.

The site has since become one of the UK’s fastest growing ecommerce businesses, claiming 100% revenue growth in recent years. It’s positioned at a mid-level pricepoint between Net-a-Porter.com on the high-end and Asos.com on the low-end.

  • http://maxniederhofer.com Max Niederhofer

    Interesting to see that Balderton is making such a big bet in ecommerce. They have a bit of a mixed track in pure ecommerce (Yoox, Figleaves).

    I think ecommerce acquisitions playing out will be a deciding factor of European venture capital success over the next ten years. Ecommerce is a much, much bigger % of capital deployed in Europe than it is in US. Lots of big deals getting done over stuff like Brands4Friends, KupiVIP, Spreadshirt, MyFab, various shoe retailers, GlassesDirect, Autoquake, MyDeco… If ecommerce plays fail to find large buyers or stay too small on thin margins to IPO, lots of folks will be in trouble.

    • azeem

      Yeah. We’re definitely overweight e-commerce relative to true tech plays, with super scalable business models to boot.

      And i question whether the exits are there. Figleaves wasn’t a great exit. Kelkoo ended up being written down. (and on the social apps side, Bebo didn’t work out so great).

      Perhaps it is a reflection on where the buyers might be? We do have relatively large retail groups that can do an acquisitions, and these companies may also be good footholds for non-European players seeking a stake in the Euro market.

      Or perhaps it is just that we are http://en.wikipedia.org/wiki/Nation_of_shopkeepers

      • http://maxniederhofer.com Max Niederhofer

        | i question whether the exits are there

        Yeah, that was my general gist, too. I’ve seen none of these large retail groups aggressively go after ecommerce. Otto, PPR, Arcadia… any of the other catalogue or dept store retailers. It took Rakuten to buy Priceminister. VentePrivee will be a US exit. NAP may have been an outlier because it’s so internationa. There just doesn’t seem to be a Euro-domestic M&A market for this stuff (yet?).

      • http://www.shutl.co.uk Tom Allason

        interesting to see what happens with ocado ipo. although not sure that an unprofitable 8 yr old is really very representative of these businesses…

      • http://www.etailinvestor.com Etailinvestor

        This is the most interesting discussion I have seen online for a long time.

        @IntellectGetOne – When you calculate the NPV of an investment, the expected growth is important. You don’t include the fact that E-commerce continues growing with +10% worldwide, even though a financial crisis. Ask yourself: Will Ecommerce decrees or increase in the nest 10 years? How does that effect the value of E-commerce investment

        Why would anybody invest in E-commerce? Because it is growing fast. Of cause you have to make a profit, but when Etailers keep a plowback ratio of 100% and making annual growth at +50%, then it is not a problem that they don’t cash in yet. When you grow with 50% a year, you are not a cash cow, but you could be the day that you stop reinvesting a 100%.

        I believe that E-commerce companies have the same issue as offline retailers. There is only space for few on the top. Nationwide there might only be space for 3-4 large players in each segment. You need to be the #1 online shop in your area. But if you get that position you will be so hard to challenge. Who challenge Zappos? Nobody.

        In the old days, people could start up E-commerce companies as a part time job and scale it to a huge company. Today competition is too hard. Nobody just start at new online shop and gets success. It can not be done as a part time hobby business any longer. Fact is the market entry barrier is getting hard and harder for every day. Now is the time to invest in those companies, and implement some business thinking.

        The big vision is, that if you can be market leader in you e-commerce segment today, then you will be in a very valuable possion. If you can have that position in 10 years from now, you will be holding the fattest Cash cow ever – you will be where all the supermarket chains where 20 years ago.

        If I believe e-commerce just have begun in EU, and that we will see lots of M&A in this area.

        Br, Anders

  • http://www.ojointernet.com/noticias/my-wardrobe-recibe-9m/ My-Wardrobe recibe 9M

    […] un sitio de e-commerce centrado en ropa de diseño, ha recibido una ronda de financiación Serie A de 9 millones de […]

  • IntellectGetOne

    I don’t see ecommerce sites (the actual selling sites) having sustainable margins or barriers to entry.

    Tough environment to invest in when the company has poor margins and virtually no barriers to entry.

    800,000 visitors with at best a 2% conversion is 16,000 sales — with an ASP for higher fashion goods at maybe $70 — you are looking at sales of $12-14million usd a year? Average margins, even on the higher end stuff (considering that competition needs to be priced based with no other serious barriers) is likely in the 3-5% range.

    It isn’t a bad business, but to invest $9 million at a typical 35% expected ROI? Must be something I’m missing here. I don’t see how it can pan out.

    The valuations for even the very best ecom sites I’ve seen have hovered around 1x gross sales.

    Scratching my head on these retail models. Some service providers, especially those in marketing (Google, Groupon, etc), have surely done very well with rich margins. But the underlying retailer? Not so much.

    • http://maxniederhofer.com Max Niederhofer

      +1 for this comment. Would be +2 if you posted under your real name.

      Don’t quite understand the “3-5% range” margin, though debatable what you mean by margin (I’m assuming you mean operating margin after marketing?).

      The big issue in ecommerce is: the offline retail business isn’t terribly profitable to begin with and people don’t pay really for convenience – they bargain hunt. It’s hard to justify big customer acquisition costs since return purchase rates are so low, so you can’t say oh the consumer costs us GBP40 on a GBP30 net revenue basket, but that’s ok since they’ll only need to come back 1.x times. With that mindset many of these funded ecommerce business scale unprofitably and that’s just painful to watch.

      I’m not saying that’s true in this particular case. Just what I’ve seen happening a few times.

      P.S. I hate the “accessible” positioning. I wonder if they’ve A/B tested that copy.

  • IntellectGetOne

    Zappos — probably the best ecom recent comparable — had operating margins of only 2.5%. Returns on high-end are probably comparable to returns for shoes (Zappos made it very easy to do returns).

    http://cc.bingj.com/cache.aspx?q=zappos+profit+margin&d=4796602402146033&mkt=en-US&setlang=en-US&w=8c62c36c,483d40b1

    PS: I don’t post on my real name because I once posted and someone tracked me down to my business. They then contacted our customers (from our web-site) and made — oh let’s say — hugely disparaging remarks about me and the company I work for. It didn’t lead to lasting damage, but why risk that again? Once burned, twice shy.

  • http://vnow.wordpress.com/2010/07/05/ecommerce-blended-with-fashion/ eCommerce blended with fashion « V Now

    […] eCommerce blended with fashion Published July 5, 2010 daily , eCommerce , technology Leave a Comment My-wardrobe […]

  • http://www.adventventures.com Frederic Court

    @azeem and @max, e-commerce is only going one way for the next 5 years, up! I can bet that each each “online Christmas” will be bigger and clearly it won’t be the same in the high street. Fashion ecommerce is a £4bn business in the UK alone (source Mintel) and penetration of ecommerce vs. offline retail is way below many other verticals (travel, books, etc.). On this basis ecommerce, and fashion ecommerce in particular, is an attractive market to get exposure to as long as we can invest in businesses that eventually stand on their own legs with growing profits (needed to IPO or refinance) and build sufficient differentiation to trigger M&A interest. That’s teh best that Balderton is making with my-wardrobe, and my guess is that with the data they have from Yoox and Figleaves they are well placed to assess what works and what doesnt. The issue for VCs with these businesses (ie etailers) has been capital intensity, which becomes even more stringent as you grow. Just check out YOOX balance sheet, they had over 50m worth of stock at the time of IPO. Even the flash-sales sites, who sell mainly fashion and homewear stuff, are finding that they need capital to secure the stock. But so far this hasn’t stopped YOOX from becoming public, ASOS from growing fast and consistently year on year, Vente-Privee to become a major success story, and Net-a-Porter to be acquired for a big price and multiple (to name a few). I expect more companies to follow the route these companies have traced and hope that we can see the European leaders start to act as local consolidators so that we do not have to rely on the Americans (or the Asians such as Rakuten) to acquire to provide liquidity to investors. Watch this space, I expect more action and many more success-stories.

    • azeem

      It’s going up, definitely.

      And I have but one thing to say:
      Winchester Disk Drives. http://bit.ly/cgT8XB

      And good point on Balderton’s experience from Figleaves and Yoox–it would be great if they were capitalising on that ;)

    • http://www.SpeedSell.com George Bevis

      A few other points in defence of retail investments vs digital-only:
      1) The barriers-to-entry argument is nonsense (sorry Max). If you build a unique retail business you usually have to build a shed-load of backend platform (both IT and opps) which are seriously complicated and invisible to competitors (so difficult to clone). By the point anyone has noticed you getting big (which does take longer to get to, admittedly), you’re miles ahead of any potential competitor. This is the exact opposite of webapps, where two Ycombinator guys can clone your product in two months.
      2) Retail investments can be really safe. Once an online retailer’s market is proven, it rarely disappears. My own business will be offering fundamentally the same service in 20 years that it is offering now. Many webapps won’t be able to have the same service in 2 years.
      3) Retail businesses are typically mass-market. Digital media products may scale internationally more easily, but they are subject to the whim of fickle tech-savvy customers who change their tastes very quickly. See FriendFeed.
      4) Finally – let’s be honest here – many digital media ideas are just dope-smoking (“visionary”) madness and the fact that they’re cheap to scale is irrelevant. The proportion of retail entrepreneurs I meet who are pushing mad ideas if far lower, and every retail startup seems to have monetisation built into the model right from the start. In Europe, where startups rarely get so massive that monetisation is innevitable (Facebook/ Youtube/Twitter etc), having it built-in from the start is a bloody good idea.

      • http://maxniederhofer.com Max Niederhofer

        I don’t believe the barriers to entry argument was mine. I also wasn’t defending web apps against ecommerce.

        To summarize the points I was making:

        – European VC is overweight ecommerce vs US
        – I don’t see massive M&A interest domestically
        – Ecommerce tends to yield low margin businesses
        – Scaling tends to be capital inefficient

        I stand by all those. While I was not defending web apps against ecommerce, I would definitely like to see more visionary, “dope-smoking” European startups, as you put it.

      • IntellectGetOne

        The barriers to entry argument was mine. This is a double-edged sword. It is true that with a 2.5% operating margin, even the slightest error in your operation could wipe you out. So, in the case that this relatively small company can master all the aspects of an operation, finance, inventory management, fashion buying, etc, it is very possible they will have a distinct advantage. But you must also concede that they have a much higher probability of getting it wrong and wiping out their business. Moreover, like Groupon — once someone “gets” the model right, there’s 1,000 people that will reverse engineer it.

        Your point two makes no sense to me. You wrote: Once an online retailer’s market is proven, it rarely disappears.

        Are you kidding? Have you seen the dismal stats on eBay churn? On the number of businesses that are shuttered within three years? I have no clue what planet you are living on, but on this planet, your statement is horribly false.

        Look – it isn’t a bad business model for a small company to sit on top of. It is, however, NOT a business for VC type returns.

      • http://www.SpeedSell.com George Bevis

        Apologies guys, I did indeed mis-attribute the barriers argument. Re eBay-churn – I wouldn’t disagree that undifferentiated eBay sellers aren’t investable. Typically retailers deliver investable margins (higher than the 2.5% mentioned) and customer numbers when they have differentiated themselves via at least one of:
        – a (reasonably) unique and hard-to-replicate service delivered by deep infrastructure
        – low customer acquisition costs because of cheap distribution and/or high customer engagement (via brand or exceptional customer service)
        – an unusually cheap supply chain permitting attractive prices for consumers.

        When retailers have these things, they can build a sustainable, investable, mass-market business. But it isn’t easy to get there, of course.

        Finally, I wouldn’t consider Groupon to be a retail model for the purposes of this discussion: it seems more like an advertising business to me. And, like everyone, I’m still jealous of how much money they’re making :)

  • Ahmed Al Bassam

    E-commerce is growing rapidly not only in Europe but also in the rest of the world. Talking specifically about My-wardrobe.com is very interesting. As it was recorded that visitors of this business on the web was increased by 110% compared with the previous year. This indicates that people have more knowledge about this kind of business which is good.

  • http://www.petticoatlane.com.au Emma Read

    Wow I found the article and all your discussions really interesting. I have a web boutique selling buying new, second hand and vintage designer fashion. I first started the website due to lack of funds to open a premises. I have now since opened a boutique because I was seriously struggling through the web, I guess it was a survival thing and something my customers were asking for. Even though everyone I knew shops online including myself, my marketing through facebook, print advertising, launch parties, fashion shows, swap parties still did nothing for my sales online. I’m on a tiny tiny scale and nowhere near your expertise and understanding of e-commerce and big business but I have been learning a few things as I go along.

    First, I buy online fashion regularly-it doesn’t bother me about price nor where it is…if I love it- I buy it, so it’s a very important tool in my life. In saying that I’m a size 8, slim and fit into anything. So online shopping isn’t risky to me. Most of my customers are not that size. Average size in Australia 12 to 14. Designer label sizing charts can vary considerably too! It’s crazy looking at the differences….size 8 in one could very well be a 12 in another? Not good for online shopping.

    I found through Google analytics I have great traffic and people are interested, it’s just that women don’t want to risk spending over $50 on something that might not fit even if I do have detailed measurements or their saving 60% on a designer item new with tags still attached. With facing all these barriers I transformed a room in my house into a shop for ladies to try and buy. I have only been open 3 days and I’ve sold more in the last few days then I have in a month on my site. In saying all that I think it’s important to have a web based boutique but also have a tangible shop front working in unison. In my shop I don’t have EFTPOS, I utilise my website as a payment system (credit card and pay pal) but the customer has the option for a discount if they pay cash. Saving me a significant outlay on a pay point operating system and also adds an interactive dimension to other wise standard shop. Customer sits down in the store, signs into the site, becomes member and then pays- with me helping them along the way.

    I have found ecommerce to be a bit of a minefield, a little misleading and a lot of work with very little reward but I think it can work if you have the ability to marry your website with a actual store, somewhere customers can trust, touch feel the products for themselves and talk face to face with someone who cares. Maybe once I build that trust through my boutique they will feel more relaxed buying from my site.

    Petticoat Lane ‘accessible affordable designer fashion’ I like that sound of that!

    • http://maxniederhofer.com Max Niederhofer

      Thanks for grounding this discussion in reality. Love how you turned your house into a showroom/fitting room!

      Returns (no sizing/fit risk) are a big part of online apparel businesses. They also badly eat into margins, with a typical fashion retailers seeing something like 20-30% of revenue being returned every month.

      Interestingly, vintage works super-well at some places like Netaporter.

  • http://ecommerceparis.com/2010/blog/revue-de-presse-e-commerce-du-6-juillet/ Revue de presse e-commerce du 6 juillet « Blog E-Commerce Paris 2010

    […] : Tech Crunch (5 juillet […]

  • Patricia Klein

    My Wardrobe offers 10 – 12% if you refer sales to it and offering high commission has brought acres of SEO referral sites.

    http://www.affiliatewindow.com/merchant_directory.php?action=showmerch&mid=1249

    Some fashion searches, the whole page of Google results every single one is to My Wardrobe through affiliates earning 10% – Shop Style, Telegraph Shop, Polyvore, Twenga, OSOYou, Priceinspector and hundreds more fashion affiliates ALL SELLING THE SAME THING FROM THE SAME SHOP. Why? What’s the point?

    The public isn’t stupid you know. Since venture capitalists took over the internet went downhill.

    Everybody using computes to flog the same stuff for less and less return is the opposite of what creative, individual people who spend on fashion want.

  • http://thisweekin.com/thisweekin-venture-capital/this-week-in-venture-capital-13-with-michael-montgomery/ This Week in Venture Capital #13 with Michael Montgomery

    […] TechCrunch […]

  • Jill

    I work in the eCommerce sector. Given that the operating profit margin in the online fashion business is between 2-5% I wonder why an aggresive ROI VC like Balderton will invest in My-Wardrobe. Maybe Balderton has changes its investment philosophy.

  • http://www.cloudave.com/link/this-week-in-vc-michael-montgomery-president-montgomery-co This Week in VC: Michael Montgomery (President, Montgomery & Co.) | CloudAve

    […] -Board includes Nick Wheeler, CEO of Charles Tyrwhitt.  Current round: $9mm Series-A led by Balderton Capital.  TechCrunch […]

  • http://fashionablymarketing.me/2010/07/mywardrobe-investment-expands-ecommerce/ FashionablyMarketing.Me » My-Wardrobe Receives $9 Million, Plans Expansion

    […] luxury brands like Acne, BCBGMAZAZRIA, Kors by Michael Kors, Polo Ralph Lauren and more — announced last week that it won $9 million worth of investments, led by Balderton […]

  • alicevito

    Christian Louboutin Shoes are my favorite designer brand.There are over 1000 style cheap christian louboutin shoes
    in elouboutinshoes.com. There are so many women wear christian
    louboutin pumps today.Go on the street, you will be surprised that christian louboutin pumps are so popular now. Christian louboutin boots are special collection at hot sale.Especial the over knee christian louboutin boots are so popular in the winter holiday. In hot Summer Holidays, one pair of christian louboutin sandals not only bring u the cool, but also it make u much more sexy and hot than ever.

  • alicevito

    If you are planning for your coming wedding,the herve leger dress may be a good idea.More and more  brides pick the herve leger dress for their wedding.we do have prepare a speical herve leger wedding dress collection for promotion. cheap herve leger dresses only available from some online shop when they put some hot sale herve leger dresses for promotion.once they make sure one style herve leger dress is  popular among women, they will end the promotion and the price recove to  regular price. Do you thing herve leger sale on ebay is very cheap? In fact, most lady will not buy from ebay but  only check for styles.especial for herve leger dress, they would like to  go to local herve leger shop to try it on. herve leger strapless dress are sexy.it’s special for strapless.with a pair of christian louboutin shoes,you must be the most sexy people than ever. Good news for herve leger fans.herve leger dress discount promotion is available from herve leger onlie boutique. Herve Leger Deep Red Bandage Dress is ok for party in the night.The deep red color make u more hot and help u stand out in the crowed.
    Christian Louboutin Shoes are my favorite designer brand.There are over 1000 style cheap christian louboutin shoes in elouboutinshoes.com. There are so many women wear christian louboutin pumps today.Go on the street, you will be surprised that christian louboutin pumps are so popular now. Christian louboutin boots are special collection at hot sale.Especial the over knee christian louboutin boots are so popular in the winter holiday. In hot Summer Holidays, one pair of christian louboutin sandals not only bring u the cool, but also it make u much more sexy and hot than ever.
    I am thinking of buying a pair of chrisitan louboutin shoes for my  girlfriends.After searching around google,i got a shot. Found a good  place to buy cheap christian louboutin shoes. Do u know that some christian louboutin shoes are named by hollywood star’s name? christian louboutin shoes has been so hot in the fashion designer world, so more and more hollywood stars become its fans. 
    Beautiful designer wedding dresses and bridal gowns for your big day. Buy cheap wedding dress, cheap wedding dresses sale, wholesale bridesmaid dresses, designer wedding dresses, bridal gowns, wedding gowns, evening dresses from our online store, free shipping. cheap wedding dress on sale, custom wedding dresses, wedding gowns, bridesmaid dress,beach wedding dresses and vintage wedding dresses wholesale by BridalDress-us.com. All plus size wedding dresses are well made with high quality.

  • http://www.cheapbenefitcosmetics.co.uk benefit makeup uk

    Thank article is benefit makeup ukquite good
     

  • cheap jordans

    Nike Air Jordan 1 is the most retroed sneaker ever in the world,
    Jordans shoes Online and it has a special link with Michael Jordan’s career and personality.
    In 1984, a lean shooting lookout from the Dean Smith-led UNC Tar Heels was special third general by the Jordans for sale Chicago Bulls in the NBA Draft. The daring red and jet black was in unity with his surly Air Jordans 1 Retro
    bearing and mild arrogance, but it was a beguiling, boyish smirk that required the league’s collective protect down,
    departure it vulnerable to damage from any vantage intention. It was too recent by the time the league figured out who Michael Jordan genuinely was, and it rewarded greatly; six
    Air Jordans 18 Retro
    NBA Championships, ten stretch scoring titles in stuffed seasons, five MVP trophies, and shelves satiated of other trophies were conceded to one man who bent an unreasonable ordinary for NBA players both during his time and for the existence to come.With him throughout the whole journey was Nike; after an assembly  Authentic Air Jordan
    with organizer Phil Knight, Jordan united in and the sports-apparel brand designed a signature shoe that twisted league-broad disapproval from both Jordan’s on-patio peers and the NBA brass up top. “”Wear it in a brave,
     and you’ll pay””, said the league, and pay they did. Five-thousand a fixture. “”Who do you Jordans 19 Retro

  • cheap jordans

    Nike Air Jordan 1 is the most retroed sneaker ever in the world,
    Jordans shoes Online and it has a special link with Michael Jordan’s career and personality.
    In 1984, a lean shooting lookout from the Dean Smith-led UNC Tar Heels was special third general by the Jordans for sale Chicago Bulls in the NBA Draft. The daring red and jet black was in unity with his surly Air Jordans 1 Retro
    bearing and mild arrogance, but it was a beguiling, boyish smirk that required the league’s collective protect down,
    departure it vulnerable to damage from any vantage intention. It was too recent by the time the league figured out who Michael Jordan genuinely was, and it rewarded greatly; six
    Air Jordans 18 Retro
    NBA Championships, ten stretch scoring titles in stuffed seasons, five MVP trophies, and shelves satiated of other trophies were conceded to one man who bent an unreasonable ordinary for NBA players both during his time and for the existence to come.With him throughout the whole journey was Nike; after an assembly  Authentic Air Jordan
    with organizer Phil Knight, Jordan united in and the sports-apparel brand designed a signature shoe that twisted league-broad disapproval from both Jordan’s on-patio peers and the NBA brass up top. “”Wear it in a brave,
     and you’ll pay””, said the league, and pay they did. Five-thousand a fixture. “”Who do you Jordans 19 Retro

  • http://factoidz.com/ear-infection-in-babies-home-remedies-for-baby-ear-infection/ Baby ear infection
  • Anonymous

    I have read your post thoroughly and got mind blowing information…. Please send me mail if your are going to improve something advance..
    Thanks..
    Bridesmaid Gifts

blog comments powered by Disqus