The fashion world has taken to the internet like fish to water — with thousands of brands and retailers complemented by the rise of fashion bloggers, social media and new technologies to make it easier than ever to buy online. But all that activity poses a problem for the consumer: navigating one’s way through all those virtual clothes rails to find just the thing you want. Lyst, a New York/London startup, is taking a big data approach to try to solve that issue, and today is announcing that it’s picked up $5 million in financing to help do it.
The Series A round is being led by new investor DFJ Esprit — a champion of European startups that was also an early backer of LOVEFILM, now part of Amazon. Accel Partners, Alex Zubillaga and Venrex also participated. The total raised to date by Lyst now stands at $6.5 million since its launch in April 2011.
Lyst’s approach to the online fashion industry is to be the site where it all the many disparate strands of online fahsion come together. It’s aim is to helps you find the thing you actually want by doing the sifting legwork for you — kind of like a Google for fashion.
Lyst does this by aggregating inventory from thousands of brands and retailers — including high-end names like Gucci, Alexander McQueen, Net-a-Porter, Neiman Marcus, and Barneys — combining it with all of the many other players in the online-fashion-content world (eg bloggers, online magazines), and then giving it a social twist by involving your friends and their opinions. Using algorithms, it then reorganizes that content by brands and other categories to present selections tailored to you, in “lysts” that you create yourself, or Lyst creates for you. It also integrates into blogs — meaning that when your favorite fashionista writer pens her latest rant on A/W collections in Milan, Lyst automatically imports and organises that content by tags to be consumed on its own platform. This is still initiated by Lyst, which has yet to release an API for others to integrate themselves.
One key point about the site is that its content is in real-time: that means that if an item has sold out at a retailer, of if it’s gone on sale, that information will be live and up to date on Lyst. For those of us who have tried to hunt down specific items of clothing online that happen to be in demand, this is a key point. (It still relies, unfortunately, on the retailer in question having that data to share. Another problem for Lyst to tackle down the road.)
Chris Morton, the co-founder and CEO, tells me the site was borne out of his own frustrations at how it could be time-consuming to shop around online (he’s a fashion hound himself).
“We believe fashion commerce is broken, and if anything getting increasingly fragmented, with online sites, apps and more from a variety of places. Consumers have an increasing list of places to look for things. But I want one place where I can shop and find the most interesting pieces,” he says. He likens it to how there is so much news out there, but really only a few articles that a person would actually want to read on a subject. “The ratio between interesting and non-interesting clothes out there in the physical world is big, but that doesn’t have to exist online.”
There are others who are also looking at how to harness all the data out there related to fashion — Shoptiques, ShopStyle, The Fancy and Pinterest being just four of them. The distinction with Lyst is that it while sites like Shoptiques focus on providing recommendations local to you, and while sites like The Fancy and Pinterest help users share all kinds of style-related content, Morton says Lyst was created “from the start” as an e-commerce operation focused on apparel that will not need to “retrofit” making money into its operation. It’s worth point out, too, that Lyst appears to be interested in aggregating as much as it can from these sites, too. Pinterest is already a major source of traffic for Lyst, second only to Google.
However, the fact that so many others sites are all chasing the same idea means that Lyst will be using the funding to help itself scale up, investing in more development, marketing and partnerships to help pick up more users and catch even more brands and retailers in its aggregation net (to return to that fish analogy)…
So far Lyst’s business model seems to be working well for it. The company, which has been around since April 2 makes money through an affiliate revenue sharing scheme — it ranges between 7 and 20 percent depending on individual deals, and is based on the transaction price, including delivery — and has been doubling sales each month for the last three months after a redesign that Morton said put an even greater focus on buying items than it had before. He notes that it has a long waiting list of brands that want to get added to Lyst — the company vets and curates these rather than adding them automatically, he says.
He says the average order today is for $300, and that in terms of traffic, it’s roughly 40 percent each from the U.S. and Europe, with the remainder coming from the rest of the world. No specific figures on visitor numbers except to note that “millions” are visiting the site monthly and that “millions of dollars” are being generated in sales quarterly. The U.S. accounts for the most revenue “by a considerable way,” Morton says.
“We’ve known Chris for a long time and like what Lyst is about,” said Nic Brisbourne, a partner at DFJ Esprit. “We’re a big believer in next wave of social sites and how they will intersect with marketing and commerce and think Lyst has some fantastic momentum.”
And where will that momentum take Lyst? Mobile is one to watch. It already accounts for a lot of traffic on the site — 15 percent of all of Lyst’s traffic already comes from iOS devices, Morton notes, although “hardly anything” from Android. And there is the prospect of increasing the relationship with the offline world (similar to Shoptiques). “We would love to give you an experience where we could solve discovery in the real world,” Morton says. “Walking down Bond Street or Fifth Avenue and showing you where you can find products that have been recommended on Lyst… We have a lot of ideas about how to do this, but those are things for next year.” And for next season’s trends to tackle.