In Las Vegas earlier this week, startups at the intersection of technology and fashion discussed developing a global brand from day one and highlighted opportunities associated with participating in the international marketplace.
Surging demand internationally
During a discussion at SXSW’s inaugural Venture-to-Venture conference on how technology is enabling startups to access global markets, Warren Liao, co-founder and CEO of online custom tailoring outfit Black Lapel, detailed how he exported to 74 countries in his company’s first full year of operation. He observed that developing markets in particular offer huge long-term potential for fashion brands, and that Internet technologies and logistics services enable startups to build a global brand immediately.
Mike DeSimone, CEO of the New York-based logistics company Borderfree, added that the high degree of internet connectivity in key global markets combined with currently low penetration of e-commerce suggests massive pent-up demand. DeSimone, whose company works with large retailers to help extend their online businesses outside of the United States, noted that in Australia, 80 percent of the population is online but only 1.5 percent of retail sales are through e-commerce.
Vishaal Melwani, who moved his fledgling, buzzed-about company Combat Gent from Los Angeles to downtown Las Vegas earlier this year after receiving $1.8 million in funding from the VegasTechFund, told Modern Fellows that the global market is huge for him. “We built our brand knowing we would get into it,” said Melwani, who was out of town during the conference and who spoke to Modern Fellows by phone.
Even though Combat Gent will not start selling to Europe until 2014, already “we have had such a huge response from Spain, Germany and the UK,” said Melwani. He noted that the ongoing economic difficulties in Europe likely help explain why the company’s message – to make you feel good about your appearance and yourself for not a lot of money – is resonating there. As he enters the market next year, his plan is to brand individually to these countries. “We will differentiate,” explained Melani. “We don’t believe in one unified URL and just converting the process. For us, to own those markets, we want to go in and understand their preferences and pain points,” which may be different from those of U.S. men.
Establishing trust from far away
Liao of Black Lapel also spoke to the issue of establishing trust with potential customers overseas. He noted that traditional custom tailoring is a high-touch personal service and that people may be skeptical about whether a company like Black Lapel can replicate that experience online.
He ticked off three approaches that his company has pursued to help develop that trust with consumers:
1. Delivering exceptional customer service. “We see customer service as an inbound marketing tool for us. We have the goal of creating such a good experience that they do the outbound marketing for us via word of mouth and referrals. You have to give your best customers the tools to spread the gospel about your company.”
2. Focusing on content. “We create content so that customers can make informed purchases even if they don’t buy from us. Men don’t really like to browse and shop. Men like to research information and make a purchase. By offering entertaining and engaging content, they look to us as a resource for information about dressing better and feeling better about themselves. That allows us to build trust in the community and engage customers on a much deeper level.”
3. Selling a really high quality product. “That’s something you can’t skip out on. Our value proposition is that we can deliver a designer quality product for a quarter of the price of a designer brand. We can make it specifically for you and deliver it anywhere in the world in 4 weeks.” You need to have that value proposition there and deliver a consistent experience all across the world or else the business doesn’t work.
Usman Ahmed, Policy Counsel with eBay, indicated that “feedback is really important to build trust with future customers.” He highlighted the feedback system that eBay developed, which has become an essential feature that customers can use to rate sellers’ service. Lindsey Grossman, Senior Manager of Global Public Policy for Intuit echoed Liao’s advice on customer service, adding that it is critical to develop a good narrative and to empower your best customers to tell it.
DeSimone of Borderfree observed, “this is an area where you can live and die by social media. When people are researching a new brand, they search Facebook and Twitter. People generally want to write on social media when they’ve had a bad experience,” so getting those good stories out there is really important.
Addressing challenges in foreign markets
Startups also noted challenges specific to foreign markets. Kevin Lavelle, founder of Mizzen+Main, which sells American-made tailored performance clothing direct to consumers, expressed concern at SXSW V2V about the red tape and reporting requirements for exporting over certain thresholds. Melwani of Combat Gent separately cautioned that it is important to look out for your brand reputation abroad, recalling how a fellow online direct-to-consumer e-tailer was knocked off by a foreign company.
Grossman suggested several ways to address problems as they arise, including seeking out the U.S. Foreign Commercial Service as a resource, engaging directly with foreign governments, and aligning with business associations and larger or more established companies with similar interests. Melwani didn’t seem overly concerned about being knocked off. Referencing his earlier example, he said that the original U.S. company “stand[s] for something.” They have a soul, and customers can tell the difference.
At a separate V2V discussion on Wednesday, Liz Bacelar of Decoded Fashion highlighted that, while New York and London are leading the way in integrating fashion and online technology, other places like Mexico City and Milan are increasingly innovative as well, which may give their governments and others like them incentives to minimize friction to trade in fashion ideas and products.
The SXSW forum, a spinoff of the annual technology and music festival held each March in Austin, Texas, was attended by startups, investors and government officials and featured keynotes by Tony Hsieh, Steve Case, and Lauren Bush Lauren.