Farfetch backer Index invests €7m in outlet disruptor Otrium as it grows fast
today May 2, 2019
Dutch online fashion outlet Otrium said Thursday that it has raised €7 million to “grow its international footprint and brand partnerships.” And it’s particularly interesting that the series A round was led by venture capital firm Index Ventures, which is also a backer of Asos and Farfetch. Index partner Danny Rimer also joins the board with this round.
Otrium already counts Fred Gehring and Ludo Onnink, the former CEO and CFO of Tommy Hilfiger Global, and Victor Knaap, founder of creative production company Mediamonks, among its investors.
So why are they interested in the business? With a “mission based on the belief that every piece of clothing deserves an owner that appreciates it,” the company says that it has developed a “unique model for selling excess inventory – a growing challenge in the fashion industry.”
“Instead of offloading unsold items via flash sales, to stock-buyers at little or no profit, or in expensive-to-run physical outlets, Otrium’s platform delivers higher margins and gives brands more autonomy and flexibility,” it said. Clothing companies retain full control over price-point, merchandising and promotions with Otrium as the intermediary, so it’s claimed “they also avoid cannibalising and competing with their own new-season offerings.”
The firm also provides “uniquely rich data about the most popular lines and items to its partners” and says this “can help brands come up with strategies for ‘continuation stock’ – items developed specifically for off-price sale.”
The three-year-old firm has over 100 brand partnerships including big names and smaller labels with G-Star, Puma, Vans, Pepe Jeans and Scotch & Soda on board. More than 600,000 shoppers subscribe to buy on the platform, and revenue is growing 400% annually.
“Billions of dollars of valuable clothing are collecting dust in warehouses every season, going to waste, sold at knock-down prices and even being burned,” said founders Milan Daniels and Max Klijnstra, who previously built up and sold-on the internet meme-based clothing brand Breaking Rocks. “Our aim is to help apparel makers minimise waste and give their inventory a second chance, selling to a ‘gated’ community of shoppers where they control the channel.”
New board member Danny Rimer added: “Otrium has seen an impressive uptake by fashion brands, who see the new model as an appealing alternative to discounters or running their own outlet operations. With Otrium, brands increase their margins and maintain control of where their stock is sold and at what price. [It’s] quickly becoming a trusted online outlet partner for the fashion industry.”
And ‘outlet’ is a good sector to be in with the off-price clothing market growing faster than any other retail sector, with over €30 billion worth of annual sales in Europe and $250 billion worldwide.
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