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Beyond the Rack, the Montreal-based off-price flash site, has closed a sixth round of financing and brought in Amazon.com veteran Mike Bhaskaran as its chief operating officer.
This story first appeared in the November 26, 2013 issue of WWD. Subscribe Today.
The e-commerce retailer has added $25 million to its coffers through contributions from three new investors, Investissement Québec, Iris Capital and Tandem Expansion Fund. Four other investors from previous rounds — Highland Capital Partners, Panorama Capital, BDC Venture Capital IT Fund and iNovia Capital — also participated.
Including a $36 million investment round in 2011, the company has raised a total of just over $70 million. The first three rounds entailed angel investors only; the latter three have relied on institutional investors.
With the additional capital, the company’s founders and management “still have important but not controlling interest,” said Yona Shtern, cofounder and chief executive officer.
Alexander Wiedmer, partner at Iris, said, “As a global investor we have broad exposure to e-commerce internationally and have been impressed by Beyond the Rack’s world-class unit level economics and operations. It is ideally positioned to be an industry and market leader as e-commerce continues to expand in both Canada and the United States.”
Bhaskaran, who takes over the duties of chief operating officer from Rob Gold, a cofounder of BTR, has held global logistics posts with Starbucks, Amazon and Gap. “His mandate at our company is speed and efficiency, to scale our operations and push the envelope on the speed of our supply chain,” said Shtern.
Jim Weinberg, BTR’s New York-based chief merchandising officer, has been promoted to the additional post of president. Before joining BTR four years ago, he held posts with May Department Stores Co., where he was senior vice president and general merchandise manager of Robinsons-May, and Kellwood Co., where he served as ceo of the company’s Halmode division.
Alex Moorhead, from Tandem, has been added to the firm’s board.
Shtern told WWD that the company is on track to surpass $100 million in sales for the year and, excluding marketing expenses, would be profitable for 2013. “A company like ours, with plans to become a multibillion-dollar firm, needs capital to grow,” he said. “We’ve acquired three different e-commerce companies and we paid back the cost of acquiring one of them in less than four months. We’re converting members — about 10 million at last count — into buyers. Investors find our profile compelling.”
Shtern, who earlier in his career was with Avon Products and Saks Fifth Avenue, noted that BTR is currently shipping between 40,000 and 50,000 units a day, more than five times the volume of two years ago, but that its mix and platform emphasis are shifting. “Two years ago, mobile accounted for about 6 percent of our business, and today it’s close to 50 percent, and on a Saturday or Sunday night, when there are a lot of women shopping on iPads, it can be 80 percent,” he said.
Women’s apparel accounts for about a quarter of BTR’s business, but the fastest-growing areas are kids, at just over 5 percent, and home merchandise, which has grown to about one-third of sales. A mix of footwear, beauty and other products makes up the remainder.
“Visit us after 5 and we look like a home site,” the ceo commented. “It’s all driven on direct analysis of consumer feedback.”
Gold has shifted his emphasis to a direct import program, but Shtern doesn’t anticipate that private-label merchandise will become a significant portion of the apparel business.
“We’d be less comfortable going in that direction on fashion items or, for instance, in footwear,” he said. “When we look at how consumers view us, it’s about access to brands as well as value. We’re in the mainstream, not unlike TJ Maxx.”
BTR stages as many as 30 off-price “events” a day on its site.