The already burgeoning off-price sector could accelerate with B-to-B technology being introduced to automate how buyers procure excess inventory from brands.
This story first appeared in the April 20, 2015 issue of WWD. Subscribe Today.
The new platform, called InTurn, has attracted some high-profile industry investors — Ken Seiff, founder of Bluefly, and Silas Chou, who backed the Michael Kors and Tommy Hilfiger businesses.
In addition, Kirsten Green of Forerunner Ventures led a $3.6 million round of financing that included Seiff’s Beanstalk Ventures seed investment firm; Novel TMT, which is Chou’s family’s technology-investment arm; Lerer Hippeau Ventures; Bobby Lent, cofounder of Ariba, and T5 Capital.
“We are redefining an area of retail that’s been very manual and outdated,” Ronen Lazar, InTurn’s chief executive officer and cofounder, told WWD. “Instead of taking days or weeks to assemble the offer, it can now take minutes. It improves the work flow on both sides, making things happen faster.”
“While nearly every aspect of the retail experience has been automated, the sellers and buyers of excess inventory have been completely ignored,” Seiff added. “Transactions between the sellers and buyers have been run on Excel spreadsheets for 40 years. This is the first big innovation in this space since Microsoft Excel.”
According to the executives, InTurn eliminates the manual labor involved in creating spreadsheets; sorts by classification; shows sizing and color information; indicates quantities, suggested retail prices, wholesale prices, new asking prices and, in effect, creates “private, curated showrooms for retailers” that give clear reads on the offer.
InTurn lists purchasing rules, such as whether you can buy all of the inventory or part of it, and for how long the offer stands; geographic restrictions on where the product can sell, and calendar restrictions on when to start and stop selling the products. In addition, there’s a margin analyzer that calculates purchase prices to get the desired margins. Frequently, buyers are writing orders without product pictures, descriptions, UPCs, color codes and country-of-origin information; however, InTurn is designed to provide all that. It’s cloud-based (nothing needs to be installed), it’s mobile ready, and it works on any kind of device.
According to InTurn officials, each year an estimated $250 billion of off-price inventory is sold globally. The introduction of InTurn is timely, considering Nordstrom Rack, Saks Off-5th, Bloomingdale’s, Century 21 and T.J. Maxx are aggressively expanding their outlet fleets, while Macy’s is considering opening outlets for the first time. But getting the inventory on the selling floors is delayed by manual, inefficient tools and processes, which means brands are stuck with merchandise longer, leading to steeper markdowns, and off-price buyers can’t thoroughly analyze the inventory.
“Brands have been selling their excess inventory to retailers in linear fashion using Excel spreadsheets for too long,” Lazar said. “It’s archaic and massively inefficient. Buyers have been handcuffed to buying what they are offered, not what they want. And because selling off price is a by-product of their core business, brands end up selling to buyers who may not be the optimal buyers for their inventory. This is costing both sides billions of dollars a year,” said Lazar. “There’s a tremendous amount of money left on the table.”
InTurn executives said the technology has been in beta testing with some major brands and retailers since last fall, though they declined to mention who they were. Lazar has assembled a team that includes Michael Newman, previously vice chairman, chief operating and chief financial officer of Ralph Lauren, and David Margolis, founder and former president of The TJX Companies’ Winners division, as strategic advisers.