LOS ANGELESDailyLook has been quietly refining its strategy just outside of downtown Los Angeles, emerging Thursday to disclose a fresh round of funding led by Forever 21 and Upfront ventures.

The fashion technology firm sells a subscription box-styling service with pieces pulled from personal stylists tailored, based on data, for each client. The $8 million series A is the first time Forever 21, as a company, has made a venture investment and gives the retailer’s president, Alex Ok, a seat on the DailyLook board of directors.

“From a brand perspective, obviously, we are non-competing so we feel comfortable collaborating,” said DailyLook cofounder and chief executive officer Brian Ree. “Forever 21 has a product and merchandising focus and is a more traditional retail business, but on the back end what they’ve been able to do that’s been phenomenal is scale up a global retail operation and supply chain. That’s one of their strengths, amongst many. Our private label’s good but we always have room to grow and improve, so as we continue to grow and get bigger we’re going to continue to face challenges in procuring, designing and manufacturing clothing and I think we can get a lot of strategic benefits and advice from them.”

The new capital will help as the company looks to hire about 60 people over the next eight months across styling, warehouse, client services and corporate among the rest of the its departments.

Ree, when asked if there’s room in the future to include Forever 21 product in the boxes, said it’s not something that has been considered or discussed.

“We’re just such different businesses and brands right now that we have not thought about it from that perspective,” he said. “Forever 21 — I know internally they have different lines that are targeting other types of customers and labels, so if they were to make a label that was a little bit more expensive than their core customer base, it’s certainly something we would consider. But I don’t even know if that’s something they would necessarily want to do. The benefits of the investment is, one, we’re local; we’re only 10 minutes apart. They have a lot of great operating experience and supply chain experience, which is helpful if you want to design and manufacture. The other is we’re very strong in technology.”

DailyLook, with 115 workers just outside of downtown Los Angeles’ Arts District, is generating more than $20 million in revenue with Ree reporting the business has been profitable for roughly two years.

The company is small relative to a competitor such as Stitch Fix Inc., which went public in November with an opening price of $15. Shares of Stitch Fix on Thursday were trading at nearly $42 for a market capitalization of $4.10 billion.

Those figures, Ree said, are enough to imply there’s plenty of room for growth for DailyLook, which is seeking to differentiate with its focus on premium labels and a roster of stylists — Ree declined to say how many the company employs — who work full-time with the company.

The last time DailyLook garnered any major press was in 2013 at the time of its $2.5 million seed round, which included investors such as Rachel Zoe, GRP Partners, RRE, SV Angel and Novel TMT Ventures.

The business model has gone through refinement. The company, launched in 2011, got its start offering customers assistance in purchasing pieces from a single look offered daily. Three years ago it pivoted to a subscription styling service.

“The mission was always the same: make it really easy to be stylish,” Ree said. “But that particular transactional business model didn’t really resonate with customers because it still didn’t solve a lot of issues like, ‘How will I know this fits? Maybe this only looks good on the model. I don’t know what brand this is. I don’t know about the quality.’ So we decided to try putting these looks in a box and sending it to the client.”

DailyLook Brian Ree

DailyLook cofounder and ceo Brian Ree.  Courtesy Photo

The change seems to have worked. The company initially trialed the idea in with styling based on intuition — literally pen to paper and Excel spreadsheets for a pilot of about three dozen clients. That later changed to having stylists pack boxes backed by software and data. Conversion went from 50 percent on boxes driven by intuition to 80 percent conversion once technology was deployed.

Members are sent as many as 12 items per box, which comes with a $40 styling fee that’s waived if items are purchased. Most of the pieces retail for $75 or more and include brands such as Kate Spade, A.L.C., Equipment, J Brand, Hudson, Brochu Walker and Vanessa Bruno. DailyLook also has three private label brands.

“I look at box business customers in three different types,” said Sharon Moon, the company’s senior buyer who came to DailyLook from boutique retailer Brigade L.A. “The first is they have the time but they don’t have a sense of style, so they need the service to help them curate. Two, they have the sense of style but they don’t have the time so they’re able to pick and choose and apply this to their current wardrobe. And the third I look at as people who like to be surprised and it’s low-risk.”

The company reaches customers in their early 20s to 60s with the highest spending group in their mid-30s to late-40s.

Before a box is shipped, recipients take a style quiz and have a chance to preview the box and swap out up to three items in a bid to ensure greater conversion. Shipping is free both ways and customers have five days to try on and decide what to keep.

DailyLook is already testing higher-end labels, launching a pilot earlier this year with an undisclosed roster of brands that Ree characterized as attainable luxury.

“They’re very ginger about where they’re being sold,” Moon said of the pilot brands. “Since we’re able to test a lot of different styles at a quick turnaround, they’re willing to work with us. Some of the lines that we’re working with, they want to do this discreetly. If it works then they’ll go wide. Let’s say Brand A has all their flagships in L.A. and New York, but how do they figure out how to reach customers in the middle of the country?”

That’s where DailyLook aims to pitch itself as a partner to said brands. The luxury pilot will run a full year, according to Moon, so that brands can test all four seasons.

The company also established a team of stylists in Las Vegas to test how it could have stylists on the ground closer to regional markets as it scales, allowing those boxes to be tailored to geo-specific factors such as weather or local trends. So far, the Vegas test has born out well, Ree reported.

For now, the focus remains on scaling women’s within the U.S. Ree doesn’t see expansion into men’s or international in the near-term with plenty to do with the women’s business.

“Stitch Fix has already exceeded $1 billion in revenue and I see a long runway ahead of them for their growth,” he said. “We’re certainly somewhat more niche than them due to serving a more premium customer so it’s hard to say [how large DailyLook could grow to]. But if they’re able to grow into the billions of dollars in revenue, then I certainly see space for another competitor that is not directly competitive in terms of customers to also do $1 billion in revenue. Forever 21, H&M and Zara do billions of dollars in revenue. They’re all somewhat different and you’re not even including the Gaps of the world, the Guesses and all these other brands. So fashion is a big market just in the U.S. and for that reason I think there’s certainly a lot of growth ahead of us.”

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