Bernard Arnault is spreading his Internet wings – at least as an investor. The luxury titan’s Groupe Arnault is part of online fashion marketplace Lyst’s latest fund-raising round, which brought in $40 million.
The Series C round added Groupe Arnault as a new partner and pushed the company’s total money raised to $60 million. Existing investors Accel Partners, Balderton Capital, 14W and DFJ also took part in the most-recent round.
Lyst was the first marketplace to debut a universal shopping cart in July 2013, which allowed customers to pay for multiple items from different merchants with one transaction. Thirty-five to 40 percent of the 1.5 million items available on Lyst in the U.S. are eligible for universal checkout – and this number is quickly accelerating. By year’s end, chief executive officer Chris Morton expects 80 percent of its offering to be eligible for the bundled checkout option. Overall, 2.5 million items are listed globally on Lyst from 11,000 designers, brands and retailers.
Morton said it didn’t take long to see how the universal checkout feature affected the business. Despite early technology challenges – like synchronizing inventory in real time – conversion rates increased by five times with the broader checkout functionality.
That is part of what attracted big names to Lyst’s latest round of fund-raising.
“There are 500,000 products [available] in universal checkout. It’s significant inventory,” Morton said. “To have someone like LVMH’s controlling shareholder in the round, as well as top tech investors like Accel, the premise for all these guys to invest was seeing the traction in the universal checkout.”
At the current run rate, the platform is on track to facilitate $150 million in annual sales, according to Morton. That’s a big jump from $40 million last year and the company sees sharp growth continuing. With Lyst taking a double-digit cut of each transaction (Morton declined to reveal a specific percentage), this could add up to significant revenues for the company.
International expansion is another major area of focus at Lyst. A dedicated U.K. site rolled out earlier this month and sites will go live in Canada and Australia this quarter. Further down the line, Lyst plans to expand to other countries using local languages and currencies, with the Asian market seen as particularly promising.
Downloads of Lyst’s app are growing fastest in China, and Hong Kong and the Middle East log the company’s highest average order values at north of $1,000.
“This allows us to start doing things and understand which brands are trending in different geographies. This is particularly important with Australia, [where we’ll be] marketing bikinis at different times,” said Morton, who added that Australia also has a substantial local fashion ecosystem.
But don’t call Lyst a marketplace. Or a retailer.
“[We’re] more like a shopping mall or street,” Morton told WWD. “We want to give customers a great shopping experience and easy, convenient checkout – but at every step of the checkout, they understand they’re buying from a Saks or a Lane Crawford.”
Once a purchase is complete, consumers get confirmation e-mails from each retailer, making it clear where the items originate. The benefit for retailers is that they acquire a customer they can market to directly.
Lyst is the third fashion marketplace to close a substantial round of funding this month. Mobile marketplace Spring and the largely resale-driven Poshmark each raised $25 million and plan to use the money to grow their businesses.
The difference is that Spring and Poshmark are more focused on the mobile experience, whereas the majority of Lyst’s business takes place via traditional e-commerce channels.
While 55 percent of Lyst’s traffic comes from a mobile device, two-thirds of sales still come from a desktop. The remaining third comes from a combination of mobile Web and Lyst’s app that came out last year. Morton said nailing the checkout experience was the company’s first priority, because he didn’t think an app would work unless that functionality was solidified.
“Mobile is important, but we don’t see the use case of our customer shopping at her desk at work going away,” he said.