THE EYE OF THE NEEDLE
60 MINUTES WITH THE THREAD’S WILLIAM ANDERSON
Byline: Valerie Seckler
NEW YORK — The slick Chinese red lobby of The Thread’s headquarters in New York’s fashion district — just steps down the hall from the offices of Seventh Avenue giant Liz Claiborne Inc. — belies its status as yet another startup in the busy B2B apparel space online.
Typically, the Internet’s business-to-business crowd is housed in make-do digs populated by skeletal staffs, and exhibits a penchant to keep their clients’ names to themselves, a phenomenon seen by Web watchers as a signal those so-called clients have yet to sign contracts that would take them beyond a test phase with the nascent e-marketplaces, or, worst case, that they do not exist at all.
But it’s a different scene taking shape at The Thread, whose executive team includes top players from Old Economy style and store titans such as Limited Inc., Federated Department Stores, Warnaco, Liz Claiborne and Carrefour, the world’s second largest retailer and former corporate home of the B2B’s newly arrived chief executive officer, William Anderson.
Anderson, 53, brings to the project a merchandising and marketing acumen acquired during his career at mass chains like Carrefour and Kmart, and, equally important, an affinity for technology, sparked by his stints as chief executive of both Reality Technologies, a software developer targeting the financial services sector, and @Carrefour, the French retailer’s stand-alone e-commerce platform.
Anderson is ready and willing to rattle off the names of some of The Thread’s first customers, which, he said, number 10 and include Gloria Vanderbilt, Regatta USA, Retrospettiva, the Rocky Apparel unit of Tarrant Apparel, Pacific Alliance, Kids International Corp., children’s wear maker Mayfair and Absorba, a manufacturer of branded infant and toddler apparel. And his world view marks a departure from much of the Net set, who focus sharply on dot-com doings in Silicon Alley and Silicon Valley, but whose vision tends to go blurry somewhere over Middle America.
In his first sit-down interview since taking The Thread’s helm, Anderson eschewed prevailing e-style, sporting a navy blazer, oxford cloth shirt and traditional striped tie, and playfully scolded an observer for “sounding like such a New Yorker.” And that from a Boston native who took his undergraduate degree in engineering at Columbia University and professes a passion for Manhattan, where, he confides, he’d really like to live if his family weren’t so keen on having “a house with a backyard” after apartment life in Paris for the past two years. In fact, with only a week or so on the job behind him, Anderson, who took The Thread’s helm in January, was busy house hunting around the New York metropolitan area, as well as getting his arms around the privately held Internet startup.
Given the twinkle in his eye and a wide open expression on his face, it’s not a surprise to learn The Thread’s leader is glad to be back stateside, in part, because he had not mastered the French language and, as he assured, “I like to be able to talk to people. Paris is a beautiful, wonderful city, but it doesn’t have the energy level of New York,” Anderson noted. “New York is about energy and commerce. Paris is about food and wine.”
New York is simply one of the passions that Anderson has returned to. Another, The Thread’s chief executive pointed out, is technology. An epiphany occurred 10 years ago, when he was tapped as ceo of Philadelphia-based Reality Technologies Inc.
“This was the most enriching experience of my career,” offered Anderson, who has reams of traditional retail experience. “The thing I’m wrestling with is how did I get back into traditional retail?”
Anderson was a merchandising vice president of former Abraham & Straus back in the Seventies and Eighties; he co-founded Domain Inc., a Norwood, Mass.-based, venture capital-backed home furnishings retailer, where he also was president and chief operating officer, in the Eighties, and then became a senior vice president of Ames Department Stores, where he helped engineer the discounter’s turnaround, following bankruptcy proceedings, in the early Nineties. It was in between stops at A&S and Domain that Anderson did his stint at Reality Technologies, before returning to the world of bricks and mortar, at Ames. After that, he stuck with the traditional scene for seven years — as president of Oshman’s Sporting Goods, chief hard-lines merchant of Kmart, and, most recently, at Carrefour.
“I’ve always been a fan of technology,” Anderson insists. “I had a chance, 10 years ago, to be the ceo of a small software company [Reality Technologies] and I’ve never had more fun. I encountered some of the brightest people I’ve ever worked with.”
But it was his most recent tour of retail, with Carrefour, that convinced Anderson to reenter cyberspace. “It was a seminal event for me to be Carrefour’s chief merchant and chief executive of @Carrefour at the same time,” Anderson related. “The Internet business was more exciting. I found it intellectually challenging and it became clear to me the Internet was what I wanted to pursue.”
Many of those perceived merits are based on the proposition that retailers and fashion houses can save time and money by moving a healthy helping of their sourcing effort onto the Net. For instance, management consultant Kurt Salmon Associates recently estimated there’s about $34 billion worth of savings to be had from developing apparel online, with two-thirds of it coming on the vendor side. That cost-control formula is a critical one for B2Bs like The Thread, which is aiming to hook up fashion vendors with their suppliers, and eventually with their retail clients.
During the past year, around eight B2Bs began vying for life online in the apparel sector, and Web watchers believe it will probably be another couple of years before those businesses bulk up. This year, by comparison, is expected to bring a shakeout of those players; the survivors will need to establish a firm platform for growth, expected to come just around the next cyber-bend.
“One issue is how fast will it happen,” Anderson acknowledged. “I think it will be a couple of years. It will take time and heightened awareness to convince people to change the way they’ve been doing things. It will take a couple of very satisfied customers to say publicly that they can’t get along without [sourcing online].
“I like technology, but some people are scared of it,” Anderson allowed. “We’re prepared for it, culturally and financially prepared to stick it out. It’s something we talk about all the time.”
Taking a broader view of business in Netland, Anderson noted, “The decision-making process to invest in e-anything got out of hand, and then it changed. Now, the widespread pessimism is overplayed. “As in most sectors, I expect there to be two or three survivors,” he said of apparel sourcing sites. “Over time, I imagine the big chains will adopt these types of systems,” he projected. Asked who he currently considers The Thread’s chief competition, Anderson replied: “We keep our eye on Fasturn and Freeborders.”
Setting The Thread apart from most of its rivals is its willingness to — gasp — name its fashion clients. The few apparel B2Bs that also have done so include 7th Online, which went live in October with e-showrooms for roughly a half-dozen fashion brands, such as Violette Nozieres, Ocean Pacific and Miriam Salat, and GlobalNet-Exchange, which has created perhaps the biggest stir of the sites aimed at apparel marketers and general merchandisers, by signing on last February two of the world’s biggest retailers: Sears, Roebuck & Co. and Anderson’s alma mater, Carrefour. (Sears and Carrefour own a majority stake in GlobalNet-Exchange while software giant Oracle Corp. holds a minority interest in the venture.)
Anderson won’t say how much has been invested in The Thread. Instead, he stated, “We are privately funded and could remain so if we wanted to.”
So, what are the B2B’s financing plans? “There’s a real benefit to bringing in a world-class venture capital firm,” Anderson responded. “I believe we will do that over the next year.”
The most immediate challenge facing The Thread, Anderson said, is another one. “It’s not our product or our efficacy,” he insisted. “It’s going out and making believers of everybody. We’re aiming to speed the rate of adoption in a somewhat closed society — the apparel business.”