London-based fashion e-tailer, Threads Styling has recently completed a USD12 million funding round in an effort to further boost online sales and expand its online division.
Threads Styling was established in 2010, and has grown into a USD60 million business. Threads sells luxury goods online, using platforms like TikTok, WeChat and Instagram to attract very young and very wealthy customers, closing sales using direct messaging.
After a successful run on social media platforms, the fashion e-tailer now aims to scale up its one-on-one marketing model in addition to launching initiatives that cater to a wider audience, including live shopping events and a traditional e-commerce enabled website.
Threads Styling announced that it has raised USD12 million of venture capital from existing investors, and additionally launched a crowdfunding campaign exclusively for its customers.
Threads was initially launched as a personal shopping service, and gradually transformed into a chat-commerce marketplace. The company combines in-house stylists with a wide network of personal shoppers to upload content on social media platforms on a daily basis, offering customers hard to find products.
Very often, shoppers at Threads will spend thousands in a single visit, choosing from a diverse range of fashion featuring names like Rolex, Fendi, Chanel, Prada and Loewe. Threads Styling does not retain any inventory, but relies on a network of over 600 brands that pay a commission to the company in return for products sold on the platform. The target audience is mainly Gen-Z and Millennial customers.
Pandemic fashion sales surge with one-on-one shopping model
The one-on-one model adopted by Threads worked well during the pandemic, which witnessed a surge in sales of luxury fashion goods. However, in comparison to other fashion e-tailers, Threads revenues are far behind. While stating that Threads is not yet profitable, CEO and founder Sophie Hill also said that the brand has a very clear model on how to achieve that.
Threads launched its e-commerce website in February. The website focuses on fine jewelry, retailing diamond necklaces and more from brands like Anita Ko and Ananya. The recently raised funds will be deployed to add more categories to the website, and also launch a VIP, invitation-only website for loyal customers of the brand. These customers will enjoy priority access to new products, exclusive deals and rare items.
Threads Styling has warehouses in London and New York, and also has a drop-shipping option directly from partner outlets. The warehouses will be used to consolidate multiple products into a single shipment.
Investors are confident that the websites will provide an alternate way for Threads’ audience and partner brands to connect and interact.
Tony Zappala, partner at Highland Europe, said that from the customers perspective, there will be times when the chat-only option is more feasible, and other times when the customer would prefer to flip through a website to find products. Highland Europe led the funding round with C Ventures, TriplePoint Capital and BVYP.
Retail consultant Robert Burke said that despite the highly competitive and crowded e-commerce fashion marketplace, there was still an opportunity for a niche website like Threads, with a captive audience and a clear business model.
Burke went on to add that bigger is no longer better for the customer today. Customers online often do not want to sift through hundreds of products if they have something specific in mind. It would be much more preferable if there is a curated range that reflects their taste and interests, and this is the niche that Threads fills.
Chat-based personal shopping services will remain at the core of its business, since half the sales of the website’s first month were routed through personal shoppers. Customers visited the website, then took screenshots of the products they wanted, and sent these to personal shoppers to fulfill.
According to the company, the entire ecosystem was connected, with one division driving the growth of the other.