Amazon debuts Showroom, a visual shopping experience for home furnishings

Amazon just over a year ago launched its first in-home furniture brands, with private labels Rivet and Stone & Beam. This past fall, it began experimenting with a new, more visual way to shop for furniture and other merchandise with its Pinterest-like recommendation service Scout. Now, Amazon is venturing further into home furnishings with the debut of Amazon Showroom, a visual design tool that allows you to place furniture into a virtual living room, customize the décor, then shop the look.

The retailer didn’t formally announce the launch of Amazon Showroom, but a spokesperson confirmed it’s a recent test that’s now available on Amazon.com and in the Amazon mobile app.

You can access it from the “Accounts & Lists” drop-down on the web; the Home, Garden & Pets department on the web; or the Home & Kitchen department on the mobile app.

Currently, the new feature is focused on helping Amazon shoppers put together a living room. In a virtual setting, you can make adjustments to the wall color and the flooring, then swap out each item in the space with one of your own choosing — including the sofa, coffee table, chair, end table, lamp, rug and even the art on the wall.

To do so, click on the piece in question, then pick another from the right-side panel where a scrollable list of options are available, along with their prices. This selection can be filtered by a number of factors, as well, like price, style, color, material, brand and star rating.

Not surprisingly, Amazon’s own home furnishing brands are heavily featured here.

As you work on your project, you can save your room design to pull up later. And you can save more than one room design, if you’re trying to decide between different styles. When satisfied, an “Add to cart” button lets you place all into your cart for checkout with just one click.

Amazon Showroom — a name that’s almost a cruel reference to Amazon’s ability to turn brick-and-mortar stores into showrooms for online shoppers — isn’t the retailer’s first attempt at helping shoppers visualize items in their home ahead of purchase. The company also launched an AR shopping feature in its app in 2017, which allows you to place a virtual item in your camera view to see how it goes in your own room. That can be useful if shopping for a single item, but less so when designing a complete room.

Home furnishings is still an emerging category for online retail, not only because they’re hard to visualize, but also because heavy items are expensive to ship. However, major retailers see the potential in this growing market.

Walmart, for example, launched a new home shopping site for furniture and décor last year, which features its own in-house brands and more visual, editorial-style imagery. It has also snapped up other home furnishing and décor retailers, including Hayneedle and recently, Art.com, and is building its own visual search.

Amazon confirmed the launch of Showroom in a statement.

The retailer wouldn’t say when the feature debuted, exactly, but a Twitter account was tweeting links to a pre-production site earlier in December. It’s also unclear at this time if Amazon Showroom was built entirely in-house.

“Amazon Showroom is a new way for customers to visualize their home furnishing purchases when shopping online,” a spokesperson told TechCrunch. “Amazon Showroom presents customers with a virtual living room, where they can customize the décor and furniture selection providing the ability to visually compare to scale representations of furniture items together in a room to determine how an item will fit with the style of a room and work with other complimentary pieces. The result is a photorealistic rendering of a room that answers the question: ‘How will this all look together?’,” they said.

The feature is live for all customers on the web and in the Amazon app.

Alibaba just gave Chinese youth another reason to never leave their desk

People in China have a host of reasons not to go outdoors these days. They may be too busy to leave their office, wary of air pollution or have chosen to live isolated lives. Among them is an expanding young consumer base who prefers to dwell in the virtual world of video games, animes and comics over the tangible reality. More important, there’s an endless list of startups pandering to their impulse to stay indoors with services from online shopping to food delivery.

Two Chinese internet giants are chasing after this indoorsy crowd. Last week, food delivery giant Ele.me announced that it’s teamed up with youth entertainment site Bilibili on a one-off joint membership that will further keep young consumers at their desk.

Ele.me, which means “are you hungry?” in Chinese, was sold to ecommerce behemoth Alibaba in April. Bilibili, which went public in the U.S. this year, started as a video streaming service focused on animes and has evolved into a one-stop destination for all things related to youth cultures: Animes, comics, cosplay, video games and other niches that you and I may fail to name.

Their marriage gives subscribers the best of both worlds: Unlimited streaming of animes and deep discounts on food delivery orders. Bilibili has been doubling down on content investments in recent months, which saw it agree to buy out most of the comics assets of Netease, one of China’s largest internet companies. What’s better than binging on one’s favorite anime series and not having to leave home when the stomach growls? (Whether this is a healthy lifestyle is another topic.)

The promotion, which runs from December 23 to December 30, allows people to purchase the memberships of Bilibili and Ele.me at 25 yuan, or $3.63, a month. That’s a 15 yuan discount from what users would have to pay were they to subscribe to the two services separately. The rationality behind the tie-up is an overlapping Generation Z user base. By 2017, about 82 percent of Bilibili’s users are 8 to 28 years old, according to a report by QuestMobile. Meanwhile, more than 60 percent of the users who order food online in China are under 24 years old.

China’s food delivery market is set to top 243 billion yuan, or $35 billion, by the end of 2018, according to iiMedia. By then, China will have 355 million users of food delivery apps — or about 40 percent of its national population. Five years ago, there were just over 100 million users for this market.

The boom has jacked up the price tags of market leaders Ele.me, which was valued at $9.5 billion in the Alibaba deal, and Tencent-backed Meituan Dianping, which had a spectacular initial public offering in Hong Kong in September.

Alibaba and Bilibili call their joint membership “Zhai E Kuai,” a wordplay on “be otaku together.” The Japanese word “otaku” originally means “someone else’s venerable home” and later took on a new life to describe someone who is so obsessed with a subject or hobby to the point of not leaving home. Bilibili’s core users are often stereotypically described as otakus of animes or video games, though certainly not all of them shun the outside world.

Aside from Bilibili, Alibaba has also been pally with Starbucks as the two began integrating their rewards systems.

Memberships similar to Amazon Prime have become an increasingly popular tactic for China’s tech giants to drive revenue growth. Alibaba, for instance, has lumped services of its portfolio companies under 88 Membership that spans ecommerce (Tmall), fresh produce (Tmall), food delivery (Ele.me), video streaming (Youku), music streaming (Xiami), movie tickets (Taopiaopiao) among others. Tencent has taken a different approach to membership with its King Card mobile internet plan, a partnership with China’s major telco that gives users unlimited data usage on apps in Tencent’s ecosystem — from social networks, video streaming to games.

China’s JD.com teams up with Intel to develop ‘smart’ retail experiences

Months after it landed a major $550 million investment from Google, China’s JD.com — the country’s second highest-profile investor behind Alibaba — has teamed up with another U.S. tech giant: Intel.

JD and Intel said today that they will set up a “lab” focused on bringing internet-of-things technology into the retail process. That could include new-generation vending machines, advertising experiences, and more.

That future is mostly offline — or, in China tech speak, ‘online-to-offline’ retail — but combining the benefits of e-commerce with brick and mortar physical retail shopping. Already, for example, customers can order ahead of time and come in store for collection, buy items without a checkout, take advantage of ‘smart shelves’ or simply try products in person before they buy them.

Indeed, TechCrunch recently visited a flagship JD ‘7Fresh’ store in Beijing and reported on the hybrid approach that the company is taking.

JD is backed by Chinese internet giant Tencent and valued at nearly $30 billion. The company already works with Intel on personalized shopping experiences, but this new lab is focused on taking things further with new projects and working to “facilitate their introduction to global markets.”

“The Digitized Retail Joint Lab will develop next-generation vending machines, media and advertising solutions, and technologies to be used in the stores of the future, based on Intel architecture,” the companies said in a joint announcement.

JD currently operates three 7Fresh stores in China but it is aiming to expand that network to 30. It has also forayed overseas, stepping into Southeast Asia with the launch of cashier-less stores in Indonesia this year.

PayPal: Black Friday & Cyber Monday broke records with $1B+ in mobile payment volume

Black Friday broke records in terms of sales made from mobile devices, according to reports last week from Adobe. This week, PayPal said it saw a similar trend during the Thanksgiving to Cyber Monday shopping event. PayPal saw a record-breaking $1 billion+ in mobile payment volume for the first time ever on Black Friday – a milestone it hit again on Cyber Monday.

Mobile payment volume on Black Friday was up 42 percent over Black Friday 2017, the company said, and it even outpaced the mobile payment volume on Cyber Monday this year.

However, Cyber Monday saw more total payment volume, likely because much of the shopping that takes place that day comes from office workers back at their desktops, wrapping up a few more purchases.

Worldwide, mobile payment volume from Thanksgiving to Cyber Monday accounted for a significant 43 percent of PayPal’s total payment volume. Between those days, PayPal was processing more than $25,000 per second, with more than $11,000 per second processed on mobile.

The peak hour took place on Black Friday, which shows the sales event has shifted much of its business online. It’s now coming close to topping Cyber Monday in terms of both online and mobile shopping, PayPal noted.

PayPal’s data also pointed to another trend: that of the blurring of the line as to when holiday shopping begins and ends. Many retailers these days are launching their deals on Thanksgiving or even earlier, then allowing them to run for the week of Black Friday or longer.

Amazon, for example, has decided to capitalize on its own Black Friday/Cyber Monday momentum by launching a “12 Days of Deals” event that will feature hundreds of new deals every day from Sunday December 2 through Thursday December 13.

Other times, the shopping starts early, as PayPal’s data shows. Thanksgiving has now become another major shopping day, the company said, having broken into the top 10 shopping days of the year. It also grew 41 percent over last year.

E-commerce spending wasn’t the only thing that’s up year-over-year, PayPal also found. On Giving Tuesday – the event focused on donating to charities and other worthwhile causes – PayPal said over a million customers from 180 markets donated $98 million this year. That’s a 51 percent increase from 2017, it said.

Amazon reverses tax-triggered block on US shop in Australia

Amazon has reversed a decision it made six months ago to shut off its US ecommerce site to Australian shoppers. Reuters reports that the U-turn comes after a customer backlash.

Since July shoppers in Australia trying to browse stuff to buy on Amazon.com have been redirected to the local site, Amazon.com.au.

Shipping to Australia from Amazon.com was also shut off at the same time. So shoppers were limited to buying goods sold by local sellers.

But from today the block has gone.

The geoblock on Amazon.com followed a change in Australian tax regulation requiring businesses earning more than $75,000 AUD per year to charge its 10% Goods and Services Tax (GST) on low value items imported by consumers.

The so-called ‘Amazon Tax’ was drawn up in response to concerns about the impact of Amazon and other large overseas ecommerce businesses on local retailers which have to apply GST to all products they sell.

A loophole had meant GST was only applied to items purchased from overseas retailers worth $1,000 AUD or more — so local competitors argued it gave Amazon, eBay and other overseas competitors an unfair advantage.

Amazon’s response was to shutter its overseas shops. But by limiting shoppers to the inventory on its Australian site, which only launched in December 2017, the ecommerce giant seems to have shot its local business in the foot — encouraging locals to look elsewhere for their retail fix. Or just not buy as much stuff.

The Guardian notes there are only about 80 million products on the Australian store vs 500 million on the US site.

Six months later Amazon has backtracked. And seemingly decided to suck up the 10% tax after all.

We’ve reached out to the company for a comment.

An Amazon spokesman told Reuters it had changed its mind after listening to customer feedback, adding it had built the “complex infrastructure needed to enable exports of low-value goods to Australia and remain compliant with [local] laws”.

So far only products sold by Amazon itself on Amazon.com are being made available for purchase by Australians, with third-party sellers not yet covered.

Notably — on the U-turn timing front — Black Friday is tomorrow.

Aka the day when retailers attempt to kick start a holiday buying bonanza by slashing a bunch of prices and scattering digital tinsel all over their online channels. Clearly Amazon doesn’t want to miss out on more sales.

UK to probe fairness of personalized pricing practices in online retail

The UK government has announced an investigation into personalized pricing practices in online retail following growing concerns that vulnerable consumers are at risk of price discrimination through the use of ecommerce technologies that vary prices for products such as cars, holidays and household goods via the use of personal data points.

The Competition Markets Authority (CMA) will also be involved in the research, which was announced yesterday.

The government-commissioned research is intended to investigate how widespread the practice of personalized online pricing is; how businesses are applying it through different mediums like search engines, apps or comparison tools; and the extent to which it is preventing shoppers getting the best deals, the CMA said.

Commenting in a statement, business secretary Greg Clark said: “UK businesses are leading the way in harnessing the power of new technologies and new ways of doing business, benefitting consumers and helping them save money. But we are clear that companies should not be abusing this technology and customer data to treat consumers, particularly vulnerable ones, unfairly.

“The research we are undertaking will help us better understand how we can ensure businesses work in a way that is fair to consumers.”

“Ensuring markets work fairly and in the interests of consumers is a cornerstone of our modern Industrial Strategy, and I am proud to say that our consumer protection regime is among the strongest in the world,” he added.

In another supporting statement, CMA chief executive, Andrea Coscelli, added: “With more of us shopping online, it’s important that we understand how advances in technology impact consumers. This personalised pricing research will help us stay at the forefront of emerging technology, so we can understand how best to protect people from unfair practices where they exist. We will also use the results of the research as part of our ongoing efforts to help vulnerable consumers.”

In September, UK consumer advice charity Citizens Advice filed a super complaint to the CMA calling for it to tackle the loyalty penalty in essential markets such as mortgages and mobiles which it said it resulting in excessive prices being charged to disengaged consumers.

The UK’s Financial Conduct Authority (FCA) has also announced it will be investigating personalised pricing for car and home insurance policies — after finding hidden discrimination between customers.

At the end of last month the FCA said its initial work had identified a number of areas of potential consumer harm — announcing a market study to take a closer look at the outcomes from general insurance pricing practices and make a determination on whether and if so how it should intervene to improve the market.

That market study is focused on: the consumer outcomes from pricing practices; the fairness of outcomes from pricing practices; the impact of pricing practices on competition; and remedies to address any harm that the FCA finds.

JetLenses aims to save you a bunch of money on your contacts

A Y Combinator-backed startup, JetLenses, is taking on the major contact lens e-commerce sites, like 1-800-Contacts, Lens.com, and other online ordering systems offered by major retailers, such as Walmart. The startup’s goal is to bring down the cost of prescription products by automating the overhead associated with these businesses, in areas like prescription verification, order tracking, compliance and fulfillment, then pass those savings on to customers.

The company also promises fair and transparent pricing, so there aren’t surprises at checkout, and offers customers free shipping on their orders.

JetLenses was founded by Dhaivat Pandya, the son of an eye doctor who studied Statistics and Computer Science at Harvard. His background allowed him to identify the market inefficiencies in this business, in order to develop a new solution, he says.

“It was a space where doing this kind of work – engineering and data science – would have an immediate impact that I could see on a day-to-day basis,” Pandya explains as to why he decided to target the prescription lenses market. “A lot the reason why contact lenses are so expensive is just overhead,” he says.

Around 20 percent of the time, the online sites run into issues when verifying customer prescriptions. For example, the eye doctor may have relocated their practice, and their phone and fax numbers changed.

This ends up eating away a lot of time in terms of human labor, as staff has to research if the practice still exists and locate their new contact information before they can proceed with the verification. JetLenses, meanwhile, will instead try to first match the doctor’s information to a data set it maintains of existing practices to find a match, then locate the new phone number and fax automatically

It also automatically faxes the office to verify the prescription, and processes the doctor’s office response.

The company is leveraging data science around the logistics of order fulfillment, too, in order to determine which fulfillment partner to use for each incoming order.

These sorts of engineering tasks may already be common to larger e-commerce shopping sites, but haven’t really been put to work in the prescription lenses market, Pandya says.

He says JetLenses’ lower pricing comes from these improvements – it’s not just slashing prices to attract customers.

“Our margins are basically identical to others in the space,” he notes. “The goal is not to alter the business by just selling [lenses] for cheaper.”

While not a comprehensive review, I tried out online ordering on JetLenses before speaking to the company, to see how it compared with my usual site, 1800Contacts.com. I was fairly surprised to find that a 6-pack of my Acuvue Oasys for Astigmatism lenses were $32.99 on JetLenses, compared with the $51.99 I usually pay. (1800Contacts encourages shoppers to buy 4 boxes per eye at once, to get a $40 rebate on these lenses. But that’s a lot to spend all at once.)

JetLenses will honor the manufacturer rebates, too, and works with customers’ vision insurance plans.

The website itself is a little wonky in parts, but it’s only been online since the fall. You’ll need to know your lens brand and do a search rather than try to browse your way. as the site navigation is somewhat lacking, I found. But to save nearly $20 a box? Worth it.

JetLenses isn’t the only contacts lens e-commerce startup out there right now. Another, Hubble, raised $73.7 million last year for its own brand of daily disposable lenses, sold on subscription. That’s the not route JetLenses is going.

Instead, it aims to apply these data science techniques to other prescription businesses, like dental products or prescription creams.

For now, the startup is focused on raising a seed round following Y Combinator’s Demo Day to scale the business more quickly.

Amazon’s next conquest will be apparel

Late last year, after Amazon announced it had acquired the rights to J.R.R. Tolkien’s epic “Lord of the Rings” saga for $250 million, I wrote how the move underscored Amazon’s relentless pursuit to build one platform to “rule them all.” Now that Amazon is investing half a billion dollars into developing a Middle Earth show – making it the most expensive TV series ever made – it won’t be a surprise to see Jeff Bezos front and center at the Emmys soon.

But Hollywood isn’t the only industry Amazon wants to upend. Based on the company’s great ambitions in apparel, it may not be long before we also see Bezos at New York Fashion Week next to Anna Wintour.

The 800-Pound Gorilla in the Fashion World

 

As traditional retail continues to recede, direct to commerce fashion brands continue to emerge. I’ve previously shared how Stitch Fix, Warby Parker, Everlane and Allbirds are just a few innovative companies proving the success of this model. As the master of D2C commerce, Amazon has been fine-tuning its fashion operation for over 15 years.

Amazon originally got into apparel all the way back in 2002 and acquired online shoe retailer Zappos for $1.2 billion in 2009, marking the largest purchase in its history at the time. But the company’s quest to dominate fashion has faced several historical obstacles, chief among them that people have not trusted buying apparel online out of a desire to try on the items first and that Amazon was not perceived as a “cool” brand.

Headwinds are now tailwinds. Online shopping for apparel took off and is now the highest online-penetration CPG sector; the majority of women have shopped for clothing online. E-commerce accounts for nearly twice as big a proportion of total clothing sales as it does for retail more broadly (17 percent vs. 10 percent). Amazon, meanwhile, has honed its apparel strategy, providing free returns, better photography and greater selection. Today, the company is the largest apparel retailer by gross merchandise volume. Mission accomplished? Not quite.

Building A Private-Label ‘Fashion House’

An actual Amazon fashion shoot

Bonobos CEO Andy Dunn once said, “Selling a bunch of other people’s stuff is a low margin game that requires a lot of capital and, ultimately, it’s hard to beat Jeff Bezos at that.” This is true, but when it comes to apparel, Bezos has greater ambitions than selling other people’s stuff. Currently, though, that’s mostly what Amazon does.

According to analysis from Coresight Research, nearly 14 percent of listings on the U.S. Amazon Fashion site are from Amazon itself, while third-party sellers account for the remaining 86 percent. Amazon is highly incentivized to increase its share of that pie. Apparel is a highly profitable category for the company, with 40 percent peak gross margins in the last 10 years. Additionally, Prime members heavily overindex for buying apparel on Amazon – nearly two-thirds have done so in the past year.

As it ramps up its private-label offerings, Amazon is clearly keen to move beyond selling the apparel equivalent of batteries and diapers through its Amazon Essentials brand. It started selling thigh-high velvet boots in September, and Coresight’s analysis indicates that the company is focusing on higher-value categories.

If its recent Lord of the Rings rights acquisition was an attempt to further capture young affluent consumers’ eyeballs, and Whole Foods an attempt to lock down their stomachs, it follows that Amazon would want to ensnare their wardrobes as well. Acquiring a hot digitally native vertical brand – or brands – would be a speedy way to accomplish that. Walmart has already pursued this strategy by buying Bonobos, Modcloth and others; Amazon could take a similar path and seek to bring buzzy brands like Everlane into the everything store. This could also go a long way in helping Amazon shed its “uncool” label.

Becoming A Fashion (Power)House

The Echo Look is just one sign Amazon is serious about dominating fashion

Last year, Amazon introduced a number of innovations designed to turbocharge its apparel business and make the online shopping experience as frictionless as possible. It launched Prime Wardrobe, a Stitch Fix-style service that allows you to try three or more items on at home before sending back the items you don’t want for free in a resealable box with a prepaid label.

 It also debuted Echo Look, a new Alexa-powered device that the company dubs a “hands-free camera and style assistant.” The addition of a camera enables the device to record and comment on its owner’s clothing choices, using a combination of machine learning and human stylist feedback. This advice also takes the form of recommendations, which can drive revenue to Amazon Fashion, and specifically its private-label brands.

Amazon is iterating on and rolling out more features for the Echo Look, including curated content and even crowdsourced (human!) style feedback. It also created an AI algorithm for designing clothes and patented an AR mirror that lets you virtually try on clothes. The value of such a mirror was validated recently by L’Oreal’s acquisition of ModiFace, a company that produces technology that powers similar applications in beauty AR.

Analyzing all these moves together, Amazon’s apparel strategy begins to crystallize. First it sells tons of clothes to learn how clothes are sold. Then it starts selling its own clothes to generate higher gross margin. And now has it has Prime Wardrobe to increase lock-in and reduce points at which customers can choose not to buy Amazon’s own clothing (all while gathering more data about individual preferences); and Echo Look to be its data collection and voice-commerce portal (and as an added bonus, it can route ambiguous purchase requests to its growing inventory of private-label items). If this strategy is successful, it will give Amazon an enormous data moat to drive high-margin sales – a competitive advantage that will be extremely difficult for fashion retailers and brands to replicate.

Bezos doesn’t need to even ask.

Amazon has become increasingly dominant in several increasingly important arenas: cloud services, voice assistants, self-serving brick-and-mortar stores with Amazon Go, and of course its now-traditional role as the online everything store. The company is poised to add apparel to this growing list as it changes the way people shop for clothing (again) and entices more of its customers to buy Amazon’s own threads. And it bears mentioning that Amazon Fashion will get a helpful hand from Amazon Studios as well. Bezos once shared that, “When we win a Golden Globe, it helps us sell more shoes.” If he has his way, Amazon will be doing a lot more of both in the coming years.

Gwynnie Bee is bringing subscription clothing rental to traditional retailers with launch of ‘CaaStle’

Gwynnie Bee, a subscription service offering women an “unlimited closet” of clothing for rent, believes its model is one that can be expanded to traditional retailers, too. And today, it’s officially taking the wraps off a new technology platform which will allow retailers to offer a subscription clothing rental business alongside their existing channels. The platform is cleverly dubbed “CaaStle” – the name referencing “Clothing as a Service” (itself a play on subscription-as-a-service, or SaaS). It offers retailers a turnkey solution where all aspects of the subscription business – including the website, the databases, the logistics, the cleaning, returns, packing, shipping, and more – are handled.

CaaStle is actually something founder and CEO Christine Hunsicker had envisioned from the beginning, she says.

“When we first started the company, this was the goal – build the platform and the technology that would power a new economy for retail,” Hunsicker says. “From day one, we were building this, but we had to prove the model would work. We also had to have a way to prove that we could do it right – that we could ship boxes and process inventory – so we brought up Gwynnie Bee as our first service on top of CaaStle,” she explains.

Founded in 2011, Gwynnie Bee is a clothing rental service that originally served the plus-sized women’s clothing market, but expanded at the end of January 2018 to include sizes 0 through 8, as well. (It does so in a different way than most, however – it only adds the smaller sizes for items that are available from 0 through 24, as a means of encouraging brands to make more plus-sized apparel.)

The company plays in a larger market of clothing rental businesses, several of which are on the upswing. Rent the Runway, for example, just raised $20 million from Alibaba’s Jack Ma and Joe Tsai; Le Tote just became the first U.S. subscription service to enter China.

Gwynnie Bee doesn’t share its subscriber numbers or other metrics publicly, but says it’s doing better in terms of that ideal 3:1 ratio for SaaS companies – the Customer Lifetime Value to Customer Acquisition Ratio, that is – which is a crucial measure of a successful subscription business.

Above: CaaStle homepage

With CaaStle, retailers simply send Gwynnie Bee their inventory, and the rest is handled.

Gwynnie Bee builds the front-end site under the retailer’s name. It handle all the logistics – the processing of returns, the cleaning, the inspecting, the restocking, the pick-pack-ship – all out of its own multi-tenant warehouses in Columbus and Phoenix.

The retailers pay Gwynnie Bee on a per customer basis when they use CaaStle, which can be customized for their specific goals.

There are basic, premium and enterprise tiers available, with optional add-ons that offer things like fit and size recommendations, personalization technology, algorithms that price the clothes the customer wants to keep, and more. CaaStle collects the customers’ credit card transactions, so it pays out to the retailer, based on their package.

In some cases, the retailers are looking to acquire new customers. Other times, they may want current customers to spend more money. Or they may be looking for inventory monetization.

On that latter front, the retailer could use CaaStle as an alternative to moving excess inventory to an outlet, for example. Or if they’re looking for new customers, they’ll put their best clothing on subscription instead.

Above: Ann Taylor’s clothing subscription business, Infinite Style, powered by CaaStle

“But the best stuff is not the top sellers,” Hunsicker points out. “I think this is probably one of the most interesting pieces of this model – what sells well tends to not rent well, because what sells well are the basics, the staple items…what rents well is all of the fashion,” she says. “What people actually want to rent is an amazing complement to traditional retail, which is why we’re so excited about it.”

That is, people often rent the trendy, fashionable items they didn’t want to buy because they knew they wouldn’t wear it more than a couple of times.

CaaStle has already been quietly powering the subscription clothing rental businesses from Ann Taylor (Infinite Style) and New York & Company (NY&C Closet) since last year – well ahead of this week’s public unveiling during a keynote at the Shoptalk conference.

While Hunsicker can’t share their specific metrics, she could speak to the three businesses – including Gwynnie Bee – in aggregate.

Above: CEO Christine Hunsicker

“What we’ve seen is a really large increase in new customers – a substantial portion of the people signing up for the services are new-to-file. We’ve also seen a meaningful share of wallet increase, and a really good operating profit,” she notes. “If you look across all three tenants…we’re seeing a 50-plus percent new-to-file, a 60 percent share-of-wallet increase, and 25 to 45 percent operating margin on the business.”

The company has several more retailers coming on board in 2018, including expansions beyond women’s apparel.

Gwynnie Bee itself has operated fairly quietly, too, despite raising over $100 million in outside capital. Its investors include only a little bit of traditional VC, along with individual investors from retail and finance, as well as specific VCs investing independently. The company is not in need of raising again soon, because CaaStle is a less cash-intensive business than Gwynnie Bee, the founder notes.

“We’re super well-funded and have a bunch of cash in the bank. We’ll figure out if we want to do a big expansion round in the next year, but no specific plans,” says Hunsicker.

CaaStle is open to any retailer today who wants to reach out through its website.