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The Startup That Changed How Women Buy $10,000 Gowns
It’s New York fashion week and Aslaug Magnusdottir is sitting in the front row at the Marchesa fall 2012 show at The Plaza Hotel, dressed in a white bouclé Marc Jacobs skirt suit, looking every bit like the women’s magazine editors she’s seated beside. But Magnusdottir doesn’t write about the latest trends. Her year-old startup Moda Operandi, which in its second round of financing last June raised $10 million, allows customers for the first time to pre-order items straight from the runway. “People are saying fashion week is no longer just a press event, it has become a shopping event because of us,” she says.
Moda Operandi CEO Aslaug Magnusdottir
Following a fashion show, Magnusdottir dispatches her team—including a photographer, stylist, makeup artist and models—to a designer’s studio to shoot the line. “Often the collection is still being priced while we’re there,” she says. “Everything happens very much in real time.”
Within 24 hours following the studio visit, the collection can be seen online, allowing customers to be curators, and decide what fashions are standouts. They can pre-order what they like by putting 50 percent of the price down. The balance isn’t due until several months later when the items they’ve ordered are shipped to their homes inside of one of Moda Operandi’s monogram fabric garment bags with leather accents.
There is room for surprise built into Moda Operandi’s business model. Phillip Lim’s pre-fall 2012 Ka-Pow cardigan inspired by neo-noir comics was a surprise hit on the site, for instance. Customers can make returns for credit, but currently the return rate on the site is a low 10 percent, the company says.
Magnusdottir co-founded Moda Operandi with Vogue contributor Lauren Santo Domingo. Before settling on the concept of online trunk shows, the duo considered opening a traditional brick-and-mortar store, which they envisioned as a New York City version of Paris’ famed Colette boutique. But after spending six months in 2008 looking at potential spaces, “we came to the conclusion that New York just doesn’t need another store,” Magnusdottir says.
In 2009, Magnusdottir, who’d previously had a career in venture capital and consulting, began working at e-commerce site Gilt Groupe. “It was through the interaction with a lot of designers at Gilt that I started thinking about the need for this concept,” she says. She revived her partnership with Santo Domingo, resigned from Gilt Groupe in June, 2010 and completed the startup’s first round of funding two months later. “As far as being a woman, this is a better time than ever before to be raising capital,” she says. “The fashion sector is very hot in New York, especially the fashion tech sector, and a lot of women have been the leaders in the industry.”
The site launched in February 2011—coinciding with New York fashion week and the fall 2011 collections—with over 40 designers featured, from rising-star Prabal Gurung to stalwart Calvin Klein.
Moda Operandi’s biggest challenges have been convincing customers of the value of ordering clothing online months in advance of delivery, and luring in big spenders who are used to meticulous care (and perks) from luxury purveyors.
To woo customers, Magnusdottir says she reminds them that “the experience that we are offering is similar to a private order, which was previously only available to celebrities, socialites, editors and close friends of designers.” She’s also taken a lesson from Gilt Groupe’s flash sales experience. “If you don’t secure [the runway fashions you want] then and there, you will probably never find them again,” Magnusdottir recites as another Moda Operandi mantra. Trunk shows live on the site for three to seven days.
The exclusivity resonates in other ways. Actress Glenn Close’s fresh-off-the-runway Zac Posen fall 2012 forest green embroidered bustle mermaid gown, which she wore to this year’s Oscars, hit Moda Operandi before she hit the red carpet. Can’t live without it? It will cost you $8,990.
Selling luxury goods at that steep a price point online is a relatively new phenomenon. “Ten years ago, people thought nobody would ever buy expensive dresses online,” Magnusdottir says. The most expensive piece Moda Operandi has sold to date was for $60,000. The average order placed on the site is for $1,400.
“If someone is making a very expensive purchase decision they typically have a lot of questions about the fit, and about what to wear the item with,” Magnusdottir says. “In some cases, they’ll ask for additional images or want to contact the designer.” All of which Moda Operandi’s team of stylists will assist with.
Other perks of being a top Moda Operandi customer include being invited to fashion shows and having items personally delivered. Top Middle Eastern clients (the site’s second biggest market behind the U.S.) were invited to Matthew Williamson and Peter Pilotto’s latest runway shows in London.
Moda Operandi, which started with five employees (including its founders), has grown in just a year to 40 employees. International sales are on the upswing (the site ships to over 150 countries, which make up 20 percent of sales currently). And the site is offering over 120 designers’ fall 2012 collections. Alexander Wang, Isabel Marant and Theyskens’ Theory have been the bestselling lines since the site launched.
Perhaps the biggest sign of success for Moda Operandi is that several luxury brands—including Salvatore Ferragamo and Jil Sander—have followed their lead offering pre-sale trunk shows on their own sites. “The more that customers get used to shopping this way, the better it is for us,” Magnusdottir says. As for how she plans to keep the site ahead of the curve—shoppable editorial content is in the works, as are online tools to help customers better figure out their sizing.
Magnusdottir cites dealing with rapid growth as her biggest challenge, and jokes that straddling the line between tech entrepreneur and fashionista is her other issue. “My days lately have been a mix of meetings with some of our investors and going fashion shows,” she says. “Getting the outfit right for that is quite the challenge.”