The fashion industry is hostage to inventory and reliant on a retail buyer’s ability to forecast demand by accurately predicting trends. These trends, though, are constantly changing, along with consumer tastes and preferences. Inaccurate predications are why high fashion ends up in discount stores, thereby damaging brands’ equity, reputation and margins.
That’s what Moda Operandi and CEO Ganesh Srivats are looking to change. They’re closing the gap between when fashion appears on the runway or in designers’ showrooms and the time consumers can buy those items, while helping designers create more salable collections – and they’re using machine learning and AI to do it.
On Thursday, June 13, 2019 at Bloomberg’s Global Headquarters in New York City, Bloomberg Television’s Emma Chandra sat down with Srivats as part of the Cornell Tech @ Bloomberg Speaker Series, and discussed the company’s efforts to disrupt the fashion industry, predict fashion trends with data, and create a global brand.
Retailers understandably buy into fashion pieces they believe will sell, which means the ‘riskier’ pieces – often representing a designer’s best work – are never presented to the consumer. “In a sense, this skews most of the fashion industry’s investments into things that are safer and broadly more likely for them to see sales in. In that process, the people that are most disenfranchised are the consumer whose choices and tastes are circumscribed, and the creator, the designer who probably put a lot of love and passion into creating this collection. Much of it will never see the light of day,” noted Srivats.
Moda Operandi enables consumers and designers to interact with each other, empowering creativity while enabling choice. Online platforms that allow consumers to buy whatever they see provide a sense of instant gratification. When their inventory is based on consumers’ choices, consumers are the ones dictating the trends.
Dissecting Consumption
Discovery (or shopping without intent), transaction, and fulfillment are the three stages of consumption. In the fashion industry, there are inevitable gaps between them. Over decades, the industry chose what they wanted customers to experience. Today, with social media platforms like Instagram, consumers have more awareness of available fashions, and that awareness often inspires consumption. Moda Operandi’s goal is to encourage fashion discovery, while closing the gap between discovery and when something is available for purchase.
How content is presented matters, as does how this information is bridged with the customer experience. Moda Operandi focuses on discovery without stifling the consumer by limiting choice. Discovery on the website happens through personalized content curated; browsing; or relying on the platform’s influencers, like ‘Lauren’s Closet,’ which is curated by Moda Operandi’s founder, Lauren Santo Domingo.
“[Consumers] want to do different things at different times and that keeps it challenging, because you can’t pigeonhole them into something,” explained Srivats. “We look at all forms of discovery and how to enable choice making, and we embrace all of them.”
When it comes to fulfillment, consumers expect the same level of service across every product they experience. If someone can order a meal from the best restaurant and have it delivered to their home within 60 minutes, they also expect fashion retailers to provide a similar service. Retailers can no longer simply compete solely on price and service when people take convenience for granted. Moda Operandi differentiates itself and its products by providing its customers with choice.
Using Data to Meet Customer Expectations
Moda Operandi competes on service, price, how people shop, and what they’re buying. Along the way, it captures a huge amount of customer data. Because Moda Operandi sells next season’s complete collections, its data shows what trends customers will most likely want in six months’ time. As a result, its discovery-oriented customers — who want to purchase next season’s trends now — serve as early adopters and prognosticators of future fashion trends.
“We saw data that the items we end up selling in Trunkshows — and selling well — have huge correlations to what items we will end up selling in our, what we call, boutique business,” said Srivats. “The metadata we collect on all the customer purchases is a strong indicator of future fashion trends – not only do we know the individual items that are going to be successful or certain designers that are going to have a huge season, but we can also somewhat tell the colors, fabrics, silhouettes, and patterns that are going to be big trends in the future — six months from now.”
This data also enables the company to make smarter, more sustainable, inventory decisions, in addition to helping designers produce more salable items, while being more competitive.
“There’s a huge amount of institutional inertia in the existing industry about how things ought to be done and will be done – that’s not for us to speculate on – and people would have the adoption that they will take,” said Srivats. “Over time, we will figure out the economics of the value that we’re creating, and how do we actually derive that economic value between us and the designer of the brand.”
Geographic Expansion
China has the largest luxury market in the world and is expected to comprise 50% of global spending by the next decade. While luxury fashion has been able to capture part of that market, e-commerce and tech companies in fashion have yet to gain a major foothold in China. Therein lies a huge opportunity for Moda Operandi.
“We think our proposition is very unique for China, because that consumer first and foremost loves choice, access, exclusivity, and the kind of values that we represent within fashion — they want to have access to the best and the most exciting,” said Srivats.
Young Chinese consumers tend to buy the most extreme, innovative, and forward-thinking fashion – the Chinese consumer is more daring – and along with expanding its customer base by bringing Moda Operandi’s designers to China, there’s also the opportunity to bring Chinese designers onto its platform.
Moda plans to build its product from the ground up and let that consumer dictate how they want to experience the platform. Also, by establishing an office in Shanghai, the company will be even more in tune with the Chinese consumer.
“We’re talking a fully-dedicated product, engineering, marketing, and operations team that will — from the ground up — build a new Moda for the Chinese consumer,” said Srivats. “If that takes longer, that’s fine, but in the long-run, we think we’ll be more resilient and possibly avoid some of the pitfalls that we have seen some of our competitors at other American companies face.”
You can watch the entire discussion below:
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