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“Startups are not broiler chickens for accelerator!” CEO of Get Outfit about developing a fashion project on the emerging market

“Startups are not broiler chickens for accelerator!” CEO of Get Outfit about developing a fashion project on the emerging market

12 Sep 2019

A year and a half ago, Kim Sanzhiev saw on his eyes, how a dilemma “a full closet of clothes, but nothing to wear” could kill time and nerves. As a result, he has created Get Outfit, a service that matches outfits for the clients, taking into account their lifestyles, tastes, body shape and budget.

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Kim’s project is one of the most interesting fashion startups in the CIS region, that is earning money from the very first working month. However, Get Outfit has never finished any acceleration programs. What does Kim think about useful and harmful accelerators, Belarusian market and retail technologies — all about it in an interview to Startup Jedi.

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What is Get Outfit?

It is a service, that helps to create looks with clothes, shoes and accessories. How it works: a person fills in a form, telling about his or her style preferences, body parameters and budget. Out of the thousands of things, the application finds options which match the customer the most. Next step — stylist’s work. He creates finished looks from all of the clothes that can be combined with each other.

Depending on the chosen plan, your look will come randomly or after online coordination with a stylist. More than 80% of clients, prefer to make a preliminary agreement. A parcel usually has from 5 to 20 things. “Premium” plan provides an offline meeting with a stylist at the beauty salon. Before the client comes, a stylist prepares different looks and assists during the try-on. In any case, it is allowed to replace the things that did not fit or just not to pay for them.

The service saves the purchase history, taking it into account when compiling the following personal looks. You can sign up for regular delivery.

Get Outfit has also launched an online school of stylists. The program has two courses — basic (for those who want to get fundamental knowledge about the fashion industry) and advanced (for those who are already versed in fashion and want to hone their skills). The best graduates of the advanced course can get into the Get Outfit styling team.

Profile
Click the image to open Get Outfit’s profile on the Rocket DAO platform

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Get Outfit clients — who are they?

Talking generally, our client is a busy person (not necessarily with high income), who wants to spend minimum time choosing the outfit.

We distinguish two main segments:

  1. Middle- and top-managers, entrepreneurs, IT-geeks. Everyone who earns enough money and values their time. In general, these people are inclined to do shopping online. Most likely they all use similar services — food delivery, taxi etc.

  2. Young mothers, who have pre-school children. In addition, girls with non-standard body shapes, for whom it may be difficult to find clothes of their size.

Among our customers, there are 60% of men and 40% of women. Partially it happened so because of how we were positioning ourselves in the past. We focused on technology, on saving time and on the fact that the service allows you to achieve great results thanks to a presentable appearance. I think this gender distribution is associated with this. But not with the fact that men use similar services more often, this is not so.

An additional channel of promotion is our corporate segment. We are developing it from the beginning of 2019 and Belarus has shown amazing growth. Corporate style is not vivid, but it can be a useful component of loyalty programmes for a pair of reasons:

  1. It is an additional privilege for the employees

When in the compensation package apart from fitness, medical insurance, tea and coffee, there are unusual “perks” — it is always another argument for attracting and retaining employees. According to iCIMS, effective loyalty programs can reduce staff turnover by up to 31%.

2. It has a positive effect on business results

The founder of McKinsey consulting company — Marvin Bauer, said: “If you want to sell something to your client, you have to look like your client”.

Our business customers are:

• companies where the employees’ appearance is important because it affects business performance;

• companies without a dress code. Often these are IT projects where people are “tuned” to efficiency. This is a trend: in Silicon Valley, they are ready to outsource practically everything to free up their time.

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Main customer acquisition channels

Up to this moment, we didn’t invest that much into paid channels, our marketing was based on personal networking, we were spending our time on it, but not money. Recently, we started working with one Belarusian agency.

We have been testing acquisition channels on Facebook and Instagram since last Autumn. We have noticed good performance progress — approximately 1000 Russian Rubles for one paying customer. Thanks to these channels we can grow much faster and more aggressively, but first of all — qualitatively, therefore we are growing organically, gradually increasing our marketing budget.

Another important channel is partnerships with companies of different scale and specialisation. They mention us on Slack, on the corporate portal, in the discount catalogue for employees — eventually, that’s how we are receiving new orders.

We are using content-marketing: we maintain an online magazine about fashion and style. We have just started, but it already helps us to attract new customers. Our magazine is a bridge for communication with influencers: they share useful content and attract their audience to our website.

Other things that work perfectly are word-of-mouth tales and organic search. This points to the fact, that people like what we do. Even those, who didn’t use our service, tell others about GetOutfit.

For us, it is important that stylists and partners do like our product — it allows us to attract many cool image-makers to Get Outfit. During the last year, we have received more than 100 organic applications from stylists. After some workshops at our school, the stylist becomes a partner of the company: he is interested in spreading the info about our service in order to earn extra money with us.

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Financial performance

The average bill in Belarus is almost the same as in Russia — about 380 dollars. At the same time, net profit per customer is somewhere between 30–45 dollars. The rest of the revenue is the cost of clothes and services of stylists, a commission of payment systems, etc. On average, a client uses Get Outfit services 3–4 times a year, and this directly correlates with seasonality.

In April, there was a jump in all metrics — large Belarusian mass media wrote about us — Onliner, Probusiness, Relax and Marketing.by. Since June, steady growth continued due to organic and paid channels. In August, we grew by almost 2 times in revenue compared to July. Talking about traffic, we monthly grow at least 10% from month to month.

Many startups are too late to wonder how they will earn. From the very beginning, I had a clear vision of how I will monetize the project. And it worked out: we started earning money from the first day. But it wasn’t much money, it was not enough for development, we invested our own funds in the project.

The fact that we are developing without external funds has taught us to immediately earn and do some things much more efficiently than other startups. Many projects pay for PR — we have not yet paid a dime. All articles about us were published for free, and this is our reasoned position. Many popular media are ready to write about startups for free if they have something interesting to say

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Plans for development

We launched our project in spring 2018 in Moscow and so far it is still our main market. We tried to launch Get Outfit in Kazakhstan but we understood just in time that it was not the right time for us to enter the market there, so we closed our project there. Starting from April 2019 service works in Belarus, and so far metrics are way better there than in Russia. It is surprising but can be explained.

Mostly that’s because we have no one to compete with on the market. A circumstance that when we were launching our project we stood out of crowd (there were no similar Belarusian services on the market) worked for our benefit. So far, only one competitor has appeared in Belarus after us — Oybox, even if we are very different. At our place, the client himself determines the budget, and almost all brands of different price categories are available to him, from which we select looks. But in Oybox there are 3 main plans with a fixed price per box, with the already included cost of clothes. We have a positive attitude towards them because they help us develop the market and a similar “boxed” model of purchases.

Now we are looking for investments in the range from 300 thousand to 1 million dollars. Ideally, the figure is closer to a million — this money will be enough for us for a little longer, and with it, we will launch in other markets. We will do this without investment, but it will be more local, longer, and not so bright.

For investments from 300 thousand to 1 million dollars, we are ready to give the company’s share from 7% to 15%. At the same time, if we see that we can develop much faster in partnership with someone, but for this, we will have to give a slightly larger share, we are ready to discuss the options.

Recently, I spent a month in Los Angeles and saw an unlimited number of opportunities there. In the United States, competition is much higher, but with the same efforts as here, you can earn more. Also, I went there to feel the mentality of people and find those who will develop the service there.

We are not very happy with the classic Russian history when the project is sold to conventional Yandex or Mail.ru. In this case, startup evaluation is often underestimated due to the deteriorated business climate in Russia in connection with recent events. Therefore, many investors recommended us to enter the Western markets faster, make first sales there and validate the business model.

That’s what we do. Now we are thinking about cities: in the US it’s about New York, San Francisco, maybe — Los Angeles and other megapolises. In Great Britain, it is London, apparently. In perspective, we want to launch our service in Europe. However, there is not one single market, as it can seem from the first sight. There are lots of them, and they differ from each other. German and Italian, the same as French and Spanish markets are very different.

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Get Outfit doesn’t have a warehouse — it is a competitive advantage

It is directly connected to the idea which we put into the basis of our model: to create a maximally suitable look to our customer out of the whole variety in the market. Technically, we can create a look grounding only on the offers from the conventional Lamoda and deliver everything in one beautiful box. Customer experience may be better, but customers rarely buy all the wardrobe items in only one online store, whatever its assortment is. The best look often turns out when you conditionally buy shoes in a store in Italy, a t-shirt and sweater in a Uniqlo store, and order jeans on the Internet. We have long ago realized what specific problems we want to solve, and we are following this: the client, in fact, doesn’t matter where exactly we find the things that are ideal for him.

However, it is important to strike a balance between look options and the convenience of logistics. A great item can be sold on the website of an international retailer abroad, but delivery can take a long time. Therefore, we provide a choice and clarify with customers: how much time they are ready to wait, whether they are ready for receive deliveries from foreign online stores, whether they can make an advance payment for things. For many, this is uncritical, but for someone it is important, and we try to find the best solution for everyone.

The absence of warehouses with clothes makes us more flexible and mobile. We do not face procurement and sales problems. Also, the same Stitch Fix works with warehouses, and they can buy a batch of things that will be on the shelves for a long time. In such a situation, any such service or retailer theoretically may not always act within the interests of the customer. Those. offer not the best of what is possible, but the best of what needs to be sold. We are free from such a dictatorship of the warehouse and can offer our customers a look from the whole variety of the market. Well and then, freezing money in a warehouse is very expensive for any business.

We also consider our partners as our customers — online-shops, boutiques, showrooms and shopping centres. It’s because Get Outfit is a platform which unites customers, stylists and shops. There are more than 50 partners where we are creating looks for our customers.

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Fashion retail trends

Personalization and clothes search by photo

The main trend now is personalization, it allows the client to save time and view the assortment on the site that is selected specifically for him or get a ready-made wardrobe solution, that’s how we do it in GetOutfit. Browsing hundreds of product pages is too tedious, this is the reason why many startups offer technology for finding clothes from photographs. All of them speak about the uniqueness of their product, but in fact, with slight differences, they all are very similar. We also launched a typical project with Oyper, because they have one of the best solutions on the market.

The technology itself is interesting and promising. But it is important to correctly integrate it into the business so that it solved real problems and improved metrics. Otherwise, it will be another little-known function in the application or a chip for attracting the attention of investors. Any qualified business angel or venture fund understands that matching the solution to the needs of the market and its willingness to pay money for it is much more important than any product-market fit technology.

Get Outfit we also understand this, that’s why we are building a technology platform that helps the client choose the image that suits his lifestyle, taste, body type and budget. Now, this is done by stylists, who use various technologies as their assistants. The neural network finds the right things among thousands of wardrobe items by size, style, fabric, colour, etc. And a stylist makes an image based on approved products. Shortly in the application, we plan to launch a tool where the neural network itself will select the proper looks.

Technology will not replace human stylists completely, at least in the next five years. A neural network can be taught to perfectly perform tasks within the framework of algorithms, to work with data arrays. And it is very useful — artificial intelligence, unlike humans, doesn’t make mistakes in routine tasks. But, when it comes to the creative component, where taste, stylistic skills and creativity are needed, the technology is still “stalling”.

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Connecting offline- and online-experience

If earlier companies relied only on one of these channels, now business needs to be omnichannel. A vivid example — more and more people prefer to order online and choose pickup. Or they look at the product on the site and then go to the store itself to it try on and buy. It is important for them to tactfully evaluate things, touch them before buying. And if this is a boutique — also feel the atmosphere, which is especially important for premiums. All major brands in the United States combine online with offline.

Harvard Business Review examined the preferences of 46 thousand customers and found that only 7% of respondents buy online only, 20% only offline. Both channels are used by 73%. This means that the business should be equally well represented in them, integrating channels with each other.

In the language of marketers, the phenomenon of people choosing online and buying offline is called the ROPO-effect. Google even made the Consumer Barometer service, which collects statistics of purchases online and offline for different regions and products.

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How can accelerators hinder

It is very important to go through the stage of mistakes in order to learn. In this regard, some accelerating programs can sometimes interfere — especially those that teach everyone the same mechanics, claiming that is the “only way how things should be done”. Startups are not broiler chickens for the accelerator! When you do everything following well-defined steps, the risk of mistakes is less. But the likelihood of succeeding is much lower. Because, by studying the ready-made instructions through which everyone goes, you will be just one of everyone, you will be less innovative. Those ideas that you would probably risk to try out of an accelerator, may simply not be accepted there.

Another reason not to go to the accelerator right away is the benefit of a startup’s uncertainty state. Being in uncertainty, you constantly test many different hypotheses, think creatively. Resources are limited, you need to run the project as soon as possible: in such a situation you are forced to generate ideas and work hard. And only then, when you understand what your business is about and for whom, what you need from the accelerator, studying in it can be useful.

On the other hand, if a person does not understand how to take the first steps, but he has a brilliant idea, energy and talent, you can try to go through the accelerator. When I started Get Outfit, I did not have experience in startups, but I had an understanding of how the business works, as I used to work in a consulting company.

There are different successful examples — let’s take Airbnb, it passed Y Combinator. But I have a feeling that the coolest stories were born outside accelerators. Facebook, Uber, Amazon, Snapchat, Stitch Fix — all of them did without training.

Indeed, most of the unicorn startups did not go through acceleration programs. Ali Tamaseb, a founder of Data Collective VC, has thoroughly studied 195 unicorn startups operating in the United States. It turned out that almost 90% of these companies did not go through accelerators. But at the same time, most of the accelerators appeared in the last 10 years. And the founders of “unicorns” in 60% of cases are serial entrepreneurs who have gained rich experience in previous projects. The trend is curious anyway.

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What the startup founder needs to focus on at the very beginning

It is extremely important for a founder to understand what he is as good as possible at, and to focus on this. When we started, I understood practically nothing in style and fashion, but I knew how the business worked. I focused on building business processes, marketing, and this allowed us to build a project effectively from the very beginning.

At the beginning of the journey, the success of a startup is 100% dependent on the founder. If he correctly determines his strength and constantly improves this point, then something should work out. Many incorrectly position themselves or want to create someone else out of themselves, but this does not work here.

It is important not to expect quick results. Often people think that they will work 3–4 months, and success will come by itself. In fact, before the first results are reached, one and a half year you will have to fully devote yourself to the project. It will not be easy, but if you choose a sphere that you like, you will go through any difficulties.

The pain threshold of the startup founder must be at the cosmic level! At the very beginning, I could react painfully to a typo on the landing page. Now, this is not the case: efficiency as a startup trait has been preserved, but we perceive these things in the team easier. These are just tasks — let’s solve them. At the beginning of the journey, a startup can and should sacrifice perfectionism in favour of speed. It’s better to do MVP quickly and add a few iterations than to constantly delay the release. Otherwise, when you finally launch your ideal product, it may be too late. This is a simple truth, but it is often ignored. Go for it!

12 Sep 2019

 

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