The Genteel
November 20, 2017
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Coatsworths.com founders and brothers, Matt (right) and Andrew (left) Coatsworth.
The Peacock Parade flash sales
Screenshot from thepeacockparade.com.

The web is saturated with shopping sites like Gilt, yoox.com and The Peacock Parade offering deal-foraging hunts. Into this fierce group of competitively-priced fashion e-commerce sites enters Coatsworths.com, a Toronto-based company offering everything from apparel to gadgets to home decor. The site is currently in Beta mode and set to launch at the end of the month.

Coatsworths.com started with brothers Matt, 27, and Andrew, 31, Coatsworth, who set out six years ago to pursue modelling careers that took them to London, Paris, Milan, Berlin, Lisbon and back. "When we were constantly shooting for these fashion companies, we got a behind-the-scenes look at how these companies operate, how they source product," says Matt.

When the brothers returned to Toronto in 2012, they founded Coatsworths.com - a discount shopping site that follows a flash-deals model, with a layout and navigation inspired by Pinterest.

On Coatsworths.com, members are able to share deals with tools akin to "pinning". Andrew and Matt also scrutinised existing daily deal sites: "It's free [to receive notifications from daily deal sites], but you'll get 20 different emails if you sign up from 20 different sites. So it's annoying because you're constantly getting emails and you don't even check half of [them]," remarks Matt.

It's free [to receive notifications from daily deal sites], but you'll get 20 different emails if you sign up from 20 different sites. So it's annoying because you're constantly getting emails and you don't even check half of [them].

Their solution? Matt believes that aggregating the deals on Coatsworths.com "cuts the work of having to go to multiple sites to find stuff. If you log in, there's a deal button, and every day we're going to have a daily deal from all those sites, on our site. So you can unsubscribe from all those deals you get, and just get one email from us, and it'll come from 20 sites." Included in their aggregated deals are sales from Gilt, Bluefly, Shopbop and ASOS.

Members can also search products through a crowd-sourced shopping rack. "It's a hybrid of everything good in the marketplace, that's our whole platform, essentially. We analyse each segment, its pros and cons, and then turn it into what we offer," states Andrew proudly and with confidence in the site's take-off.

When it comes to start-up success, the picture isn't complete without cases of businesses that relied on their entrepreneurial spirits alone. While fashion e-retailers such as Net-a-Porter are at the pinnacle of fashion e-commerce gold, the majority never come close. One of the earliest online fashion retailers was Boo.com, a British-based business-to-consumer (B2C) site that aimed to be the online destination for discerning shoppers.

Founded by Swedish model Kajsa Leander and poetry critic Ernst Malmsten, the pair had previously sold their first internet venture when the dot-com boom was just rising. As reported in The Guardian, Boo.com was launched in October 1999, only to see its £80m-plus cash investment from banks JP Morgan and Goldman Sachs, the Benetton family and Bernard Arnault (chairman of luxury group LVMH at the time) go up in smoke within 18 months, because of poor planning, management and attempting "to do too much," too fast.

Several factors affect the success and life span of a fashion e-commerce start-up and both investors and players in the fashion e-commerce industry continue to debate issues like generating demand, revenue and viable business plans. And according to Paul Pavlou, professor of Management Information Systems, Marketing and Strategic Management at the Fox School of Business at Temple University (whose research includes e-commerce strategy, digital business strategy and development of research methods), this couldn't be more relevant to flash-deal e-commerce sites.

Yoox.com
Screenshot from yoox.com.

In an interview with The Genteel, Pavlou points out that online shoppers tend to be more selective and are generally deal-seekers who are more likely to react. "So they'll sign up for an email and get offers to really go after the deals," says Pavlou. Flash sales give the impression of a "good deal" because of their fleeting availability. "If the deal goes on forever, then they feel like they're not getting a good deal," says Pavlou.

Whether a company can afford to constantly offer flash sales is a matter of supply and demand and there is no magic business model. "Amazon usually has a [sale window] of three or six hours, and of course the reason for this is not to constrain the consumer to make a decision quickly, but it's more the aspect of accumulating demand," says Pavlou.

The ability of companies' to sell designer products at such competitive prices goes back to the buying phase. "By buying at such a huge volume, companies can get a lower price. For example, buying at factory price means consumers can be charged a lower price," explains Pavlou. "So the reason companies want to complete the sale quickly is because the company bought a large stock and they want to sell it quickly. They want to aggregate that as quickly as possible, and push consumers through the discounts to make a decision quickly."

All the traditional aspects of business still apply here - [online shopping] is just a new model of selling.

How quick is quickly? That depends on a company's customer base, which for start-ups, approximates their subscriber list. "Amazon has a very large customer base. They can sell hundreds in three hour, six hour deals when they send an email to consumers in the morning, and one million will see the email and respond to the promotion. But for dot-coms, they don't have this kind of customer base," says Pavlou. "It's more like experimenting with a different promotion time with each product. The more expensive product will sell more slowly, but if you're selling a $5 product, it will sell quickly."

Pavlou's advice on business management of e-commerce sites is winsomely simple: "All the traditional aspects of business still apply here - [online shopping] is just a new model of selling." Pavlou elaborates further: "It's a business, so companies have to get as low a price as they can through [their] suppliers, try to market quickly, not to keep the inventory too long, try to buy in large quantities and at the right time, try to give the impression to customers that they care about quality and trust."

A successful e-commerce start-up must satisfy a few integral needs: experimenting with the business model, following a basic business operation framework, and keeping up with fast-paced and ever-changing demand online. No wonder that entrepreneurial spirit and tenacity of start-ups are praised, and for the brothers behind Coatsworths.com, these qualities will be tested with the official site launch date slated for late April.

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