A pioneering fashion-tech company, bringing personalised styling services direct-to-consumers
- Type: Retail
Threadicated is now accepting expressions of interest!
What is Threadicated?
Threadicated is an on-demand and subscription-based, direct-to-consumer personal fashion styling service. The Company markets its services directly to consumers and, increasingly, through online fashion retailing partners as a plug-and-play feature for deep customer personalisation.
At its core, Threadicated is reimagining fashion styling in Australia, to help people find clothes they love. Their innovative model combines the processing power of AI and the expert intuition of human stylists to deliver an affordable, high-quality and scalable service in a medium that is relevant for time-poor digital natives.
It is an offering which has resonated strongly with customers to date. The Company has achieved significant traction in the first 18 months, generating over $200,000 in revenue, with robust customer acquisition and frequent repeat purchases. The next steps are to continue growing their direct-to-consumer customer base and deepen integration with fashion retailer partners.
How Threadicated Works
Customers request styled parcels that include a 5 item mix of clothing, shoes and accessories - with 60% of parcels delivered via subscription at one, two or three month intervals. Threadicated forms a complete picture of each customer’s style and needs, using the 60+ points of data shared during sign-up. Each parcel is then curated by a stylist, with assistance from Threadicated’s AI according to the customer’s preferences resulting in a selection of clothing, shoes and accessories personalised to each customer’s style, fit, and budget. Upon receiving the parcel the customer shares further feedback with Threadicated on each item. This data loop allows Threadicated to improve over time, adapting key learnings from each customer to enhance the overall experience.
Threadicated does not hold inventory and instead partners with leading brands and retailers. Having direct supplier relationships means Threadicated only purchases products at a reduced RRP after styling a customer, removing the need for large upfront inventory costs and reducing the working capital requirements of the business.
- Personalised Styling is disrupting the Fashion Retail Industry
Whilst many fashion retailers have already moved online, the user experience is often clunky and return rates high. Although many consumer-facing industries have been disrupted in ways which improve convenience (e.g. Uber, Deliveroo, AirBnB etc.), the fashion industry lags far behind. Personalised styling provides an accessible solution to time-poor consumers.
- Demand for direct-to-consumer and personalised experiences
Thanks to online pioneers, such as Amazon, customers have grown to expect and desire personalised experiences, with many retail CEOs stating that personalising the customer experience is a strategic priority for their companies. However only 15% of retailers have fully implemented personalisation strategies, creating a huge opportunity for growth of such services.
In Australia, thanks to increasing ecommerce penetration and improving logistics, there has been huge growth in direct-to-consumer models.
- Threadicated is a first mover and seeing huge traction to date
With over 4,000 sign ups and 800 parcels styled to date, Threadicated has grown revenue at an average of 20% MoM. They’ve also demonstrated impressive customer retention, with 60% of the parcels sent to customers on subscription. Customers receive an average of 3 parcels per year, representing a yearly customer value of $313 and an anticipated lifetime value of $540.
- Partnered with leading suppliers and offering leading brands
Threadicated has cultivated a strong network of industry partnerships, working with key suppliers including The Iconic, Birdsnest, The Athlete's Foot and over 100 more for their direct-to-consumer model, providing customers with access to over 1500+ brands. There are opportunities for further expansion of partnership scope, through plug-and-play and AI recommendation integrations over the next 24 months.
- Harnessing the power of data science and AI
Threadicated leverages unique proprietary and defensible AI technology, employing an adaptive machine learning model to optimise clothing choices from available items and multiple customer preference data-points. Combined with the input and connection from a human stylist, this hybrid model improves the quality and efficiency of styling services, directly correlating with higher customer lifetime value.
As the AI gradually learns customer preferences and assists the human stylist in making optimal selections. In the near term, it is expected that this creates an opportunity to improve efficiency and profitability over time, creating a highly scalable foundation.
- Multiple avenues for further growth
There are multiple growth opportunities over the next 24 months through brand building, technological development and expansion of partnership scope, through plug-and-play and AI recommendation integrations. Several initiatives are underway, with agreements in place to launch plug-and-play with two retailers, Trunc (Asia) and Azurra Runway (Global) in early 2022.
How Threadicated Leverages Data
Threadicated’s proprietary AI and analytics platform is powered by data provided by customers during the sign-up process and begins filtering through products to remove styles they have asked to avoid or previously received. The system also considers like-for-like audiences and feedback similar users have shared on products to optimise the curation of parcels for each customer, presenting optimised list of items for hand selection by the human stylist.
The AI tracks every customer touch point, the frequency of engagement, feedback provided, referrals made and all email correspondence. This data is used to better understand each customer and detect changes in preferences. These data points provide insight into the customer journey and steps which can be taken to improve service quality. Over time, this data pipeline and feedback loop trains the machine learning model to overcome challenges prevalent in the fashion industry, such as solving for individual taste, fit and sizing.
Performance to date has shown that this iterative approach has been effective, with customers keeping 50% of the items they receive for their first parcel, 60% for their second, and 65% for their third. Improvements to the quality of styling have a direct impact on customer satisfaction, encourage repeat purchases and increase margin revenues on items retained from each given parcel. Moreover, the value of this data-pipeline increases over time as additional customers reinforce the data loop.
Globally US$1.5trn is spent each year on fashion retail, with US$12.8bn spent in Australia.
Trend 1: Continued growth of Ecommerce, however dissatisfaction with experience
Australian, e-commerce penetration is still growing. Currently contributing about 10% of overall retail compared to 20-30% of the overall retail level seen in the US, Germany or the UK.
Whilst many retailers have already moved online, the user experience often lacks innovation and fails to markedly improve the shopping experience. Customers still have to go through the process of navigating multiple websites, perusing excessive quantities of inventory, trying on clothes at home and returning any purchases that don’t fit.
The bewildering number of options available often leads to ‘analysis paralysis,’ creating an opportunity in fashion retail for saving customers time by offering personalisation at scale.
Trend 2: Leveraging Data and Embracing Data Science in Fashion
Personalisation is a core use-cases for data analytics and AI in the Fashion Industry. Fashion, with its many sizes, collections, and styles, is far more complicated and overwhelming to consumers than most other retail categories. Similarly, consumers are highly selective and want their purchases to reflect their values and express their uniqueness. However, data alone has limitations. Hybrid models, such as those of Stitch Fix and Threadicated, leverage the consumer insights provided by data algorithms, to support human stylists applying their expertise toward taste and style.
Trend 3: Increasing Focus on Personalisation in Fashion Retail:
Recognising this trend, online retailers are increasingly creating ecommerce storefronts personalized to individual customers to reflect either onsite behaviour or buying history. Research shows that online retailers expect to increase their investment in personalisation by 18 to 30% over the next three years. There is considerable upside for these investments, as surveys and transactional data have shown that customers are 80% more likely to make a purchase and become high-value customers
Transactions and Fundraising
Growth of fashion tech has led to significant fundraising and M&A activity in the space.
StitchFix is the global leader in direct-to-consumer digital styling. Their IPO in late 2017 raised US $120m and valued the business at US $1.6 bn, an uplift of 433% from their prior Series C funding round in 2014. This demonstrated investor appetite for businesses at the intersection of fashion and technology. Locally, personalised fashion styling app Mys Tyler has recently raised $1m from institutional investors, demonstrating appetite in the local fashion-tech space.
More broadly, these examples demonstrate investor appetite for challengers within the direct-to-consumer space including Uber, AirBnB and Dollar Shave Club, who have leveraged the power of technology to deliver unparalleled convenience and service.
Threadicated has already achieved impressive growth and retention to date with no external funding. Over the first 18 months, the business focused on consolidating operations and initial partnerships to achieve $200,000 in sales, delivering a total of 800 parcels. Looking further ahead, the company’s plug-and-play model will introduce another revenue stream, generate additional direct-to-consumer sales and facilitate expansion into the global market in 2023.
In the medium to longer term, further AI development, introduction of additional products and global expansion will be key drivers of growth.
Why Equity Crowdfunding?
Built upon the belief that everyone should be able to enjoy clothing they love, Threadicated's vision is to reveal a new way for Australians to shop, dramatically expanding the availability of this once-exclusive service of personalisation. For this reason, Threadicated has partnered with Equitise to give their customers and the broader community a chance to share in their growth.
Funds from this raise will be used for key hires to grow their team; in technology and development, executives, and sales. With a focus on brand awareness and user sign ups delivered through our growth marketing strategy.
Threadicated are looking for like-minded investors as they move into the next phase of accelerating growth.
Australian Corporations Regulations - Warning Statement About Equity Crowdfunding
Crowd-sourced funding is risky. Issuers using this facility include new or rapidly growing ventures. Investment in these types of ventures is speculative and carries high risks.
You may lose your entire investment, and you should be in a position to bear this risk without undue hardship. Even if the company is successful, the value of your investment and any return on the investment could be reduced if the company issues more shares.
Your investment is unlikely to be liquid. This means you are unlikely to be able to sell your shares quickly or at all if you need the money or decide that this investment is not right for you.
Even though you have remedies for misleading statements in the offer document or misconduct by the company, you may have difficulty recovering your money.
There are rules for handling your money. However, if your money is handled inappropriately or the person operating this platform on which this offer is published becomes insolvent, you may have difficulty recovering your money.
Ask questions, read all information given carefully, and seek independent financial advice before committing yourself to any investment.