Business of fashion: This startup is changing the way retailers sell online

Have you ever wondered how an online fashion portal automatically comes up with the right mix of clothes for you? How does it decide as to which cloth should be pitched to a particular individual through online ads? The answer is artificial intelligence (AI). 

Just like every other field from social media to banking and finance, the fashion industry is embracing AI — computer systems that can learn for themselves and carry out tasks that were once the preserve of humans — in order to create new designs, better manage inventory, improve product discovery and to connect with customers.

While most big retail companies like Amazon have their own technology for the purpose, the smaller ones outsource the task to retail automation platforms. One such platform is provided by Vue.ai, which recently secured $17 million funding. The Series B round of funding was led by Falcom Edge and also saw the participation of Sequoia Capital India and Global Brain.

Vue.ai is the retail automation arm of Mad Street Den, a start-up founded by Ashwini Asokan and Anand Chandra-sekaran in 2013. It counts Tata Cliq and US’ thredUP among its customers.

Revenue model

Vue.ai claims to be working with retailers across 180 countries. The pricing is based on the size of the catalogue, traffic on the retailer’s website, and the nature of metadata. Vue.ai says it had reported 4x growth in revenue in a year. 

About the revenue model, Asokan explains: “We are an enterprise SaaS start-up, which essentially means recurring subscription models but also larger contract values that allow for scaling across use cases. We start making money right after a sale.” The company says it has succeeded in helping clients grow their revenues by up to 65 per cent.  

Opportunity

Ashwini Asokan and Anand Chandrasekaran, the founders of Mad Street Den. Vue.ai is an arm of this start-up
With more and more brands getting online, the demand for AI platforms is likely to rise. A study by Juniper research sees global retail spending on AI growing to $7.3 billion per year by 2022. In 2018, the spending was estimated at $2 billion.

 
Comment-ing on the opportunity in this space, Asokan says: “The fashion market is $17 trillion in size. The total SaaS market for retail is $40 billion. This means everything and nothing. TAM is heavily misguided in new categories... It’s better at such a nascent stage of AI to focus on problems that are present in every retailers’ organisation.”

Road ahead

The future of fashion, like for every industry, will depend on the advancement of technology. AI platforms will have a bigger market at their disposal as more and more retailers will look to leverage AI.

Though AI and machine learning have given the edge to the online market, a lot of work remains to be done to integrate AI seamlessly into the lives of online shoppers. The success of AI in online shopping and that of Vue.ai will depend a lot on how early the transformation happens. 

As Asokan says: “ AI is like the internet — it’s not going to be a use case, it’s like electricity — it changes the fundamental assumptions about how something is done, it changes the plumbing of every industry.”

Rijul Jain, Investments Team, Astarc Ventures
AI provides a good go-to-market strategy

Vue.ai is a suite of tools designed for fashion retailers combining AI and industry knowledge. These tools help accomplish catalogue management, inven-tory data management, visual merchandising, digital channel outreach and many more functions for a fashion retailer. 

A lot of these tasks such as catalogue management and visual merchandising are important yet mundane and time-consuming, which Vue.ai automates using AI keeping different kinds of customers and purchase channels in mind. 

This also serves as a good go-to-market strategy given the sales cycles are long with retailers, so easier to push more products to the existing customers than hunt for fresh customers. However, the real challenge would be the fragmented systems each  retailer would have, making it difficult to integrate the large product offerings which the firm probably aims to tackle by taking a platform approach.


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