Yet another post-Series A startup that looks really promising. I am really excited about what this company can do to disrupt online apparel shopping.
Avametric is building a technology to help online shoppers see how a garment will fit on a 3-D digital image of themselves, enabling them to virtually try on clothes online, and switch between different sizes and colors to pick the perfect look. It’s VFX meets retail e-commerce. For now.
The product couldn’t launch at a better time. I hear from a bunch of millennial consumers that they hate buying clothes online purely because of the hassles around returning items that don’t fit (even if the returns are paid for). For the retailers, the costs of these returns are an unnecessary expense item. The market will pull this product in. There also exists an orthogonal opportunity to extend into bespoke and tailored clothing in the future.
It speaks volumes that the company already have over 80 partnership deals with brands. Once Avametrics launches with these brands, brace yourselves for an online sales avalanche.
The U.S. apparel market is the largest in the world, comprising about 28 percent of the global total and has a market value of about 331 billion USD. I found this chart on U.S. apparel and accessories retail e-commerce revenue from 2013 to 2019 (in billion USD).
This is what I believe to be the total addressable market for Avametric. But there are obvious additive opportunities including partnering with niche fashion brands that are not yet online and helping them embrace e-commerce.
I am a huge fan of founder-CEOs so a little disappointed to see that’s not the case here. That said, stellar team on paper. Eclectic selection of VFX gurus, CS talent, and fashion merchandising vets. The founder is still with the company and is the CTO. The former head of Google Glass, Ivy Ross is advising the team as an independent board member. But the biggest draw for me is that Keith Rabois is backing the team. He is unbelievably amazing.
I believe that Avametric at scale will possess non-obvious network effects due to the immense data points they collect. At the same time it is a challenge to build a data business, something which requires tremendous focus and long-term thinking. But as the tech market matures, products like Avametric will become the infrastructure for the new economy.
Macy’s and Nordstrom are both hurting from the Amazon onslaught. Avametric will accelerate this trend. If the company continues to strike partnerships with tech savvy brands and e-commerce juggernauts like Amazon, the future is bleak for traditional fashion retail leaders. On the other hand this is an opportunity for Macy’s/Nordstrom to plug the leaky bucket before it’s too late. Either way Avametric is in pole position to capitalize and potentially become a platform on top of the retail stack and perhaps go direct-to-brands eventually to obtain a larger slice of the pie.
This is a b2b business and if the product or service is sold on a subscription basis, then the amount and timing of expected churn will be important to track . I’d have to guess what the price elasticity of the service is. But in a subscription offering,
LTV > CAC + COGS
These are exciting times as we move into the next phase of innovation in online retail and I think Avametric is going to be a huge disruptor in apparel. Such paradigm shifting products are rare (no historical precedent) and a focus on execution (business development/partnerships) will set them up for success.
Learn more about Avametric.