How Lifestyle, Beauty, And Fashion E-Commerce Brands Can Raise Funds In 2021

Joseph DeAcetis
Joseph DeAcetis
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MELBOURNE, AUSTRALIA - MARCH 10: A model walks the runway in a design by Balenciaga during the Gala ... [+] WIREIMAGE

In the luxury fashion business, make no bones about it: funding is the engine that keeps the vehicle of the business running. More to the point, without funding, it is nearly impossible to launch brand. Many times funding is required to ignite the engine to flourish in business. If you ask the folks who own the brands, they will surely agree that funding is one of the biggest challenges they face in today’s marketplace.

And when it comes to creativity, it is much easier to execute ideas when you have funds readily available. Sadly, the reverse can cripple an entire business and into the grit of the infamous chapter eleven.

In order to earn money a business is required to spend money.It is like the proverbial sowing and reaping; you cannot harvest where you have not sown. Unarguably, it took a lot of funding for luxury lifestyle and fashion brands such as Ralph Lauren and Calvin Klein to rise to the levels they have attained. High returns in revenue are usually the result of an investment of time, energy, and most importantly, funding.

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Luxury brands were not ready for the onset of Covid-19 stop the manufacturing. No one was ready, But on the bright-side, the beautiful thing about e-commerce, lifestyle, and fashion brands is that they are largely the creative rave of the moment. Consumers for the most part, enjoy the convenience and ease shopping online and having their orders delivered to the doorstep. While fashion and lifestyle brands are listening to consumers—changing the norm with respect to style, the level of acceptance and growth in the sector is magical.

Why bother?

According to Statista, in 2019 alone, e-commerce sales accounted for 14.1 percent of all retail sales worldwide. This number is expected to increase to 22 percent by 2023. In terms of sales, global e-com sales reached a whopping 3.5 trillion U.S. dollars in 2019.

In truth, online stores are taking over market share inciting brick-&-motar retail brands to invest more in the online market for their products and services. For guys like this, the online market provides them with the opportunity to reach many more people, expand into other territories without any restrictions, and ultimately achieve greater sales revenue. And that is something all brands wish to achieve after 2020.

On the other hand, folks aiming begin a business as an entrepreneur, they are surely discovering that lifestyle and fashion are profitable e-commerce niches to operate in today’s volatile marketplace. Subsequently, this has led to the massive influx of countless e-commerce sites. In addition, there has been a rapid rise in the number of lifestyle brands for the fashion industry.

MEXICO-FASHION-WEEK-CONTEMPO-CALVIN KLEIN
Models display underwear creations by Contempo and Calvin Klein during the autumn-winter Fashion … [+] AFP VIA GETTY IMAGES

I have been conducting research at New York’s Fashion Institute of Technology (where I teach from time to time) and have come to this simple conclusion after having run several statistical tests with the statistics department. The hard cold reality is that a brand needs to raise funds for the survival of the brand. Grassroots business can only last so long.

Here are three (3) ways you can do that.

1. Take advantage of financing options

The reason you need to raise money for your brand is to finance production/inventory acquisition, operations, marketing, and management. These key focus areas drive the rest of the business, including the miscellaneous slices. When faced with the challenge of limited funds, brand owners and executives are left with the tedious task of allocating available resources to focus areas.

An alternative way of getting the funds you need to finance your lifestyle or fashion e-commerce brand would be to take advantage of financing options that cater to specific focus areas. Although startup funding is traditionally dominated by venture capital firms, the business world is seeing some kind of a paradigm shift in recent years. One example of this is the growth-focused investment firm DRVE, which is helping online businesses scale online with smart capital and expertise.  In fact, I know of a few fashion entrepreneurs who have gone this route and are pleased with it.

 Fashion Graphs for online ready style entrepreneurs
Drve: Fashion Graphs for online ready style entrepreneurs DRVE’S THREE-STEP PROCESS, SOURCE: DRVE.COM

Instead of simply providing money in exchange for ownership, DRVE offers e-commerce businesses in industries like fashion, lifestyle, and beauty to foot their paid marketing budget and also let their online advertising specialists handle the entire paid marketing strategy. By doing this, DRVE enables business owners to eliminate the risk of losing precious funds in an unsuccessfully executed advertising strategy, while also allowing them to maintain their shares in their own company. 

DRVE’s three-step process, source: drve.com 

Through DRVE’s growth-focused investment programs – Velocity and FastForward – the company offers two highly effective financing options. In FastForward, brands obtain access to funding and support from a team of specialists who advise and help optimize the online sales process, while Velocity participants receive advertising budgets of up to $50,000 per day in addition to full management of service for their paid advertising strategy. 

French multinational Chanel clothing and beauty products...
HONG KONG, CHINA – 2020/08/28: French multinational Chanel clothing and beauty products brand store … [+] SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGES

Allies of Skin, a successful beauty company and participant of the Velocity program, reported to have scaled revenue by more than a hundred times since working with DRVE. “We were having a rapid growth in our channel business and all of a sudden, we are placing our largest orders, ever, for inventory. We had more customers than we had products!”, says Jim Perkins, Chief Operations Officer. Following this record production cycle, Allies of Skin is expanding their reach globally by building their brand presence across multiple markets, languages, and currencies.

2. Get started with pre-orders

For e-commerce brands, users can easily become your brand financiers if you understand the dynamics of the industry and can infuse great customer service into your offering. Bearing in mind that people are not coming to your physical location to see the products before initiating a purchase, it then makes it possible to have them place the order before you get stock of the product.

As an e-commerce brand, you can choose not to operate a physical store. Your model would then revolve around getting orders from your customers and servicing their orders through your suppliers. The products would be delivered directly to the customer, saving you the need for a physical store and additional expenses on packaging and branding.

Big brands across different sectors take advantage of this option – pre-orders, to accurately predict demand, launch new products successfully, and drive sales comfortably. For example, Tesla built a waiting list of nearly 200,000 customers a day after announcing the Model 3. Each person on the waiting list made an upfront deposit of $1,000 in line with the purchase.

“In order to convince customers to order an item before it is released, a brand usually has to establish a basis of trust first,” says Johannes Kliesch, co-founder of the consulting firm Snocksulting. “That’s why platforms like Amazon are attractive not only because of their incredibly large user base but also because consumers already consider Amazon trustworthy and are therefore more likely to place a pre-order.” The firm advises dozens of e-commerce startups and SMEs and, among other things, has received Amazon’s Sales Partner of the Year award in 2019.

Adding to the conversation, professional Amazon and e-commerce builder Chase Alley of PushAMZ says, “In addition to pre-order campaigns, setting up an Amazon store to complement your in-house store is another way to increase your company’s cash flow. Especially in a world of lockdowns, where everyone orders what they need online, being on Amazon is a must.” 

Alley and his partner Luis Millan, who professionally build and ramps up eCommerce stores to six-figure revenues per month in four to eight weeks, know the growth pattern well, and have developed over fifty turn-key stores for past clients. Millan explains, “it’s all about following a standardized process, and not skipping any vital stages.”

3. Consider funded global expansion

No brand wants to stay small or local, your brand is certainly not an exception. Every brand wants to be seen, known, and liked. Sometimes, the visibility your business needs is going global. The publicity and other complexities that come with it can drive the growth of your brand. Such growth would easily catch the eyes of venture capitalists, who are particular about high growth potential.

The problem with going global is that it comes at a high cost. In response to this problem, New Horizons Global Partners, a global PEO, offers specialist inbound investment services for companies seeking multi-country operational setup, particularly in Asia. According to Head of Growth at the company, Tom Kussmann, “New Horizons Global Partners works with brands who have expansion plans to actualize those plans” 

By going global, e-commerce brands in lifestyle and fashion position themselves for bigger financing opportunities. This is great for goodwill and for sales, which in turn makes more funds available to the brand.

Beyond raising funds, it is important to ensure that your brand’s product quality is top-notch. If you pull in millions of dollars into the funding of a bad product, people might buy it at first because it is all in their face. But it is only a matter of time before they realize the defects in terms of quality. Even venture capitalists would prefer to invest in a brand with quality outputs.

People know what they want and for a lifestyle and fashion brand, your products must make people feel good about themselves. Raising funds for your brand is not as tedious as it looks if you know what to do and where to look. Get started with the tips shared in this post. Cheers to your business success!

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Joseph DeAcetis

Joseph DeAcetis

Acclaimed American Journalist and International Editor. My interest lies in the pace and direction of trend adoption in luxury fashion and lifestyle, access to real-time fashion through top influencers and how disruption and social-intelligence have transitioned the trend landscape through the democratization of the marketplace

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