Like many tech startups, when the pandemic hit the U.S., Armoire braced for impact.
Its clothing subscription rental business had its best month in February, but suddenly faced several headwinds. People no longer needed new clothes for the office or weekend get-togethers. Customers put their memberships on hold. The company cut staff and slashed marketing expenses.
But Armoire has bounced back, adapting to the economic crisis and finding new ways to grow its business. Investors like what they see — the 4-year-old Seattle company just landed $3.5 million in new funding from folks including Microsoft CEO Satya Nadella, GoDaddy CEO Aman Bhutani, and several other notable backers.
Armoire made a few key moves over the past nine months to adapt as the fashion industry was flipped on its head.
It invested engineering resources into new community-driven discovery tools after seeing some of its members engage with each other in Armoire’s Facebook group. Armoire saw engagement metrics spike immediately, in part because it replaced in-person group shopping experiences.
That helped the company’s long-time members — those with at least nine months of membership — stick around.
“The reason we’re here is that our tenured customers held on,” said Armoire CEO Ambika Singh.
Armoire also adapted to customer needs. People didn’t need fancy cocktail dresses or nice suits as they spent more time at home, but they still wanted to try on new clothes.
“We’ve never carried a sweatshirt and leggings before, but we do now,” said Armoire CTO Tristan Rees.
The acceleration of online shopping due to the pandemic should provide a boost for Armoire. There is also increasing interest in the clothing rental model and personalized shopping experience. Online personal styling service Stitch Fix has seen shares surge this year as its revenue and customer base grows. Online clothing reseller Poshmark saw shares spike 140% this week on its first day of trading.
“As an investor, I’m betting on the idea that the way we consume is changing and that this is the team that will meet customers where they are while opening our eyes to things we didn’t know we needed,” said Elena Donio, a former Axiom and Concur executive who just increased her investment in Armoire.
Singh said she’s focused on helping Armoire become part of a “daily shopping habit” by using the rental model and new community features to its advantage.
“That daily shopping habit is independent of where she’s going and what she’s doing,” Singh said. “It’s this idea that every day you have a beautiful, really positive community to go visit and see how fun clothes are being worn.”
Rent the Runway, a direct competitor to Armoire, also went through changes last year by closing brick-and-mortar stores and laying off employees. But it also sees light on the horizon. CEO Jennifer Hyman told Fortune that the company has accelerated its path to profitability and she expects the fashion industry to have a big return later this year.
Armoire’s subscription starts at $79 per month for four items per month, and goes up to $249 per month for unlimited items. Members rent from hundreds of high-end brands and can purchase items at a discount. Armoire uses algorithms and professional stylists to help curate a selection of items for customers.
Rent the Runway made headlines in September after eliminating its unlimited rental option, citing an evolution in consumers’ relationship with fashion trends.
Armoire went the opposite way, expanding its unlimited plan. Singh said the company is now the leading option for unlimited clothing rental memberships and is seeing new customers come from Rent the Runway.
Armoire says it is committed to finding suppliers run by minorities and focus on sustainability — something that may be more top of mind for folks given recent news events.
“All of these things are resonating with our customer,” Singh said. “When she comes to a website, she’s looking to make sure that it’s reflective of the values that she’s trying to promote with spending her dollars.”
The company now employs 25 people, down from more than 60 last year. The most recent fundraising included $3.9 million that was converted to equity from a bridge note initiated in 2019. Total funding to date is north of $12 million.
“Ambika has done what the best technology companies have done to respond to the pandemic — focused on how to more effectively serve the needs of customers during this time through experiences enhanced by data and software,” said Tola Capital’s Sheila Gulati, who invested in Armoire as a personal investor. “She has also wisely found efficiencies to adapt through the pandemic and I would expect to see the business accelerate going forward.”
Other investors in this round include Jared Sine of the Match Group; inclusion expert & author Ruchika Tulshyan ;Heather Hardy of ZoomCare; and former EY Principal Sue Borgman.
— to www.geekwire.com