Today subscription commerce startup JustFab announced that it has raised $76 million in Series B funding led by Rho Ventures, with participation from Matrix Partners, Technology Crossover Ventures (TCV) and JustFab’s parent company, Intelligent Beauty. The company announced that it had six million members in April, and has been growing at a rate of 500,000 users per month, and is on track to hit $100 million in sales in 2012.
JustFab’s co-CEO Adam Goldenberg, the former COO of Myspace’s parent company Intermix, said the funding will be used for further international expansion, with a UK launched planned for September 2012, and more European cities in early 2013. The company launched in its first international locations, Canada and Germany, earlier this year. “A big part of the reason that we raised this round was to do aggressive international expansion,” Goldenberg said in an interview.
It will also provide cash flow for future acquisitions, following the company first acquisition of Heels.com in March 2012. “It’s a lot more capital than we need, so it gives us a lot of opportunities to look at acquisitions or expansion in the future.” That expansion includes adding to the company’s existing products, which originally just included shoes, but now include handbags, jewelry and denim, but Goldenberg wouldn’t specify which categories they’ll be adding next, but said they have a big release planned for later this year. “We’ve looked at JustFab from day one as a lifestyle fashion brand,” he said. “We’re creating the next generation H&M, Forever 21 or Zara.”
Originally, the company operated on a subscription model, opting customers in to a monthly membership unless they opted out. In April they announced a new pay-as-you-go option, which set them apart from competitors including BeachMint. Now customers can buy any item on the site, which are all priced at $49-$69 including free shipping in the continental U.S., on a one-time basis, or they can opt in to the subscription model and get the items at $39.95. “The vast majority of our customers are still gravitating towards subscription, but it gives the customers flexibility, so if they want to try our product first, see the quality, see how the experience is, it gives them an opportunity to do that before committing.”
The company is the third company launched by the Intelligent Beauty incubator for ecommerce companies, which was started by Goldenberg and his co-founder Don Ressler. JustFab’s biggest competitor is ShoeDazzle, which has raised over $60 million in funding and has 10 million members, and announced earlier this year that they are expanding to women’s clothing. “We do compete with ShoeDazzle, so there are competitors, but really it’s taking market share from the big guys,” Goldenberg said. While BeachMint is a competitor, they operate separate sites for each vertical, from home decor to beauty products, so he believes their strategy is much different.
The company sold $25 million worth of shoes, bags, jewellery and accessories in 2011, and is still on track to surpass $100 million in sales in 2012, with Goldenberg targeting $500 million in sales by 2015. The company also debuted a JustFab community in April, which allowed showers to post photos of their outfits, ask questions, and offer feedback to other members. JustFab fashion consultants also curate online boutiques where they showcase popular items and outline which celebrities are wearing the trend (the company has several celebrity stylists, including JustFab’s Creative Director Kimora Lee Simmons).
Though they clearly have a devoted base of customers, many of whom are buying items every month, pitting themselves against retail giants like H+M means swaying consumers away from in-store shopping experiences, and trusting products curated for them online. And as more affordable fast-fashion sites pop up with A-list celebrities attached (the creators of ShoeDazzle are reportedly launching a t-shirt line called Teeology with Jennifer Lopez, and BeachMint’s latest vertical is a line of lingerie created by Brooke Burke), the competition is only getting stronger. With international expansion planned, whether through acquisitions or otherwise, and this new round of funding, the company is poised to become the lifestyle fashion brand it set out to be, but whether it can become a household name like its brick-and-mortar competitors is yet to be seen.
