In Depth

Fits.me Acquisition Gives eTailers New Tool To Boost Sales

While retailers consider a sale a sale, and would rather their customers buy online from them then not buy at all, online sales ding their margins. The Wall Street Journal recently reported that while most would think online sales would be more lucrative, because websites don’t need the expensive real estate or require intensive labor to support a storefront, many merchants surprising earn less or even lose money online due to the cost of shipping, handling and higher rates of returns.

Even retail giants like Wal-Mart are saying as they invest to further develop and enhance their technology, infrastructure and fulfillment networks, they expect to lose profits online at least until the year 2016.

Fits.me and Clothes Horse, independently, and now together are joining forces to tackle the problem so that consumers have a better experience and perhaps like what they buy enough to keep it from being returned. Fits.me announced on December 3, 2014 that it has acquired Clothes Horse.

Headquartered in London, Fits.me creates virtual fitting room solutions for e-commerce retailers. Clothes Horse, a data-driven recommendations tool, helps customers find clothes in their sizes that they’ll want to purchase. How do they do that?  Well, they use customer data, like height, weight, and preferences, to point shoppers to specific items that would be ideal. Those customers can then, in theory, go to a Fit.me powered “virtual fitting room” to try them on, and hopefully buy and keep in their physical closets at home.

Currently, Fits.me serves clients in the U.K. and E.U. while Clothes Horse’s clients are predominately based in North America. Retail customers include specialty boutiques like Ministry of Supply, Frank & Oak, and Gant. The company is also running a pilot program with retail giant Macy’s, in addition to partnerships with several undisclosed merchants. Fits.me currently works with HUGO BOSS, Thomas Pink and IconStyle.

Together, Fits.me and Clothes Horse employ approximately 60 people and collaborate with about 50 retailers. There is also no current overlap as both companies specialize in different areas. The relationship started when both companies were looking to expand into each other’s markets and saw a larger opportunity if they combined forces.

As of now, both companies will hold their original names and will focus on integrating their product line-ups and test what will work well with their clients.

Vik Venkatraman, co-founder of Clothes Horse reports that his company sells their software on the SaaS model with pricing starting at $500 per month. Venkatraman also indicates that most retailers are in the “couple thousand” range while some are utilizing the high-end enterprise plans.

In 2012, Clothes Horse raised seed funding but has been running off profits since then. In 2014, the company launched a new analytics product that offers insights to merchants, which can help them with inventory planning, competitive intelligence and merchandising decisions.

Before teaming up, Clothes Horse dabbled in Fits.me’s area of expertise. “We’re going to work some of what Fits.me does well on the visualization side and work that into our business,” said Venkatraman.

The pair hopes to better align and integrate their products by Q1 2015.

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