Bringing in $165 million in venture funding is a major event in the life of any startup, particularly if the startup in question says it wasn’t even in the market to raise funds — it was doing just fine on its own revenue.
Such was the situation in which luxury eTail brand Moda Operandi and its CEO Deborah Nicodemus recently found themselves, as the luxury brand contemplated a $165 million round led by Adrian Cheng (the Cheng family is the third-richest family in Hong Kong) and Apax Digital — a fund mainly dedicated to internet companies advised by private equity giants Apax Partners.
“I didn’t go into the market with the idea to fundraise,” Nicodemus admitted. “We have enough capital to take us to profitability.”
Moda Operandi does have enough capital: The eCommerce business grew by leaps and bounds in 2016; according to Nicodemus, the firm’s year-over-year sales growth has been “exponential,” as customers have flocked to its somewhat unique offering. In 2017, the retailer will do $165 million in revenues, up from $68 million in 2015.
Moda Operandi is an up-and-coming player battling two giants that dominate online luxury retail — YOOX NET-A-PORTER and Farfetch — but its magic comes from the company’s pre-retail concept. Unlike other players in the space, Moda offers something quite different — and quite alluring — to the high fashion shopper: speed.
The brand allows clients to pre-order complete looks immediately after runway shows — no waiting and no handwringing over the whims of department store buyers. The Moda shopper can order the latest look within an hour of the end of a runway show.
Moda’s customers also have a slightly different profile from the average luxury shopper. She (because she is almost certainly a she) is younger and more ready to spend big to look great. The average basket size at Moda Operandi is $1,300; according to their CEO, “our nearest rival brings in around $650.”
But as well as things are going, Moda Operandi says now is the time to think more strategically about playing on the global stage.
“We now need to fuel growth acceleration,” Nicodemus said. “There is definitely a heightened sense of rivalry across a narrow band of luxury eCommerce players, but there’s also a great deal to play for as it is a growing sector. Still, there is no question that everyone is sizing up where to go next.”
As for Moda, what’s next is expanding its geographic footprint.
The investment from Adrian Cheng will bolster that effort, particularly as the brand hones its focus on Asia more closely. Moda Operandi will also be opening new showrooms in the Middle East and Asia, as well as in Vancouver, Paris and Geneva. Those physical locations are not unique to the brand, however; it already operates two — one in New York and one in London.
Physical brand growth for Moda Operandi is accompanied by an upgrade to its user experience on its mobile and web platforms, as well as an expansion of its product line into a wider range of goods for its customers.
The expansion, Nicodemus said, makes sense, because Moda Operandi customers don’t just have a fashion aesthetic for their clothes; they are increasingly curating an entire look for their lives. That means the site’s offerings will soon grow to include shoes, handbags, accessories and home goods.
“When a client comes to Moda and they’re buying [a] home, they’re buying the full tabletop — flatware, stemware, art objects,” Nicodemus told Forbes.
And that customer, she noted, comes as ready to shop for home goods as she does for clothes: The average expenditure is between $50,000 and $120,000. According to Nicodemus, the most expensive item ever purchased was a diamond necklace for just over half a million dollars.
The secret in the sauce for Moda Operandi has always been the same: offering its young, mobile, affluent and luxury-enthused customers the ability to get it all in one place, seamlessly, without waiting for availability from a department store.
With over $300 million in capital raised, the company might just be ready to make a big dent in a digital luxury marketplace heretofore dominated by two players — two players who just might have to make room for a third.
“We feel on top of the world right now, and it is a fantastic place to be,” Nicodemus said.