The COVID19 Pandemic accelerated a number of trends that were already underway before March 2020. One such trend is the dramatic increase in the volume of fashion and apparel ecommerce, and the resulting explosion of returns. Another trend that has been accelerated by the pandemic is that of work that would have traditionally been done in-person being done remotely, with people collaborating using digital platforms to collaborate across space and time-zones. This is being entrenched by the ongoing global crisis in air travel.
The Problem
The underlying issue that fashion and apparel retailers face is that of customer satisfaction. Customers return clothing items that they feel dissatisfied with, and the cost of processing such returns create additional problems for retailers.
Fundamentally, the problem is that there is no easy, scalable, and accurate way to obtain individual body measurements of the sort a tailor or seamstress would take before making an item of clothing for an individual shopper. It has been documented that personalization and customization increase shoppers’ satisfaction with their shopping experience. Yet, there’s no easy way for fashion and apparel retailers and brands to offer these options to their customers without adding a disproportionate amount of friction to the shopping experience. Moreover, when they have done so, the results have failed to meet shoppers’ expectations.
This is where TrueToForm comes in.
TrueToForm: Solving a Wicked Problem in Fashion and Apparel Retail
TrueToForm is developing a product management platform with two primary components: First, a simple and easy to use customer facing image and object attribute capture mobile application, and; Second, a proprietary backend data management platform.
Currently, TrueToForm facilitates the creation and capture of human avatars for scalable, made-to-measure apparel production. The TrueToForm mobile app allows users to scan and share body data securely with designers from the comfort of their own home, enabling the scalable production of made-to-measure clothing and sustainable 3D design.
TrueToForm’s business users request scans from their customers. Customers then download the app, and take a scan. That information is reported back to the business that requested the scan for use in designing and producing the garment or piece of apparel that the consumer has purchased.
While TrueToForm is initially focused on the big and growing opportunity in the market for custom-made Fashion & Apparel, once the platform is more mature it can be applied to any industry in which on-demand and additive manufacturing based on accurate object dimensions and attributes matter.
The following catalysts are working in TrueToForm’s favor;
The increasing interest in customized and personalized fashion and apparel, manufactured on-demand,
The increasing volume and value of fashion and apparel ecommerce,
Exponential increases in returns of fashion and apparel purchased online,
Regulations aimed at curbing waste and deadstock in the fashion and apparel industry as governments implement regulations aimed at industry practices that exacerbate the climate crisis,
Corporate efforts to implement ESG practices within their supply chain and operations organizations as consumer attitudes change with the worsening climate crisis, and
New and more powerful depth sensing technology on the iOS platform makes more accurate measurements and more realistic image and object capture possible where that was not true in the past.
Potential Business Customers Are Actively Seeking Solutions
There’s an increasing trend towards custom-fit fashion and apparel. This requires accurate body shape and fit for individual shoppers since such made-to-order garments are paid for before they are made.
TrueToForm has found early adoption in the following niche segments of the fashion and apparel market;
Design and Product Development,
Custom-Fit Apparel and Garments, and
Fit Simulations.
Another perspective from which to think about the market opportunity is from the perspective of the potential value that a platform like TrueToForm offers the Fashion and Apparel industry.
According to the October 2018 research note from Morgan Stanley, Can the Promise of Perfect Fit Disrupt Fashion?;
Product fit and returns are two of the biggest barriers to online apparel shopping. For online retailers, customer fit issues require planning for adequate stock, as well as the margin-shrinking costs of roundtrip shipping.
Selecting, packing and shipping clothing all come with costs for the retailer. But, when a product is returned, all of those costs are “sunk,” with no income to offset them. According to Geoff Ruddell - head of Morgan Stanley's pan-European General Retail team, online returns can range from as high as 25% to 50%.
In the January 2018 publication IMPERFECT FIT AND THE $100 BILLION COST OF RETURNS, Rakuten and Fits.Me estimated that the industry loses more than $60 billion due to the problem of imperfect fit.
Furthermore, any reductions in the costs companies bear for returns goes directly to the bottomline.
This gives companies a strong motivation to seek products that make it easier for people shopping online to find clothing that fit.
On the other hand, as this July 2019 article in Vogue Business explains, some brands are building sizable made-to-order businesses, with some attributing as much as 25% of sales to their made-to-order operations.
This means that for every potential customer TrueToForm offers a cost reduction AND a revenue generation value proposition: The former, results from the decrease in returns, and; The latter, results from the opportunity to more easily scale a proprietary made-to-order business using assets that the company already owns.
Lest you think this is an insignificant problem, on January 25, 2022, the National Retail Federation and Appriss Retail reported that Retail Returns Increased to $761 Billion in 2021 as a Result of Overall Sales Growth, accounting for an “average of 16.6 percent of total U.S. retail sales, which soared to $4.583 trillion in 2021.” The full report is available here.
How big is the opportunity in Fashion and Apparel ecommerce? According to the 2022 Global Ecommerce Report: Fashion and Apparel published by BigCommerce, ecommerce revenues for Fashion and Apparel in 2022 should amount to roughly $205 Billion. According to The State of the Ecommerce Fashion Industry: Statistics, Trends & Strategies to Use in 2022 (February 18, 2022) published by Shopify, I am estimating ecommerce revenues in 2023 to come in at roughly $234 Billion. That represents about 35% of the roughly $673 Billion of revenues that is estimated for 2023.
In Global Fashion E-Commerce Market Report to 2031 - Players Include Amazon, Flipkart, Alibaba and Snapdeal (June 23, 2022), Research and Markets reports that, “The global fashion e-commerce market is expected to grow from $668.1 billion in 2021 to $744.4 billion in 2022 at a compound annual growth rate (CAGR) of 11.4%. The market is expected to grow to $1,102.96 billion in 2026 at a compound annual growth rate (CAGR) of 10.3%.” Research and Markets defines the Fashion and Apparel ecommerce market as, “The fashion e-commerce market consists of sales of fashion goods and their related services through online channels. Fashion goods include fashion accessories, clothes, shoes, bags, jewelry, cosmetics, and other luxury goods. The fashion e-commerce market comprises revenue generated by the establishments using several online platforms and tools for trading fashion products.” We will come back to this point later.
The Role of Personalization and Customization in Fashion & Apparel Ecommerce
Retail personalization was a topic of discussion as long ago as June 2000. In fact, Jeff Bezos is quoted as saying, “If we want to have 20 million customers, then we want to have 20 million 'stores.' ... Our mission is to be the earth's most customer-centric company.” He was describing the concept that every customer should have a unique journey and experience tailored specifically to suit the individual.
According to Vue.ai (December 2021), “Retail personalization is the process of providing every shopper with a unique journey across every single touchpoint and channel, based on historical data and real-time shopper intent, powered by customer and product Intelligence. The ultimate goal of personalization in retail is to make shoppers feel unique, special, and emotionally connected, to improve their shopping experience.”
In The future of personalization—and how to get ready for it (June 2019), McKinsey reports that, “Today’s personalization leaders have found proven ways to drive 5 to 15 percent increases in revenue and 10 to 30 percent increases in marketing-spend efficiency—predominantly by deploying product recommendations and triggered communications within singular channels.”
Moreover, in Personalizing the customer experience: Driving differentiation in retail (April 2020), McKinsey again reports that, “Personalization at scale (in which companies have personal interactions with all or a large segment of their customers) often delivers a 1 to 2 percent lift in total sales for grocery companies and an even higher lift for other retailers, typically by driving up loyalty and share-of-wallet among already-loyal customers (for whom data are more abundant and response rates are higher). These programs can also reduce marketing and sales costs by around 10 to 20 percent.”
They go on to add, “Not only that, successful personalization programs yield more engaged customers and drive up the top line. In general, a positive customer experience is hugely meaningful to a retailer’s success: it yields 20 percent higher customer-satisfaction rates, a 10 to 15 percent boost in sales-conversion rates, and an increase in employee engagement of 20 to 30 percent. Customer-experience leaders in the retail space (retailers with consistently high customer-satisfaction scores) have provided their shareholders with returns that are three times higher than the returns generated by retailers with low customer-satisfaction scores.”
The COVID-19 Pandemic appears to have accelerated consumers’ desire for personalization in retail.
In The value of getting personalization right—or wrong—is multiplying (November 2021), McKinsey again reports that their “ . . . research found that companies that excel at personalization generate 40 percent more revenue from those activities than average players. Across US industries, shifting to top-quartile performance in personalization would generate over $1 trillion in value. Players who are leaders in personalization achieve outcomes by tailoring offerings and outreach to the right individual at the right moment with the right experiences,” and also that their “research shows that 71 percent of consumers expect companies to deliver personalized interactions. And 76 percent get frustrated when this doesn’t happen. Ratcheting up the pressure on companies, if consumers don’t like the experience they receive, it’s easier than ever for them to choose something different.”
Customization is another trend driving change in Fashion and Apparel ecommerce. Although most people use Personalization and Customization interchangeably in regard to retail, they are distinct concepts.
Customization occurs when the shopper is allowed to play the role of creator in relation to the product that the shopper wishes to purchase. According to The difference between personalization and customization in retail CX (August 2021), published at RetailCustomerExperience.com, “Customization allows the customer to assume the role of creator, enabling them to control what they are hoping to purchase, from changing the color of a pair of shoes to monogramming a bag or tailoring the shape of a couch to fit their living room. What will that couch look like in your living room? Does the bag you're purchasing look better with gold zippers or silver? How many custom colors for your new sneakers is too much?”
However, the desire for customization is not new. For example, in Made-to-measure, Online, Driven by Chatbots: Lanieri US Fashiontech Insights Unveils Top Trends About Americans' Fashion Purchase Habits (November 2017), Lanieri reported that nearly half of US adults would buy customized items.
The Team at TrueToForm Has Been Laser Focused
Janice Tam and Margaret Tam are siblings, and CEO and CTO respectively of TrueToForm. They decided to team up and start TrueToForm during the COVID19 Pandemic, when it dawned on them that: First, many other people would be experiencing the same problems they were experiencing when they tried to shop for clothing online, and; Second, there was now a pretty good solution to capturing highly accurate object attribute data due to new depth sensing technology in mobile phone cameras.
Janice holds a BA in Economics from Dartmouth College. She just graduated from the University of Chicago’s MBA program. Her prior work experience spans scientific research, management consulting, and venture capital.
Margaret holds a BSE in Mechanical and Aerospace Engineering from Princeton University, and an MSE in Aerospace, Aeronautical, and Astronautical Engineering, from the University of Texas at Austin. Her prior experience includes engineering research, and 5 years in software engineering at Apple.
Since they launched in 2021, Margaret and Janice have;
Built a consortium of educational partners including Parsons, the Fashion Institute of Technology, the University of Oregon, Columbia College Chicago, and the Rhode Island School of Design. Students are using TrueToForm’s digital avatars to create custom-fit fashion collections and athletic wear. If you are curious you can read about the Parsons collaboration here, and the University of Oregon collaboration here.
Attracted 200+ designers to create user accounts since TrueToForm opened its beta in May 2022
Early beta customers include made-to-measure brands VARYFORM (see the announcement here) and the Tailory New York, leading athleticwear brands Burton and Ridestore, and costume designers for Film and TV, including an upcoming AMC Studios production.
Partnerships with supply chain platforms to power on-demand, made-to-measure apparel production, and
Recruited a team of advisors and investors including: Fashion photographer and TV personality Nigel Barker; Thought leader in 3D technical design Susan Sokolowski, and; The co-founder of SyncOnSet Alexander LoVerde.
TrueToForm has been accepted into the MassChallenge 2022 US Early-Stage Accelerator program.
Harnessing The Power of Mobile and Edge Computing, and Computer Vision
That said, the enabling technologies that would need to exist for a platform like TrueToForm to succeed are becoming more powerful and less expensive every day. They include: Cloud computing; Mobile computing; Edge computing; Computer vision; Automated and on-demand manufacturing; Digital avatars, and; Virtual try-ons and styling, among others.
The problems confronting the Fashion and Apparel industry go deeper than it appears initially.
It is hard to quantify the amount of waste produced by the Fashion and Apparel Industry. In Redesigning the future of fashion, the Ellen Macarthur Foundation estimates that, “Every second, the equivalent of a rubbish truck load of clothes is burnt or buried in landfill.”
In Positive Fashion: What the Circular Solution Looks Like in the Fashion Industry (February 2019), Anthesis reports that the Fashion and Apparel industry is responsible for about 10% of global carbon dioxide emissions and about 20% of global water waste.
In Can Technology Eliminate Fashion’s $500B Overproduction Problem? (November 2020), Fashion Mannuscript reports that the industry has an annual overproduction problem that amounts to about $500 Billion, stating “What consumers may not be aware of is that 35% of all materials in the supply chain end up as waste before a product even reaches a customer. Some of this is cutting waste, unusable stock due to last-minute design changes, or spoilage in transport. However, the largest contributor to waste is excess inventory that does not sell on the retail market. Among 150 billion garments produced per year on average, only 20% to 30% sell at full retail price, and only 40% to 50% sell at a discount. Thirty percent do not sell at all and go straight to a landfill or incinerator.”
In December 2018, BodyBlockAI estimated that about 50% of online purchases would be returned because, after receiving them consumers judged them to be a poor fit. If we assume that half of that estimate represents untruthful responses, we are left with about 25% of online fashion and apparel purchases being returned because of poor fit after consumers receive them and try them on - meaning that such items can no longer be part of inventory for sale to other customers.
If you are a man reading this blog post, you’ll be forgiven for thinking that this is an issue that is being overblown. Afterall, isn’t the solution just to buy the “closest size” and couldn’t that be easily accomplished with some kind of system that looks up the closest size from a giant database?
That assumption would reveal a lack of understanding of the nature of the problem.
According to Women agree: It’s impossible to find clothes that fit (October 2017), “no matter their shape, 46 percent of women struggle with some size or fit issues that impact what they wear and what trends they’ll try simply because of the makeup of their form.” To put it simply, “shopping tribulations have led more than half of women (57 percent) to feel like there are simply no clothes made to fit their particular body type.”
The combinations of different heights, torso lengths, shoulder widths, arm lengths, belly shapes and sizes, bust sizes, hip widths, body curvatures, and other physical attributes make this a combinatorial nightmare for retailers to solve.
In trying to solve this problem, retailers run into a phenomenon known as the Curse of Dimensionality; A situation in which when one is attempting to solve a problem that requires organizing and analyzing data, the volume of data required to solve the problem grows so quickly that any available data becomes inadequate and insufficient for actually solving the problem.
More specifically, to solve this problem retailers must confront a phenomenon mathematicians call a Combinatorial Explosion, which occurs when adding a small number of inputs leads to an exponential increase in the number of combinations that must be assessed before one can arrive at a solution to the problem. High Dimensional Problems such as this one are complex and difficult to solve computationally.
In the real world, we witness the visible effects of such phenomena when we read about retailers’ traditional efforts to satisfy shoppers and the outcome of those initiatives. The combinatorial explosions that bedevil retailers' historical attempts to solve these problems explains why technology has not lived up to the task of making it possible to solve this problem at scale; In trying to satisfy “all women” by using analytical techniques, retailers end up satisfying none because inventory management becomes a problem that is too difficult to tame.
This is one reason TrueToForm has had good success getting prospective customers to try its platform, even when they are already paying for a competing product. The team reports that the feedback so far is that TrueToForm has the highest fidelity of the products that such prospective customers have tried.
TrueToForm differentiates itself from its competitors by making it possible for retailers to offer personalization and customization at scale. Specifically, TrueToForm offers the opportunity for true customization based on an individual shopper’s actual body measurements and proportions, as opposed to merely offering recommendations of the closest fit - hence the choice to start in the market for Custom-Fit Apparel and Garments. This goes beyond selecting colors and accents, but rather gets at the core frustration that shoppers express about the experience of buying clothing online.
Another challenge that the Fashion and Apparel industry faces is that of changing public perceptions around the industry’s role in accelerating the Climate Crisis. Changing public attitudes increase the prospect that regulators will be moved to pass regulations to force the industry to change its ways. This topic is discussed in Vogue, Will 2022 Be The Year The Fashion Industry Finally Faces Green Legislation? (January 2022).
In The Myth of Sustainable Fashion (January 2022), Kenneth P. Pucker, formerly Chief Operating Officer of Timberland, suggests that, “Government rule makers must price negative externalities. Carbon and water, for example, should be taxed to include social costs. This would discourage their use, lead to innovation and accelerate the adoption of renewable energy,” and “ . . . governments should adopt extended producer responsibility (EPR) legislation (as has been done in California for several categories, including carpets, mattresses, and paint). Such laws require manufacturers to pay up front for the costs of disposal of their goods,” and finally that, “Additional legislation ought to be adopted to force fashion brands to share and abide by supply-chain commitments.”
While the kind of change Pucker suggests has been slow to emerge, we believe that we are now at the tipping point, when citizen action directed at the fashion industry AND at politicians will drive more rapid change than we have seen in the past. This is a positive catalyst for startups like TrueToForm that are looking at long-standing problems in the Fashion and Apparel industry with the fresh perspective that comes with Janice and Margaret being outsiders.
Technology-Driven Innovation in Fashion and Apparel Supply Chains is Consequential
According to Fibre2Fashion in Fashion industry in 2022 & beyond (January 2022), the “Global fashion industry, valued at $3 trillion, constitutes 2 per cent of the word’s GDP and when such an industry is impacted the results are far-reaching.” [sic]
CBInsights makes the same point in The Future of Fashion: From design to merchandising, how tech is reshaping the industry (March 2022), stating that “Fashion has always been at the forefront of innovation — from the invention of the sewing machine to the rise of e-commerce. Like tech, fashion is forward-looking and cyclical.
The fashion sector is also one of the largest industries in the world, estimated to be worth more than $3T by the end of the decade, according to CB Insights’ Industry Analyst Consensus.
And today, fashion technology is growing at a faster pace than ever.”
Finally, in Rethinking business models for a thriving fashion industry (November 2021), the Ellen Macarthur Foundation states that, “Circular business models for fashion, which allow companies to make revenue without making new clothes, represent a significant opportunity for new and better growth in the fashion industry. These business models, which include resale, rental, repairs and remaking, can provide considerable greenhouse gas savings, and could be worth USD 700 billion by 2030, making up 23% of the global fashion market.”
Startups like TrueToForm fit the mold. Why?
First, by enabling on-demand manufacturing of apparel they reduce the occurrence of waste and deadstock that ends up incinerated, in Chile’s Atacama Desert, or worse.
Second, by enabling personalization and customization at scale, they enable fashion brands to earn more revenues because shoppers have demonstrated a willingness to pay substantially more for made-to-measure clothing.
According to the Ellen Macarthur Foundation, “In recent decades, the amount of clothes the fashion industry produces has grown and grown, while at the same time, profit margins have shrunk and the impact on the environment has increased,” and furthermore, “Between 2000 and 2015, clothing production doubled, while over the same period utilisation – the number of times an item of clothing is worn before it is thrown away – decreased by 36%.”
Startups like TrueToForm will lead to higher utilization and lower returns, which in turn should reduce the negative impact the fashion and apparel industry has on the environment.
Finally We Have Seen This Movie Before, and We are #ObsessivelyEnthusiastic
Between 2000 and 2001, my partner, Lisa Morales-Hellebo, served as Creative Director for Reflect.com - a company that was spun out of P&G and that became a collaboration between P&G and Redpoint Ventures.
Reflect.com pioneered mass-customization, mass-personalization, and on-demand manufacturing in cosmetics, skincare, haircare, and fine fragrance. Lisa led the team to build an in-store micro-manufacturing experience that some of Reflect.com’s customers could experience first hand in San Francisco’s Union Square.
Lisa’s experience successfully steering the team at Reflect.com to scale operations and grow sales through mass-customization, mass-personalization, and on-demand manufacturing for a retail segment as complex, difficult, and challenging as Beauty & Cosmetics during that challenging economic period is what helped us recognize the potential for the approach Janice and Margaret have adopted to help TrueToForm succeed where others have failed.
As we say at REFASHIOND Ventures, we are #ObsessivelyEnthusiastic about what the team at TrueToForm is building. The company is fundraising - we invested in TrueToForm’s pre-seed round in Q42021. It is also scaling use of the platform with customers. You can sign up for the beta here: www.truetoform.fit.
As early-stage investors, we are encouraged that many more downstream investors have awoken to the opportunity in #SupplyChainTech. We couldn’t be more excited to back supply chain technology founders at the early stages of their journey to transform the way the world makes, buys, moves, stores, and consumes the products and services that we all need.
