Nineteenth Amendment: D2C Retail LogisticsBy Christine Hong
Nineteenth Amendment is a product development and production management platform where brands can experiment with designs prior to manufacturing. Brands pre-sell items directly to their shoppers, connect with a network of manufacturers, and produce on-demand, sustainably. I sat down with Nineteenth Amendment’s Co-Founder & CEO, Amanda Curtis, to learn more about the bridges they’ve built between the historically disparate worlds of high-fashion and silicon valley.
A Holistic Solution for Fashion’s Product Development
A piece of advice that investors often bestow on their portfolio companies is to solve a deep customer pain point and to be the best at solving that one problem. “Don’t do too much” is a phrase that co-founders Amanda Curtis and Gemma Sole have heard numerous times over the past five years building their retail logistics company, Nineteenth Amendment. However, having worked deep within the trenches of the fashion industry, the duo knew that what these companies really needed was an industry-wide makeover.
While fashion & retail may be the second largest industry globally “with a $3 trillion market size, these businesses have not advanced technologically with the rest of the world and the business model wasn’t working,” said Curtis. “So, we created the whole ecosystem — a one-stop solution for selling, making, and analyzing that’s never been possible before.”
“We created the whole ecosystem — a one-stop solution for selling, making, and analyzing that’s never been possible before.”
– Nineteenth Amendment’s Co-Founder & CEO, Amanda Curtis
This isn’t another startup looking to fix one broken piece of the puzzle. Nineteenth Amendment is offering an end-to-end solution, directly connecting consumers and brands and partnering these brands to US-based manufacturers via their product life management platform (PLM). In doing so, the NYC-based startup is challenging the way fashion has been produced and distributed for almost as long as manufacturing has been around. They’re introducing the lean startup methodology into a world that has never had much cross-over with Silicon Valley, where Allbirds and Google T-shirts reign supreme.
“I grew up in the fashion industry, and being in it gave me operational insights into how it works. I went to Parsons and became a fashion designer working for startup brands to mega brands like Diane von Furstenberg, Richie Rich, and Maggy London. I saw from the inside that the operational efficiencies just weren’t there. There was very little technology involved and brands would spend thousands of dollars on their collections, not knowing if anything would sell.”
Curious about what tech startups were doing right, Curtis became involved at Harvard’s Innovation Lab. “I met my co-founder at the iLab where we saw that a lot of the startups were working on software, but not many of them were applying software technology to physical products. And that’s how Nineteenth Amendment started. We took the time to really validate our idea and create technology to allow for this reverse business model where the product isn’t held in inventory, it’s only made after someone has made a purchase. This technology has really allowed us to scale and to grow.”
A Bit of Context for the Everyday Consumer
If you’re anything like me, you know what you want as a consumer without ever giving real thought to the logistical and capital-intensive process required to get the product into your hands. Scratch the surface, and you’ll see that manufacturers and brands face different kinds of hurdles.
“For manufacturers overseas and especially in Asia, they have access to many production management tools from the early nineties and benefit from more efficient processes. However, US-based manufacturers don’t have the technology to be as efficient,” leading to higher prices. Curtis and Sole chose to stick with US-based manufacturers instead of flocking to cheaper manufacturers abroad. Why? “Well, there is speed to market to the end consumer, and savings in shipping cost. There’s also an environmental motivation as transport greatly contributes to fashion being the second most polluting industry in the world. Thirdly, there was an opportunity to create the technology for manufacturers as well. With our software, we can help manufacturers become more efficient while lowering the cost for brands to produce by 30%.”
For brands, the challenge is validating designs before investing in massive stores of inventory. Traditionally, manufacturers enforce minimums, imposing built-in inefficiencies and waste for the sake of profit. The opportunity lay in forming partnerships with brands to sell clothing in pre-sales either on their own sites or on Nineteenth Amendment’s online marketplace, enabling these brands to use sales data to validate designs before investing in their inventories. Their hypothesis turned out to be right – brands loved having access to on-demand manufacturing at a lower cost and the data to make smart investment decisions.
“The operational challenges are the same for small and big brands alike.”
– Nineteenth Amendment’s Co-Founder & CEO, Amanda Curtis
Interestingly enough, “the operational challenges are the same for small and big brands alike,” said Curtis. She found that big brands had “the same problems that would hinder smaller brands. For Macy’s, they were playing it very safe on their inventory and weren’t introducing products to market new brands. That’s why you would see the same items season after season, which ultimately hurts their business. We allow retailers and brands to try out new products without risk. Specifically with Macy’s, we brought in four or five brands that aligned with their customer and put these lines in their stores without holding inventory. They were able to presell all of their items.”
While lowering costs is a big focus, so too is brand affinity. “We’re seeing larger brands increasing their direct-to-consumer (D2C) business because wholesale is not doing so well and they’re looking for a safer way to go about selling to consumers. Nineteenth Amendment’s tech allows for total transparency – the customer gets real-time updates as the pieces are being made and this creates a unique kind of retail. Customers are increasingly millennial and are demanding products that are authentic and unique to them. Brands are thinking about how to factor that into the making of the product and the customer experience.”
Stiletto-Strapped and (Pump)ing Revenue
As two female founders in a historically underfunded sector, Curtis explains that fundraising has not been the easiest journey – “We’ve raised just under half a million to date for a few reasons. Statistically, our demographic receives under 2% of venture funding. We’re also in the tech and fashion space which is underfunded because tech investors don’t understand the fashion industry, and traditional fashion investors don’t understand the tech industry. We found ourselves caught between the two. It’s made us run very lean and focus on revenue – because we need it to sustain the business.” The company is currently raising a seed round.
So how do they make revenue? “We definitely have the most traction on the brand side, and they pay a monthly subscription fee to use our tech whether powering their own websites for presales or using our marketplace.”
And why are they confident that the company will continue to scale? “Competitors are attacking one part of the ecosystem. There are legacy software companies like Blue Cherry and Centric who are attacking the manufacturing part. There’s also the Kickstarter marketplace, but nobody’s addressing the whole ecosystem. If you only have one part of the process, it doesn’t totally work and it tends to break.”
“Our whole vision is that the future is on-demand. That means inventory-free or limited inventory and more customization overall. It doesn’t make sense for the process to take so long, and we want to keep up with D2C brands using technology first.”
As for where smart fashion is headed, we see it as “using technology to increase efficiencies across all aspects of the retail ecosystem. From using data to better processes through technology, we want brands to connect with customers in authentic yet scalable ways. The fashion industry is very delayed – they know they need data but don’t understand how to use it, and the model is all over the place and backwards. It’s all very 1995” – not as generous as Regina George’s “that’s so last season.”