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Welcome to Dealboard. In this weekly feature, The Current is providing a look at the mergers, acquisitions and venture capital deals making waves in ecommerce, CPG and retail.
This week, the owner of Solo Stove is adding more indoor warmth, and eBay acquired a digital authentication platform. Plus, investors provided new funding for fast fashion marketplace Shein and a MultiVersal AI startup.
Check out the latest deals:
Solo Brands acquires TerraFlame
Solo Brands acquired Terra Flame, which aims to “create warm, inviting and ambient spaces around clean burning flame.”
Terra Flame makes indoor fire products that include eco-friendly fireplace fuels and offers fire features to showcase flames. This will join a company that includes the popular Solo Stove and other products.
With the deal, Terra Flame’s team will join Solo, and CEO Lenny Vainberg will become the general manager of Terra Flame.
“We are pleased to welcome TerraFlame to the Solo Brands family and thankful to Gerald Berger, Oleg Berger and Lenny Vainberg for choosing us as the right long-term partner for them,” said John Merris, CEO of Solo Brands, in a statement. “This strategic acquisition complements our brands, and, alongside Solo Stove, allows us to offer our customers the fire burning experience outdoors, and with the addition of TerraFlame, we’re thrilled to bring the fire inside. We hope to leverage our direct-to-consumer and wholesale expertise to support TerraFlame’s growth while also leaning into TerraFlame’s shared passion for product innovation and incredible products to elevate the Solo Brands customer experience.”
Solo Brands is adding to a growing roster that also includes Chubbies, Oru Kayak and ISLE.
Terms of the latest deal were not disclosed.
Shein raises $2B
Shein, the fashion marketplace, raised $2 billion in a new round, according to the Wall Street Journal.
The financing was co-led by Sequoia Capital, General Atlantic and the U.A.E. sovereign-wealth fund Mubadala.
With this round, Shein’s valuation was cut to $66 billion, which was about one-third lower than its previous valuation, WSJ reported. However, it could leave room for the company to raise its valuation in an IPO, though no such offering is planned at this time.
eBay acquires apparel authentication platform
eBay will acquire Centrilogo, a provider of digital IDs and authentication for apparel and fashion. Centrilogo’s platform allows brands to offer consumers a way to confirm authenticity, access reliable information about products, and activate circular services.
"For many years, consumers have turned to eBay as a trusted destination for buying and selling pre-loved apparel and fashion goods, not only because of the unmatched selection, but because of our commitment to utilizing the latest technology to empower our sellers and buyers," said Charis Marquez, VP, eBay, in a statement. "Certilogo's technology and talented team allows eBay to build on this commitment, establishing eBay as a leader in pre-loved fashion, and offering new ways for consumers to connect and engage with brands."
Terms of the deal, which is expected to close in the third quarter, were not disclosed.
Emotive.io acquires Bloom Digital
Emotive.io, a growth platform for ecommerce brands, acquired Bloom Digital, a marketing agency specializing in SMS marketing, email marketing and paid advertising.
With the deal, Emotive.io will launch Emotive Attribution, a product that helps brands optimize marketing spend through use of a first-party pixel. It is also introducing Emotive Services to extend expertise in SMS, email, and advertising revenue growth for ecommerce brands.
"We are thrilled to welcome Bloom Digital to Emotive and launch Emotive Attribution as part of our all-in-one growth platform for eCommerce brands," said Brian Zatulove, CEO of Emotive.io. "This strategic acquisition and product expansion will enable us to provide even more comprehensive and effective solutions for eCommerce merchants, helping them grow throughout the entire funnel."
Terms of the deal were not disclosed.
PRE raises $1M for MultiVersal AI
Ecommerce tech startup PRE secured $1 million in seed funding for a MultiVersal training system that’s designed for testing AI experiences.
The system is designed to create a “bias” toward particular groups of people in order to help brands and retailers determine optimal performance for their sites.
“A key request from our partnered brands has been for the ability to focus our AI on a particular demographic. With MultiVersal training, we can do precisely that,” said PRE Founder Parham Aarabi, in a statement. “We are creating bias to analyze the demographic variability of AI systems, enabling partners with an unprecedented capability for optimizing their e-commerce sites and apps.”
Trending in Operations
"Fashion ecommerce is one of the most cumbersome customer experiences that exists," said Rent the Runway CEO Jennifer Hyman.
The rise of generative AI is bringing with it a groundswell of interest and concern about how the capability to automatically synthesize information and create something new will change how we work.
Given that AI will sit within the architecture of our digital lives, it’s also worth considering how the technology will introduce new tools for other aspects of life, as well.
For two ecommerce innovators in the apparel space, it’s a time to explore how it will transform shopping. Rent the Runway is set to roll out new AI-powered search capabilities, while Stitch Fix is drawing on a long history with data science and machine learning to personalize the inventory buying process.
Here’s a look at the initiatives underway at each company, and their visions for the future:
Rent the Runway: From search to concierge
Rent the Runway is putting a focus on the customer experience this year as it seeks to retain more subscribers and continue a yearslong push toward profitability.
This is resulting in the introduction of a variety of new initiatives, from the addition of an extra item to all orders to speeding up page load times. Yet as CEO Jennifer Hyman zooms out, she sees change being necessary on an industry-wide level in fashion. Beyond adding new features, AI can play a transformational role.
“I think that fashion ecommerce is one of the most cumbersome customer experiences that exists. You are searching through pages and pages and pages of content to find the items that you like and no one likes doing this,” Hyman told analysts on the company’s earnings call this week. “As an industry that still is selling physical products, AI is going to be -- fashion is going to be a major beneficiary as an industry.”
As a rental service, Rent the Runway has a distinct niche in fashion that lends itself to AI’s advantages, Hyman said. As opposed to a retailer that a consumer may visit a couple of times a year, RTR is used frequently by customers. So Hyman said there are opportunities to turn Rent the Runway into a “utility” by creating a more seamless experience.
This frequent use also provides a “highly unique” dataset, Hyman said. They know what a customer is planning to do based on what they rented. They know whether she liked or disliked an item, and many customers are reviewing 10 items per month. They know her size and how an item fits. This can be put to work in tools that allow customers to ask questions, and find answers.
The first application that combines AI and these advantages will appear in the coming weeks, when Rent the Runway plans to launch a beta of AI-driven search. The tool will allow customers to search for common terms or use cases for an item. So a person will be able to write “Miami vibe,” “‘clambake in Nantucket,” or “tropical motifs,” and receive results about what to wear for such an occasion.
The goal is to help customers sift through the endless aisle, and instantly finds what's right for them.
“I think that across all fashion sites, all over the world, the way that people are searching for product is fairly vanilla, it's fairly functional, right?" Hyman said. "You can go to a site and search for a T-shirt, you can go to a site and search for a black-tie gown. The fact that we're going to be able to enable our customers to search how they actually want to use this closet in the cloud, to search for items to wear to my beach bonfire this weekend, that is a completely different way to search, and I think that it really brings out the value proposition of what a closet in the cloud is all about."
Hyman sees this as a first step in the company using AI models to improve the product experience, and expects more tools to appear in the coming months. RTR is also introducing an SMS concierge experience for onboarding that allows customers to text with a member of the customer service team. The company is already exploring ways that AI can be incorporated into that tool, as well.
In the longer term, Hyman said the company has a vision that will leverage AI to allow customers to communicate with Rent the Runway asynchronously across different modalities, and have a stylist that is constantly available to recommend items, pick out new inventory and answer questions.
“If we are utilizing AI appropriately over the next few years, I see no reason why someone even has to come to our website,” Hyman said.
Stitch Fix: Inventory buying and beyond
Stitch Fix has long married AI with human curation to provide outfits on a subscription basis.
“For years, we have utilized capabilities in generative AI, injecting scores and language into our personalization engines and, more recently, automatically generated product descriptions,” CEO Katrina Lake told analysts. “We have also developed and implemented more advanced proprietary tools such as outfit generation and personalized style recommendations that create a unique and exciting experience we believe is unmatched in the market.”
A new area where the company is applying AI is inventory buying.
“We have historically utilized a number of tools to make data-informed decisions with our inventory purchases,” Lake said. “Now, directly leveraging our personalization algorithms, we have developed a new tool that creates an exciting paradigm shift, which will utilize math scores at the client level to drive company-level buying actions. We expect the clarity of demand signals at the individual client level to drive more proactive and efficient inventory decisions as a company. And because of this, we expect to see higher success rates on fixes and drive increases in keep rates and [average order value] over time.”
Early results are promising. When compared with existing buying tools, testing showed a 10% lift in keep rate and AOV. By the end of this quarter, Stitch Fix expects 20% of all purchase orders to be algorithmically informed.
With experience using AI and a team in place to build, Stitch Fix is investing in the technology. Like Rent the Runway, it also has a unique dataset that offers an immediate advantage.
Here are Lake’s thoughts about how Stitch Fix’s AI strategy:
One of the things that I love about our experience is that we have generative AI that's really in more of a visual format. And so, the outfits that we have in our app, those are actually taking into account your preferences, what we know about you, and then in combination with what we know that you own in your closet. And to be able to kind of continue to push that technology and to be able to continue to give people more value in their experience with Stitch Fix, that's a really good example of, I think, a capability that is, firstly, really aligned with our capabilities around data and personalization and really unique to us.
And then I think it's also really compelling because I really think that pushes us as we think about what that addressable market is. I think if we can push outfits to be something that can be an asset to everybody, I think that is a universal thing that people would love to be able to have, is to have access to advice on a daily basis around what to wear and how to wear it.
While these are distinct companies, their plans lead us to a common conclusion: While the talk around generative AI might be new, many technology-forward companies already have assets sitting inside them that can be leveraged to build new tools. Uncover what’s already there, learn about the AI’s capabilities and develop a solution that's right for your organization. Then, talk to customers to determine how to improve it. It might mean commerce looks different, but that’s okay. The point is to create a better experience.