Five Years In, Avenue 32 Nears Profitability While Keeping a Laser Focus on New Talent

That's quite a feat.
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Roberta Benteler. Photo: Sandra Semburg

Roberta Benteler. Photo: Sandra Semburg

Just about everyone wants to champion emerging designers. Over the past half decade or so, there has been no shortage of upstart e-commerce companies pledging to solve their growth and distribution issues  — only to discover, mere months in, just how challenging the proposition is. So it was with no little surprise I recently learned that Avenue 32 — the London-based e-commerce website that has become a destination for bold, colorful fashion from up-and-coming labels — is on track to reach profitability next year.

That's according to founder Roberta Benteler, who launched the site in the fall of 2011 at the mere age of 26. Beyond a brief internship with a small, independent designer, she had no direct experience with the industry. "I was working in private equity, but I'd always wanted to work in fashion," Bentler recalled over tea at The Connaught hotel in London's Mayfair neighborhood last week. "When the [financial] crisis came, I said okay, this is a natural time to exit [private equity] and try with fashion because no one is investing anything. And I couldn't to save my life get a job anywhere because I didn't have any experience." 

She called up a friend, designer Saloni Lodha, and asked if she could intern for three months — enough time, as it turned out, to give Benteler an idea for her own business. "I saw all of the challenges young designers face, and at the same time, as a customer, I was really bored; I could only shop super-brands and it was hard to find something interesting, something new," she explains. "I thought I needed to do something online where more creative, up-and-coming and also established designers could showcase the really interesting stuff, the kind of stuff buyers don't usually buy because they're too 'safe.'"

Benteler presented a business plan to her family ("We were lucky we underestimated the cost going into it," Benteler says, laughing) and began signing young designers on a consignment basis, so as to avoid inventory risk — a smart move, as it turns out. "It did help a lot with cash flow in the beginning, helped us get a lot more designers on the site right away instead of investing in just a few," Benteler recalls. "In the beginning we didn't have a lot of sales, no one knew us, so we sent most of it back. Now we sell pretty well and it's much more profitable for us not to do a consignment model because wholesale margins are much higher."

London-based Shrimps, known for its colorful faux fur, is one of Avenue 32's most popular labels. Photo: Avenue 32

London-based Shrimps, known for its colorful faux fur, is one of Avenue 32's most popular labels. Photo: Avenue 32

I ask Benteler what unexpected obstacles she faced in the beginning. "I didn't realize the biggest barrier to entry in this business is getting designers onboard," she says. "We launched before Moda'Operandi and [when] MatchesFashion.com was still mostly an offline operation, so it was quite tricky. Initially 25 designers said yes, but 15 of them pulled out [right before launch]. In the end it was a good thing, because we didn't know how slow it would be. You press a button and think customers will come, but no one knows you, and we had so many unforeseen technical glitches. [I learned] that you really have to believe in your idea, but also have to be able to adapt. If you work hard it will keep going."

In the five years since, Benteler and her team have gradually built a customer base — advertising on social media and influencer marketing have proved to be especially effective. In addition, they've learned what those customers want from them, which is very much the opposite of what you might expect: While most retailers tend to bank on big designers and classic staples, like denim and shirting, adding younger labels (often at a loss) to enliven the mix, Avenue 32 has taken the opposite route. "We are actually phasing out denim, and any kind of commodities like that — T-shirts, lingerie. If you want to go and buy denim, you go to Net-a-Porter because they have a huge selection, but if you want a dress you'll go to Avenue 32 because the designers are different. We are so lucky to have a customer who is really confident, really daring, who wants to have a standout piece that may very well be in a high price bracket. We don't want to give her jeans and T-shirts, we want to give her the coolest pair of trousers she can wear during the day, blouses and knitwear with a twist; we feel like that's our niche. There's no point in competing in commodities with others," adding that evening dresses are among the site's top performers. 

Benteler and her five-person buying team are constantly adding new designers to the site — I personally discover a few names each season that way. "We find a lot through Instagram to be honest with you,” she says, scrolling through her Explore feed. (She's hardly alone: Sarah Rutson, Net-a-Porter's vice president of global buying, often says the same thing.) Recent discoveries include Paris-based ready-to-wear brand Y/Project, handbag label LaContrie and swimwear maker Kini. "If the product stands out on Instagram, it will stand out when it's professionally photographed for an online shop, too."

Working with so many emerging designers, I'm curious how Benteler thinks the move towards a "see-now, buy-now" model will change the industry. "To be honest with you, 'see-now, buy-now' only works with commodities — trench coats, for example," says Benteler. "It's very unrealistic for anyone who is maybe not Burberry — they don't have that production capacity — and at the end it's the factories that rule the fashion industry. I really think the industry should go back to something much slower."

Currently, Benteler is in the process of seeking her first outside investment. She wants to use the funds to expand the site's brand mix, increase marketing on social media and on mobile, and to open a warehouse in the U.S. to offer same-day delivery. (About half of Avenue 32's sales come from the U.S.) Her voice is calm and matter-of-fact as she ticks off the list.

So if that's not keeping her up at night, what is? "Not much, actually, I'm so exhausted!" Benteler laughs. "I started young and a lot of things were very scary, but now five years on I've come to a point where I'm always going to face problems, but there's always a solution — life goes on, the next day will be better. That's one of the best things about being self-employed and about this job, you learn that as a lesson for life."

Homepage photo: Luke Hodges