LOS ANGELES – Following a string of online retail shut-downs that has included Boo.com, Eve.com, Violet.com and most recently, Pets.com, estyle Inc. has managed to steer clear of the dotcom depths. The company received its fourth round of funding in mid-November and expects this round to take it to profitability.
Estyle’s $25 million fourth funding round was led by new investor Primedia Inc. Other investors included Vulcan Ventures, Maveron LLC, Goldman, Sachs & Co., Global Retail Partners, Oak Investment Partners, Arts Alliance, Venture Strategy Partners and Zone Ventures.
To date, estyle has raised more than $85 million over four rounds of funding, including an initial funding of $875,000, a $14 million second round in July 1999 led by Global Retail Partners and Oak Investment Partners, and $45 million third round led by Vulcan Ventures closed in February.
A multi-channel retailer, estyle serves the shopping needs of busy women at key stages of their lives. The company’s founder and chief executive Laurie McCartney, conceived the idea for estyle.com shortly after conceiving her first child.
“I started the company when I was pregnant with my first baby, and realized that with busy, working moms who have a lot to do, you really have to manage your time,” said McCartney. “I thought there had to be a better way, so I decided to launch a company that was geared toward the shopping needs of women.”
Estyle started with an online business and then quickly followed up with a catalog business. Babystyle.com, the company’s flagship Web site, launched in October 1999 offering one-stop shopping solutions for consumers from pregnancy through a child’s first two years.
The company’s second site, Kidstyle.com, was launched in April, and targets the family and friends of children ages two through 10 by offering a selection of children’s clothing, room fashions, toys, gifts and a gift registry.
In addition to its online and catalog business, estyle is in the process of establishing relationships with brick-and-mortar stores as a second avenue to sell its merchandise. “Initially, estyle will be selling its own private label collection through partnerships with brick-and-mortar players, where it will be showcased in various stores,” said McCartney, adding that a flagship store is definitely a long-term consideration.
In addition, McCartney said the company is continually looking for strategic partnerships. “Primedia is a great example of a strategic partner, because it gives us great access to our demographics through its publications, American Baby, Healthy Kids and its lifestyle publications – New York and Chicago.”
So what is estyle’s secret of success? McCartney said that estyle was built on a differentiated business model. “We target large, fairly fragmented markets, meaning there is room for us to have considerable growth. We also go after high margin businesses so that we can have a real clear path to profitability,” she added. “We’re also positioned not as a single channel, but as really building a brand and that resonates with the consumer. We can take that brand to multiple channels and multiple media platforms. It’s really about that emotional experience, and I think we really focus on that.”
McCartney also said that estyle tries to go after markets where it thinks there is a real consumer need, citing babystyle.com as a strong example. “We saw there was no all-encompassing retailer that offered everything you needed from pregnancy through a child’s first two years. So we said let’s do a real edited selection of must-have products for moms and their friends and families,” she said. “We know it’s difficult to do in the traditional brick-and-mortar world and we also know that there’s no online retailer or catalog that does it.” Due to those factors, the company saw that there was plenty of room for estyle to really make a differentiated offering.
“With everything that we go after, we really try and say does this make sense for the consumer, can we differentiate ourselves and are we really adding value. Because if we aren’t, then we will not do it,” said McCartney.
“A lot of it is really focusing on making the shopping experience better, and making sure that we are in the right channel,” she said. “There are certain things that people feel comfortable buying online and there are certain things where they like the touch and feel component of a catalog, and there are things that make sense for the brick-and-mortar world. We try and reach the consumer wherever it makes sense. That has definitely differentiated us.”
To be sure, estyle has been multi-channeled from the very beginning. The company launched its catalog less than one month after its Web site was launched.
Being based in Los Angeles has afforded estyle the ability to do celebrity features on its site. Its most strategic celebrity relationship is with Cindy Crawford, with whom the company has a multi-pronged relationship. Crawford’s “Cindy’s Corner” is featured on babystyle.com where she recommends some of her favorite products. Crawford also sits on estyle’s board and acts as a spokesperson for the company.
Both babystyle.com and kidstyle.com feature celebrities, who talk about some of their experiences while pregnant, as well as their favorite maternity clothes, and then estyle is able to copy the look for consumers. McCartney says the celebrities add a aspirational, yet accessible feel to the site and makes it entertaining and fun for the consumer.
Looking ahead, McCartney said the company’s long-term plan rests on one guiding principle. “It really has to be something where we get the most return for our shareholders, employees and ultimately the consumers. So we are really open to looking at all types of alternatives for the business.”