Otrium, a European-based e-commerce option for designer clothing overstocks is expanding in this country, and could become a new, digitally native competitor to T.J. Maxx, Nordstrom Rack
Otrium – the name is meant to reference online, outlet, and atrium (as in an upscale shopping venue) – was born five years ago in the Netherlands when the founders of a designer clothing startup decided there had to be a better way to deal with their excess inventory.
Now, backed by a $120 million Series C funding round to fuel the U.S. expansion, Otrium is looking to become as well known in this country as it is in Europe. The company has 3 million registered customers, or members, and it says it has saved 6.7 million clothing items from going to landfills or incinerators by selling overstocks at discounts of up to 75% off.
Customers register as members on the site, and then receive notifications when merchandise becomes available for sale.
Zuhairah Washington, who is heading Otrium’s U.S. expansion as the company’s president, said Otrium offers upscale clothing brands a number of key advantages compared to the old ways of dealing with excess inventory.
“It provides control over price and inventory in a way that just doesn’t exist in your traditional offline stock buyer relationship, and candidly that doesn’t exist with a lot of the online players as well who buy inventory,” Washington said.
Also, she said, Otrium provides a technology platform that gives brands real time data and analytics on how the items they are offering are selling.
“Often times in marketplaces that transparency of data is not part of the model that they’ve built, but it’s critical to us, given our broader purpose is to insure that all clothing that is produced is worn,” Washington said. “So we want brands to engage with that data and use it to make their own processes more efficient.”
The site also gives brands an easy way to sell online without the effort involved in creating their own website, and can provide analytics showing how to price excess inventory to achieve sell-through.
For consumers, Washington said, Otrium gives them a way to find new brands online, at discounted prices, and to feel good about making fashion more sustainable.
Otrium is part of a growing movement to address the tons of waste created by the fashion industry due to unsold goods. Brands, particularly luxury labels, have been caught destroying unsold goods in order to avoid using off-price sellers who might cheapen the value of the brand.
According to Otrium, nearly three-fifths of of all clothing ends up in incinerators or landfills within a year of being produced, and more than 8% of global greenhouse gas emissions are produced by the apparel and footwear industries.
Otrium was founded by childhood friends Milan Daniels and Max Klijnstra who started a clothing line as recent university graduates. The company now employs more than 270 people, with offices in London, New York and Amsterdam.
Brands send their excess inventory to Otrium’s warehouses. Otrium sells it on its website and handles fulfillment, shipping, returns and customer service.
If Otrium can’t sell all of the inventory, the company works with other off-price sellers and non-profits to make sure the merchandise is sold or donated, not destroyed, Washington said.
Otrium has 300 brands using the platform currently, but not all of them are available in the United States. It expects to have 50 brands on board here by the end of the year.
Brands available to U.S. customers include Cynthia Rowley, Faherty, Adam Lippes, and Reiss. Major brands on the European platform, such as Karl Lagerfeld and Asics, also have joined the U.S. site.
Designer brand Adam Lippes is an example of a brand that is well-suited to benefit from Otrium, Washington said. “They are primarily a D2C brand based out of New York, higher-end from a price point perspective, that wants to have an exclusive member base like ours to sell their excess inventory or end-of-season inventory,” she said.
The U.S. Otrium site has been live, and accepting customers, for several weeks but the company didn’t start promoting it until this week. The company plans to use social media channels and influencers to spread the word about Otrium in this country.
Off-price retailers specializing in designer clothes came late to the party as retail was shifting online. Chains like Loehmann’s, built on the in-person, treasure hunt, brick-and-mortar store model, disappeared as a result. The TJX Companies, owner of TJ Maxx and Marshalls, launched an e-commerce site for TJ Maxx in 2013, and a Marshalls site in 2019, but as of fiscal 2021 all of its combined online operations still equaled only 3% of total sales, according to its annual report.
The pandemic has made the luxury and designer fashion world a lot smarter about e-commerce, and Otrium is entering the online outlet space with more competition than it would have faced a few years ago.
Otrium is hoping they can win by offering brands, especially smaller designer brands, a smarter solution for overstocks. Washington believes Otrium also can win over consumers who not only want to save money on designer clothes, but who want to save the planet too.
“There’s a shift that we’re all seeing to consumers looking to have their wallets match their values,” Washington said. “From our perspective, shopping at Otrium and wearing items that are already produced is a great way for consumers to exercise their values.”