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E-Commerce Innovation Makes Small Firms Big Players

Small online apparel firms have been getting a boost lately, as new technologies in both fulfillment and e-commerce lower their capital costs, reduce overhead, and streamline their growth trajectories.

A firm called Quiet Logistics is revolutionizing ground level e-commerce by providing fulfillment services to fast fashion startups that are 400 to 500 percent more efficient than traditional warehouses. The improvement is made possible by technology, including robot fulfillment workers and software that tracks each item and maintains an efficient warehouse layout.

“Getting online stores rolling faster and fulfilling orders efficiently depends on a well-constructed back-end strategy. Connecting all nodes in the supply chain in an automated environment is the foundation of fulfilling orders fast and supporting e-tail and omni-channel retail,” says Bryan Nella, director of corporate communications at GT Nexus.

The upside of this is that the company’s human workers are able to use their time to personalize items being shipped on behalf of the startups. That can include steaming garments, writing handwritten notes, and wrapping goods in craft paper instead of traditional tissue. This is allowing small fast fashion firms to provide a personal, branded experience in their goods.

Firms such as Nasty Gal, Gilt, and Bonobos have utilized the service, which allowed them to quickly ramp up fulfillment to meet their fast growth, without piling on overhead. Many of Quiet Logistics customers have since moved on to establish their own warehouse and distribution facilities, often hiring Quiet Logistics to do the setup.

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On the front end, online platforms such as Etsy and Shopify are radically lowering barriers to entry for business owners who might otherwise lack the capital to launch online stores. This groundswell of small business owners and hobbyists is small compared to the online presence of traditional retailers, but it is growing rapidly, and appeals to the current consumer focus on known-origin goods.

“For e-tailers, virtually every online consumer could be a customer.  These companies can grow very big, very fast,” says Mark Burstein, president of sales, marketing and R&D at NGC Software.

New tools are doing for retail what cloud computing has done for software developers – by dramatically lowering entry costs, they allow startups to rapidly enter the marketplace and compete with legacy brands.

A prime example of this is a company called Tictail, which hosts over 10,000 stores and allows almost anyone to set one up in only a few minutes. The company has raised $1.6 million in venture capital, and has a forward looking philosophy that puts technology second and product first.

The company also offers CRM support, integration with social media, and SEO advice, helping new entrants into the market manage tasks and provide service that can compete with a fully staffed firm. Tictail is still in beta, but it already has 16,000 active users and a 20 percent monthly growth rate.

“In some instances, e-tailers are able to take an order from a consumer on its web site, flow that data straight to a factory in Asia without processing or touching it, have the factory create the item, flow the order info into the packing slip, and then ship direct to consumer,” said Nella, speaking about cloud based systems.

The new retailers are also signing on with traditional technologies, scaled to manage their existing needs. “I am seeing large investments in systems to help them manage their growth such as PLM, SCM, CRM, and Forecasting,” says Burstein.

More traditional firm Etsy hosts 900,000 sellers, has 60 million unique visitors per month, and facilitates around $100 million in sales per month. Those numbers place it on par with traditional medium sized retailers, but with options to suit a much wider range of customers. There is also a “feel good” factor, as shoppers know exactly who is getting their money, and feel like they’re supporting a creative process.