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This Company Says it Can Solve Fashion’s Unsold Inventory Problem

Unsold inventory has been a major concern for apparel retailers throughout the COVID-19 pandemic, but one company hopes a new infusion of funding can help it tackle the problem head on.

Otrium, an online fashion marketplace that sells end-of-season collections from retail brands that would otherwise go unsold, has raised 24 million euro ($26.6 million) in Series B funding. Alongside the new funding round, Otrium, which already has a presence in the Netherlands, France and Germany, also has launched a site for its U.K. shoppers. The funding will be used in part to fuel further international expansion.

Eight Roads Ventures, an investor in Alibaba and designer furniture company, led the round. Existing investors Hans Veldhuizen and Index Ventures, which has backed fashion companies including Asos, Net-a-Porter, Farfetch and Glossier, also participated.

Otrium’s positioning is key in today’s apparel environment with the pandemic sending sales channels and supply chains into crisis, and clothing piling up in warehouses. With many shoppers abiding by stay-at-home guidelines and spending more on essential items earlier in the pandemic, retailers have had to lean on their supply chains to help repurpose original orders not yet in production or cancel orders altogether.

But Otrium believes it carries an advantage thanks to a new generation of consumers showing increased awareness around sustainability, sparking a demand for innovative retail models offering solutions for end-of-season stock. This may be a better alternative to that of major markdowns of unsold items, which have been estimated to be as high as 70 percent as stores slowly reopen.

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According to McKinsey, the value of excess inventory from spring/summer 2020 collections is estimated at $154.5 billion to $176.7 billion worldwide (between $49.7 billion and $66.25 billion in Europe alone).

Since the beginning of the crisis, Otrium has seen interest from brands double, and has grown revenues 40 percent in the past month alone. More than 200 global brands and designers already work with Otrium, including Joseph, Reiss, G-Star, Asics, Puma, Vans, Pepe Jeans, Alexachung and Scotch & Soda. Their products are marketed to 1 million registered Otrium shoppers.

The fashion marketplace is underpinned by an e-commerce platform designed to provide fashion brands with in-depth analytics and a dynamic pricing engine, tailored to help maximize revenues on each item sold. Brands retain full control over pricing, merchandising and visibility of their excess inventory.

“We’re committed to helping our partners get the most value out of their last season’s collections, and we realize that this need has never been greater,” said Milan Daniels, CEO and co-founder of Otrium. “We are focused on onboarding an unprecedented pipeline of brands and we’re working on generating revenue for items that would otherwise go unsold. We have increased distribution capacity to ensure more brands can deliver their orders quickly and safely to consumers’ homes.”