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The/Studio Raises $11M to Do What Traditional Supply Chains Can’t

With 100,000 customers and 32 million apparel, accessory and promotional items produced across roughly 150,00 orders, The/Studio raised $11 million to supercharge its first-of-a-kind cloud-based, on-demand manufacturing platform that services the likes of Nike and Urban Outfitters.

A graduate of UC Berkeley, founder and CEO Joseph Heller is aiming for an “Amazon-like outcome,” noting that the e-commerce giant’s success and growth are rooted in the simplicity of having goods delivered with the click of a button. “We’re taking that concept to manufacturing,” he told Sourcing Journal.

Fashion manufacturing in particular poses a $1 trillion opportunity and The/Studio wants to “take a small bite out of that,” Heller added.

At its core, the five-year-old platform that counts Alibaba as its only true competitor is designed to plug the myriad holes in today’s supply chains that favor volume-based production runs. That’s why even the Nikes of the world have found value in The/Studio’s proposition. Pop-up shops and other special events require custom concept products, which are often created at the last minute and in runs smaller than the huge quantities typically needed to flow into full-line stores, Heller explained. The brand’s traditional, established supply chain can’t support those one-off small batches—usually 500 pieces or fewer—which create an opportunity for The/Studio.

“Manufacturing a product is still extremely complicated, and traditional supply chain teams were not set up to support the quick turnaround times and small-batch requirements of modern retail,” Heller said in prepared remarks on the funding announcement. “Big box retail is being replaced with pop-up stores, limited edition e-commerce offerings, and millions of new brands. There is now an incessant race to get products to market quicker, to pinpoint customer demand with data and to be nimble enough to scale accordingly.”

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Indeed, it’s easier than ever for startup brands to acquire customers through social platforms like Facebook and Instagram and set up shop through a Shopify or Amazon. Heller said The/Studio has received considerable interesting from these “longtail brands” and entrepreneurs when factories and supply-chain middle men wouldn’t support them.

And large retailers similarly have been left in the lurch at times. With increasing pressure to keep inventories lean, many retailers desirous of testing a new private-label product through e-commerce often are turned down by manufacturers for 1,000-piece runs deemed too small to be worth it, Heller said.

With no set MOQs, the platform can serve even the individual artisan-maker who wants a single product made in a quantity of one. Small outfits like coffee shops and breweries use The/Studio to produce t-shirts and other accessories for their enthusiastic, built-in audiences, Heller said. “Everyone can be a brand,” he added, “and every company should extend their brand.”

The/Studio’s customers manage the design process on the platform and execute via its network of factories worldwide, which Heller said are audited twice annually to ensure compliance with minimum wage standards, child labor laws and other factors. But he pointed out that because his company has boots on the ground in China—where the bulk of manufacturers are concentrated—staff visit these facilities on a regular basis, thereby ensuring that factories are operating responsibly beyond the official audits.

To date, no factories have been removed from The/Studio’s network for compliance violations but a few that haven’t lived up to performance expectations have been terminated. “Because we’re a tech company at heart, we have metrics on everything,” Heller explained. “Quality and on-time delivery are the two things we care most about.”

Though quality hasn’t been an issue, some factories have been late in delivering orders, he said. Manufacturers must deliver samples and full runs at an agreed-upon date 95 percent of the time, though 98 percent or 99 percent would be ideal, Heller added. The/Studio is willing to work with a first-time offender to get up to standard but multiple violations will end the manufacturing relationship.

After China, Los Angeles has The/Studio’s second largest capacity, specializing in denim production, and then India and Pakistan round out the manufacturing network.

Heller said he’s keeping a close watch on the brewing trade war, though he said on Sept. 19 that it “technically hasn’t been an issue so far, and we’ve actually been helped because China depreciated its currency by 10 percent.”

He continued, “The first round [of tariffs] didn’t affect us, but the second round is going to affect the goods we manufacture.”

Even if his company has to raise the prices on some its products as a result of the back-and-forth Sino-American tariff battle, “China is still the best manufacturing country,” Heller emphasized. No other sourcing nation can replicate its manufacturing ecosystem in which mills often are located mere blocks away from a garment factory.

“It’s ridiculous in the modern age that is so hard to source factories. It’s a big pain point,” Heller said. “What we’re doing is really hard—which is why it was hard to raise money.”

Ignition Partners led the strategic Series A round, in which FJ Labs, VTF, WTI, Firebolt Ventures, and Interplay Ventures also participated. Preeti Rathi, a partner at Ignition, will join The/Studio’s board along with Chris Hicken from Inspiration Ventures and Greg McCurley, who previously was the president of Heller Sourcing—Heller’s former enterprise.