An Australian retail analytics platform has expanded into fashion hotspots New York and London after a significant Series A raise.
Style Arcade, which launched onto the retail scene in 2018, is a software suite that offers analytics and assortment planning to retailers. Founded by Michaela Wessels and Tristan Hoy, Style Arcade says it services over 3,000 users, including the likes of Carla Zampatti, Bec + Bridge and Dion Lee, and can save customers “up to seven figures”.
“I’m not kidding,” Wessels tells Forbes Australia.
The platform collates a business’ data points – from sales, website traffic and purchase orders to product information – and makes recommendations to retailers on how many units to buy of each product and how many sizes of each unit.
“You can imagine a lot of businesses launch a product and sell out in days and they go, ‘How much should we have bought?’ So we really make a difference to them. We simply help them buy the right sizes and quantities [of product] and all of sudden their revenues are shooting up.”
Style Arcade is a perfect example of this: it replaces the emails and spreadsheets that are sent around all the time between an online retailer’s merchandising, marketing, e-commerce, design and production teams.”
Jon Karlen, founder, Acadian Software
In fact, in 2018, global research firm IHL Group, estimated there’s nearly US$1 trillion (US$984 billion) in worldwide retail missed sales due to out-of-stocks. It was an issue most prevalent in the Asia Pacific region (US$521 billion).
Wessels, who worked in merchandise planning and retail prior to launching Style Arcade, recognised the problem first-hand. “Everything was manual – everything was spreadsheets,” she says. “I was buried under paper and Excel – it’s a cliché story, but I just knew there had to be a better way.”
Wessels met software engineer Hoy at an investor event, and approached him to become her technical co-founder. He accepted, though the scale of the problem required a unique solution.
“At a large retail network, you might have 40 stores, 100,000 products, and then many of those have five, even up to 10 sizes,” he says. “If you think about how many millions of data points… You need to you need to run algorithms over every single size in every single location. You can’t do that with an off-the-shelf solution. We’ve built our own stack entirely from the ground up just to solve this problem.”
The business raised $8 million in November 2022, led by US firm Acadian Software, which claims it invests in “first of its kind” vertical SaaS businesses.
“Style Arcade is a perfect example of this: it replaces the emails and spreadsheets that are sent around all the time between an online retailer’s merchandising, marketing, e-commerce, design and production teams,” Jon Karlen, founder of Acadian Software, told Forbes Australia.
“What we look for are products that deliver instant value to the customer. In the case of Style Arcade, when the merchandiser sees the product for the first time, the reaction is, ‘I had no idea this product existed’, then they adopt and use it every day to do their job and they can’t imagine living without it. It’s kind of a set and forget product.”
Wessels credits the company’s growth to a single salesperson and “63% word of mouth”, but says Style Arcade’s recent raise would help the business invest in marketing. So far, in the Australian market, the company claims its biggest competitor is Excel and BI tools. “Or doing nothing and just buying on gut feel,” Wessels says. In the US, the founders say they’ve only identified one key competitor. “It’s a wide open playing field,” Wessels says.
Now, Wessels has relocated to New York to pursue the company’s North American expansion. The next step is integrating product data with customer data to produce even more personalised recommendations for clients. After that, the company, which has been playing in the fashion sector since inception, says it may eye other categories, like homewares and beauty.
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