Moda Operandi's Aslaug Magnusdottir On the Future of Online Retail

Aslaug Magnusdottir
Photo: Getty Images
Aslaug Magnusdottir at the Yigal Azrouel Fall 2012 fashion show.

There's no doubt about it: the Moda Operandi girls are one of the coolest fashion cliques around. There's nothing like watching them arrive en masse at a show, like a red flag waved in front of the proverbial street-style bull. Since CEO and co-founder Aslaug Magnusdottir is a native Icelander and involved with the festival, a stylish delegation headed to Reykjavik to take in all the action at the Fashion Festival. We caught up with Magnusdottir after she spoke at a panel; she chatted with us about the latest from one of the most exciting e-retailers out there.

You are targeting such a specific customer; you're looking at someone who can afford clothing right off the runway and who is fashion-conscious enough to want it. How do you get the word about your site out there internationally? Is it through press features, advertising, magazine features?

We are 80 percent U.S. now. Now, bear in mind, the business only formally launched just over a year ago. When we originally launched, we had no marketing budget. So our initial list of customers was our personal network, and people referred by that personal network. So we started with a list of 3,000 people, and that was predominantly a U.S.-based list. So when we first started selling, it was 99 percent a U.S. business. The international component has started, gradually, to grow, and I think if you look at 5 years from now, it will be much bigger than the U.S. business. But New York is where we have our presence, and we were able to generate a lot of free press there. Initially, we needed to be creative about marketing, so what we decided to do was have a really exclusive membership to begin with. We would actually have people fill out a [full] page application form to join, and in some cases we would turn people down. And that was all to create this desire for something, and that helped generate press interest from a lot of different places. After we launched, and we had early success, we raised a second round of financing, so now we're able to do marketing in a different way. We try to do a variety of online and offline things....We aren't currently selling anything in the physical world, but we're very cognizant of the fact that we need to maintain a presence in the physical world. So we do a lot of events. We did a roadshow around the United States. Internationally, even though we do ship to 150 countries, we still have a few target markets that we know are big luxury markets. The Middle East is one of them that is growing very fast. We've also had events, we've done them for press. In the case of the Middle East, we took on a partner, who is there. He gets a revenue share, but in return, he is our local representative there. That's been really helpful.

Since it's obviously a very disruptive ideabecause you're not going through the traditional channels of department storeswas there any resistance from the designers? Did you have to work with designers and kind of say, we're going to send stuff directly to the customer?

I think part of it was the timing of when we launched this. We started talking to designers in 2010. And at that point, it had just been discount, discount, discount online. And the designers were really desperate to get back to full price. There was a feeling that there was a customer there who wanted, still, full price product. People were kind of worried that customer was going away. But we felt that customer was being neglected, and the designers were so thrilled that someone was coming in with innovation for that full-price customer. We first went to the U.S. designers, and many of them are more comfortable with e-commerce than some of the European brands. It was pretty easy, I would say to sign most of them up in the first meeting. They just said, sign me up! Some of the Europeans took a little more time—in some cases due to other retail accounts, in other cases because they wanted to make sure the associations were correct, and it would look beautiful, all of that. So the issue has come up in a few cases, but I think people just felt that both channels can live well together. There is a need for physical retail. It's a specific kind of customer who wants to buy the latest thing straight off the runway, and overall it would just increase the size of the business, rather than take from one [branch] and move to the other.

Do you think the luxury customer's a little more savvy now, more self-directed? They're looking at or they're making their own lookbooks, as opposed to when you used to be told, this is what's in for spring, this is the trend.

I think from the customer's side, that is exactly the key reason why this kind of concept was needed. The general consumer didn't have access to what went down the runway. But now, everyone can access it, and millions of people are going to, and all these blogs to see the latest styles. So it is no longer acceptable, from a customer point of view, to not be able to buy those pieces, and to have to be dependent on this one person from a specific store selecting for you what you should wear. I think if we had launched this concept ten years ago, it would not have made sense. But there was a need at this point.

Obviously Lauren [Santo Domingo] has all these connections, from being an editor and from knowing all these designers personally. You've also brought on other former editors, like for example Taylor [Tomasi Hill.] There's been so much attention on their street style and just their personal style in general. Do you think that serves as an advertisement, in a way, for Moda Operandi?

I think it definitely does. They both helped support the credibility with respect to the designers. There was a trust there—not only from a business perspective—that it would look beautiful and be styled beautifully, the brand mix would be right. But from an end-consumer perspective, they're both influencers, and they can really help promote the product on our site. Our concept is all about, OK: offer the full runway to the woman. But for those who want a little bit more guidance, we have our MO magazine, where we do favorite picks and all of that. So, yeah, I think it's huge from a marketing standpoint.

Considering that the Reykjavik Fashion Festival is going on right now, and that you're involved with it: what do you think makes Icelandic fashion so special and so different?

There are a lot of very different designers within the mix. I think what Icelanders benefit from is, they're huge travelers in general. So most of these designers have traveled all over the world, but are also following what is going on everywhere, not just in specific markets, and then taking local inspiration. A lot of them use Icelandic nature as part of their inspiration, which is extraordinarily unique and powerful. Within Iceland, all of the different art forms meld together in a really nice way. So, it isn't just the fashion industry. The designers are spending time with the musicians, the painters, the sculptors. That helps [it all] comes together. You really see the artistic effort that goes into these pieces.

And the street style has been so inspiring. Everyone is totally different. It's not like everyone is just wearing the same trend.

It is very true. And one thing I will say about Icelanders: even though they may look like they haven't made any effort, people do care! If you look at the American consumer, you'll see pockets where people actually care and pockets where people absolutely do not care what they wear! That is very rare to find here. People make an effort.

Since you were talking about customers all over the U.S., is there anything that's surprised you? Do you have any far-flung customers in, say, Montana, who are buying runway looks?

Well, we did immediately think that this was a good way for women who weren't in the big cities to access fashion. Despite that, our single biggest market is New York, because obviously there's a lot of love for fashion there, and we're present there. But some of our biggest individual shoppers are outside of New York. There are some in Florida, there are some in the Middle East, there are some in Canada. For the ones who are our biggest, biggest shoppers, they actually tend to be in locations where there might not be the same access to product. They don't necessarily have a broad selection in their local environment.

You talked about more international expansion. What are some of your other plans for the company coming up?

We're continuing to enhance the technology. That's really important for us. We are looking at shoppable video, we're looking at making this experience of shopping even more immediate than it has been. We will continue to broaden the selection. We'll introduce new tools to shop, so you can shop more by trend, and shop the editorials. We really believe that the editorial [side] will become more and more important for our business. And then we will be looking at category expansion, but there's not anything we're ready to announce right now. 

Like menswear?

We get a lot of requests for men's, definitely...Kind of the obvious ones to look at are men's and beauty. The other categories that these same women shop a lot of.