Fashion platforms for MZers attract investors; valuations surge

Fashion e-commerce platforms that have become mainstream shopping venues for millennials and Generation Z, or MZers, are seeing their valuations surge with investors increasingly keen to win over next-generation consumers.

Last week, South-Korea based fashion mobile app Brandi announced that it raised 10 billion won ($9 million) from the Korea Development Bank. Founded in 2014, Brandi operates women's fashion platform Brandi; men's fashion platform Hiver; and fashion shopping mall support service Helpi.

Brandi plans to use the proceeds to set up a second fulfillment center. Last year, Brandi became the country's first fashion e-commerce firm to build a 7,272 square-meter fulfillment center in fashion mecca Dongdaemun in downtown Seoul.

"We want to contribute to advancing Dongdaemun's ecosystem by offering a chain platform that connects sellers, consumers and wholesale businesses," said Seo Jung-min, the chief executive of Brandi.

The latest funding brings Brandi's cumulative investment to 55 billion won. Last September, the company raised 10 billion won from the country's internet giant Naver.

Another leading online fashion platform operator Croquis Inc. is set to welcome mobile platform behemoth Kakao Corp. as its biggest shareholder. Earlier this month, it was announced that Kakao would pursue a majority stake in mobile fashion platform Zigzag after it dropped its bid for eBay Korea. 

Kakao plans to set up a new subsidiary -- a spinoff of Kakao Commerce -- with which Croquis, the operator for Zigzag, will be merged. 

Launched in 2015, Zigzag offers curated selections from more than 4,000 shopping malls and fashion brands. The fashion app has become a huge hit among women in their 20s and 30s, logging 750 billion won in transactions in 2020.

Meanwhile, online fashion platform W Concept was sold to Shinsegae Group earlier this month. The retail group's e-commerce arm SSG.COM inked an agreement to buy an 80% stake in the fashion platform from the Seoul-based IMM Private Equity in a transaction estimated at between 250 billion and 300 billion won.

W Concept is one of the big five online fashion apps in Korea, targeting young women in their twenties and thirties with an offering of stylish and contemporary brands of clothing and shoes.

In addition to their access to MZers, fashion platforms have become attractive targets for investors given the fashion industry's unique structure. Entry barriers are high in the fashion e-commerce scene because of the specific fashion cycles and distribution structures that are not easy for general e-commerce platforms to implement.

"Large business groups' strategy is to utilize existing platforms rather than creating their own," said an IT industry official, adding that fashion platforms will continue to see their valuations surge.

Write to Min-ki Koo at kook@hankyung.com
Danbee Lee edited this article.