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A separate article on one specific retailer (I thought it was worth it to link here as it might add context, especially since Ssense stocks Elena Velez). The article at the link is free to read but I'm quoting below anyway for convenience:
Is Ssense hurting the cool-clothes ecosystem?
Is Ssense hurting the cool-clothes ecosystem?
Is Ssense hurting the cool-clothes ecosystem?
The e-commerce giant is valued in the billions. People compare it to Am*zon. What does its rise mean for small designers & shops?
20-Jun-2023
Welcome to Blackbird Spyplane, your no. 1 source across all media for “unbeatable recon” into style & culture.
Today we’ve got a special Spyplane Deep-Dive Investigative Report.
Ssense — what’s this place about? For a while, like most dope-clothes appreciators, I bought pieces from Ssense here and there, but didn’t think much about it beyond a few broad impressions. I gathered they were some very well-funded Canadian store … they carried “upscale streetwear” labels like Off-White next to luxury houses like Prada next to sick smaller lines like Auralee and Casey Casey … they styled everything against clinical white backgrounds … and they put clothes on sale with a TANTALIZING and INCREASING frequency…
The company was founded by CEO Rami Atallah, who studied computer-science in college and flipped designer jeans on eBay before starting Ssense with an investment from his father, a steel importer. Rami owns the business with his brothers Firas and Bassell. All three tend to stay behind the scenes, and at this point “the Ssense sale” might be what people associate most readily with the site — there are memes and Twitter jokes about it. Markdowns at Ssense can feel quasi-permanent. Their recent winter sale swiftly gave way to their “private sale,” which just bled into their summer sale. And so, unexpectedly early in any given season, you might see new stock already discounted, often by strange-sounding percentages (“43% off??”) that smell … algorithmic.
Ssense’s biggest e-commerce rivals, like Mr. Porter, Matches and End., also carry lots of cool stuff and, like Ssense, helped to radically reshape the jawn-selling landscape over the past couple decades. But one key thing that distinguishes Ssense from those competitors — and the reason I wanted to find out more about them — is their special emphasis on small, emerging, and independent lines of the type we love at Blackbird Spyplane. What is the effect, I wondered, of this e-commerce giant — valued in 2021 at $4.1 billion, constantly slashing prices — on the “cool clothes” ecosystem??
Lately, I’ve been hearing more and more grumbling, and even doomsaying, about Ssense from people behind independent stores that Erin and I f**k with — shops where we catch wind of new lines, cop slappers and encourage Spy Nation to do the same. If you ask them how Ssense has affected their business, they’re likely to let frustrations spray: complaints and grievances that, in their telling, reflect a giant headache at best and an existential threat at worst. Their arguments tend to boil down to a question familiar to anyone who’s heard someone at a neighborhood shop talk about Am*zon: How can we possibly compete?
Over the past couple weeks I’ve spoken to a bunch of people about Ssense: shop owners, designers, agents who help brands broker orders, and former employees of the site. Some people were comfortable being quoted by name. Others asked for anonymity, citing delicate industry relationships and, in one case, half-joking concern about Ssense’s growing power: “Probably better to be anonymous, tbh,” the owner of an influential West Coast boutique wrote: “I might be begging them for a job someday.”
Across these conversations, a picture emerged of a heavily data-driven company that makes its margins by selling clothes at gargantuan volumes smaller stores can’t begin to equal. On one hand, this means that Ssense is able to bless small designers with huge wholesale orders. “It’s almost like they’re filling this patron-of-the-arts-type gap in the market,” said Saeed Al-Rubeyi, the co-founder of Story mfg., whose clothes Ssense has stocked for several years. “They buy a lot of brands, they don’t seem risk-averse, which is great.”
On the other hand, they threaten to choke out cool small stores that cool small lines depend on for support — in ways that go beyond huge purchases. “I have nothing against big, mass-market stores,” said Jeremy Smith, a Spyfriend and co-owner of Standard & Strange, an Oakland shop with outposts in Santa Fe and New York City, and whose stock list includes Ooe Yofukuten, Graziano & Gutiérrez, Visvim, orSlow, and The Real McCoys. “But when they suck up all the boutique brands and become an Am*zon of high-end fashion? I think the downstream effects are gonna be chilling on the entire marketplace.”
The designer Evan Kinori built his line through small, like-minded stockists — the only big store he sells to is Rei Kawakubo’s sui generis Dover Street Market. He told me, “In the long run, a place like Ssense is going to pose a big challenge for designers. Because they need to make money, and when Ssense comes around with, say, an $80,000 or $100,000 order, not everyone’s in a position to say no. But the reality is you might have that account for one or two seasons, and you’ll wind up helping to destroy the web of smaller shops that would have supported you for much longer, in a more committed way.”
Ssense says they carry “more than 500 brands.” Discussing that massive roster, one New York designer told me, “I call what they’re doing ‘luxury arbitrage.’ They’re working in that Am*zon model of having everything, stocking every brand, so they’re on top of the search results.” He hypothesized that Ssense was actually trying to merge with Am*zon: “From the outside, it reads to me like the behavior of a company trying to get purchased by Am*zon. They tried to do fashion, and it hasn’t worked. I think Ssense sees that, and they’re trying to set themselves up to be acquired.”
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A former Ssense executive pushed back when I mentioned I’d heard multiple such comparisons between the site and the Bezos empire: “I don’t think Ssense is as evil as Am*zon, and maybe that’s personal bias, but I know Rami and his brothers, and they’re smart and lovely and genuinely care about the fashion landscape. Ssense wants to solidify their place as a key volume business, yes, but I think there’s much more heart at Ssense.” They added: “But who knows, maybe they’re all full of heart at Am*zon, too.”
Mad sources I talked to noted that there are well-meaning people with good taste at Ssense. (The company emailed me a statement, too; it appears further below.) But some argue that Ssense’s aggregate negative effects moot any individual intention. An agent who deals regularly with Ssense buyers told me, “On an individual level, a lot of them tell me they feel terrible about the things they do to brands.”
Even people who feel fondly toward the site say that the overall business of selling clothes, I.R.L. and online, has reached an unhinged and unsustainable moment — and that Ssense is at the center of the madness.
“The thing people need to understand is that Ssense isn’t simply ‘a store’ — it’s a tech company,” said Yuri Sin, who co-owns the L.A.-based designer showroom Lite Year with her business partner, Andy Enness. Lite Year works with emerging designers like And Austin and All Caps Studio, and deals frequently with Ssense. “They have buyers who are ahead of the curve and bring in new brands, but everything they do is dictated by data.”
Ssense’s devotion to stats, metrics and algorithms is no secret. In a rare interview, speaking to the New York Times in 2021 (shortly after receiving an investment from tech VC giants Sequoia Capital that gave the company its multi-billion-dollar valuation), Rami Atallah said: “I look at data day in and day out. That’s what feeds the intuition. Intuition is not just ‘I feel like doing it.’”
Data is put to many purposes at Ssense. For one thing, “the ability to have a birds’-eye view of the business can inform the way you advise emerging brands on ways to grow,” a former buyer told me. If Ssense sees that a style of jacket is projected to sell well next season, they might encourage brands to produce jackets tailored to that data. They are not the only such company to do so: A designer who sells on Matches and Ssense told me that both site’s merchandisers and buyers have suggested specific pieces for his line to produce, based on internal data — “they’ll come to our show and say, ‘Yeah, but we’re looking for this.’ A small brand wants input from a seller on what’s selling sometimes, but with Matches they’ve actually told us, ‘We really want you to design a specific collection,’ and they give input based on what they’re selling, based on their own trend forecasting. It gets a lot of brands to do stuff they wouldn’t do, and the upshot is it homogenizes everything. That’s why you might suddenly see 1500 Bode clones from brands that wouldn’t be doing embroidery before, but now they’re doing fake vintage-tablecloth shirts for a 10th of the price.”
A former Ssense executive said, “Being online, we had vast performance reporting, where something goes live and you can see how it’s performing and react in real-time. But we had these debates with Rami because, in the fashion space, as quickly as things go up, they come down. He would say, ‘If we can get the algorithms to work well enough, they should be able to predict the downs.’ And I’d say, ‘Well, I have a gut, I’m looking at trends, I see with my own eyes that we’re at a peak and it’s going to crash.’ So there was always that tension.”
Buying budgets tend to be heavily “based on previous seasons’ sales data,” a different ex-Ssense staffer told me, which could lead to missteps: “You had one season where the Balenciaga Triple S sold out immediately, so they increased the budget for Triple S’s like 4000% or some crazy number like that for the next season. Buyers were saying, ‘You’re going to be stuck with thousands of unsold pairs’ — and that’s what happened.”
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Ssense has an appointment-only boutique in Montreal, and a prominent editorial arm, overseen by 032c’s Joerg Koch, that is subject to unique metrics pressures, too. (Disclosure: One chill & smart editor, who was not among my sources for this piece, commissioned me to write an essay there a couple years ago.) A onetime member of the editorial team told me, “I generally quite liked Rami, and found him to be a thoughtful, interesting, ambitious guy who was genuinely interested in using the platform he’d built to make some sort of cultural contribution.” But there was this “funny dynamic, where he’d hired a bunch of people and said, ‘We like your content, now we need you to justify it.’ Our director of content, most of his job became looking at traffic data and sales data, trying to reverse-engineer models that proved editorial was giving sales a lift.”
Data isn’t the sole province of Ssense, of course. Jeremy Smith of Standard & Strange explained, “I build my own data models every season, before I commit to the next season’s buy. But I don’t use trend data and chase the hot seller, because chasing trend doesn’t move culture forward. Chasing trend only gives you the same thing, over and over again. What data-driven buyer would ever have bet on Kapital 10 years ago? I think data is great for preventing over-buying, but at the end of the day you have to be able to look at a collection and say, ‘This is like nothing I’ve ever seen before — I’m making that bet.’”
The most-direct encounters customers have with Ssense’s algorithms take the form of markdowns. Ssense has code that projects likely sell-through rates and adjusts prices accordingly. “If a brand doesn’t set guidelines” as relates to discounting, an ex-buyer told me, “the algorithm will decide them.”
Ssense’s strategy when it comes to discounting represents a dramatic departure from conventional retail wisdom. “Traditionally, working with retailers, if you hit 60% sell-through on a collection at full price, they can justify you living in the store — that was the model,” someone at a showroom explained. But with Ssense, “they came into the game with a whole different strategy,” where “they’re okay with just 20% full-price sell-through, because they can make their margin on the volume, selling 80% of the collection discounted. It’s almost an opposite approach.”
Store owners who carry brands also carried by the big e-commerce sites told me they’re well-accustomed by now to seeing markdowns on those sites even when they know there are contravening guidelines in place — guidelines their own store has been honoring. One told me that, over the Memorial Day holiday, a big e-com site “did 30% off Visvim — including current-season. Are they gonna lose the contract? No.” Visvim is known for prohibiting markdowns on its clothes for a full year, if not two. But “those contracts are only enforceable to a degree. Say you’re a brand who’s said, ‘That can’t go on sale,’ but then a site that’s writing $2 million, $3 million a year to you violates the contract. You can’t tear up that contract without replacement revenue, so unless you can make up that $3 million somewhere else, you’re kind of stuck.”
Saager Dilawri, who co-owns the fantastic Vancouver shop Neighbour, says customers will sometimes email him an Ssense sale listing, asking for a price match. “I always try to be really nice and say, ‘I’m sorry, we can’t, that item isn’t supposed to be on sale,’ but what else can I do? I’ll e-mail the vendor and say, ‘Can you look into this, because according to your policy this shouldn’t be on sale yet, or at all.’ And that’s where it gets a little tricky, because they’ll say, ‘Oh my god, sorry, I’ll reach out’ — and they get the response from Ssense that it’s an error. ‘We’re going to fix that right now.’ But usually the damage is done, and maybe it takes them a few days to fix it, or they fix it in one geographic location but leave it up in another.”
Brookes Boswell of the Portland shop Boswell told me she often gets “customers coming in, seeing something I’ve got, and saying, ‘Oh I got this on sale at Ssense’ — it happens with [label redacted], even though they have a very specific markdown schedule.”
Last week I contacted Ssense to inform them of various assertions in this piece — including those related to markdowns — and give them a chance to comment. Yesterday a publicist passed along the following statement: “We’re committed to nurturing and providing a platform for emerging talent. This has been core to SSENSE from the beginning. We put a lot of care into building trust with our partners, and honor the confidentiality we have established with them over the years. Our market position is strong in a sector facing significant headwinds and we continue to remain profitable.” The P.R. rep told me “the brand won’t elaborate further.”
When I asked another store owner whether he’s ever seen Ssense reduce prices on items despite markdown agreements to the contrary that he knows exist, he said, “Of course. All the time.” He confessed that, inspired by Ssense and other big e-commerce sites, he occasionally plays fast-and-loose with such agreements himself, e.g., through emailed discount codes or flash holiday sales: “I get called by the brand, and they tell me, ‘Hey we’re being told you’re discounting something you’re not supposed to.’ And I say, ‘OK, I’ll fix it, but you have to make the same call to Ssense or Mr. Porter.’ And the call always pretty much ends there.”
“The entire arena of online pricing is a bit like the wild west right now,” a former Ssense merchandiser told me, “from both a retailer perspective, where you have software people scanning other sites — because you have to have constant eyes on where the competitors are pricing — and from a consumer perspective. Because if someone searches for something and it’s $10 less on Matches than it is on Ssense, they’re buying it there. There’s zero customer loyalty online.”
It’s a game that majorly disadvantages smaller shops, and when they try to play it, even making a sale can feel pyrrhic. One store owner told me that her shop is on the retail-aggregating platform Garmentory, which takes commissions on orders she fulfills through them. “Customers don’t know the fees we pay if someone buys from a site like that, or from a Farfetch. They might think, ‘It’s no big deal’ — they saved $6 or whatever on shipping. But for us that’s 30% taken right there by that service.” The fact that Ssense can afford not only to ship orders for free but pay postage on returns doesn’t help, either (and it encourages wasteful and unsustainable customer mindsets to boot!!)
She emphasized that customers who asked her to price-match reflected “a welcome inconvenience, because even though it’s painful, we can at least try to do something to save that sale. Most times they don’t even ask. They just come in to try something on, ask you questions, take measurements, and then buy it from Ssense. We might spend a day figuring something out for someone who emailed us. When we follow up, they say, ‘Oh, I got it on Ssense,’ or some other site.”
Spyfriend Wes Allen of the Oakland fashion-gorp shop Understory recently decided to cut the sick Japanese line And Wander from his roster. Founded by a couple ex-Issey Miyake designers, And Wander is expensive, but when you see the clothes I.R.L. you can appreciate careful details about them — details an e-commerce listing could never fully capture. Allen has repeatedly seen customers compliment such pieces, then pull out their phones and look them up online. “We’ll have something on the racks a few weeks into the season, and Ssense has already marked it down,” he said. It sucked to drop a line he admired, Allen explained, but “I can’t compete with sales that deep, that early.”
“Showrooming” at a small store to then go cop online is some rude and myopic s**t. But as much as it annoys Allen, he knows he can’t ultimately blame people for seeking the lowest price available. One of his own sales associates bought an And Wander bucket hat from Ssense instead of Understory, he told me, because the markdown there was steeper than his employee discount: “They had it up for less than cost.”
One reason Ssense is so formidable is that its buyers have good eyes, hit up small lines early, and offer tons of dough. Saeed Al-Rubeyi of Story mfg. told me that “Ssense carries people who would never have gotten a chance elsewhere.” Sometimes those offers come too early. This fall, the two-person NYC line Small Talk Studios, whose specialty is beautiful custom hand-made clothes, are rolling out their first cut-and-sew capsule. But in March 2022, when an Ssense buyer reached out to founder Nick Williams about placing an order, he wasn’t ready. “They told us they would need a minimum of 20 SKUs” and “it was before we were doing full cut-and-sew,” he said. He decided to pass rather than scramble to produce an offering but, from a financial perspective, the decision was tough: “We didn’t get this far, but my understanding is they start out with an offer of 30 to 40 grand, which is very big compared to what you’ll get from a small or even medium-size retailer.”
Agyesh Madan, who designs the NYC line Stòffa, explained that, for many small labels, an Ssense order can mean the difference between producing clothes or not: “Factories have manufacturing minimums, so a place like Ssense can wind up funding the pieces a brand makes for its smaller stores” — whose orders alone wouldn’t necessarily hit the minimums. Several people, including an ex-Ssense employee, told me that it was common for the order for a small brand to rise from $30k to $150k in one season, given good sell-through — “an amount of cash that can be life-changing,” Andy Enness of Lite Year said. “It might mean you can develop more, hire someone new, market more, move into a bigger space.”
In moonshot cases, the numbers get astronomical. I’d heard rumors that, a few years ago, Fear of God’s Jerry Lorenzo signed a wholesale deal worth $50 million annually with Ssense for his Essentials line. Someone who worked at Ssense in a position to know confirmed that figure for me, adding a caveat: “It’s even beyond that number at this point.”
Blackbird Spyplane is reader-supported. Come behind the “recon curtain” — Jonah & Erin
But a small label considering selling to Ssense needs to weigh factors besides big checks. The co-designer of an independent line that Ssense stocked in 2019, before dropping them, told me he appreciated “the opportunity,” but noted that, given the site’s vast inventory, “you’re on a customer’s screen for 10 seconds, then 100 new products squash you down.” Amid such a vast number of brands, it’s easy to get lost in the mix — which can mean your clothes sit unseen before getting sucked into a discount spiral. “They didn’t screw us over or anything,” the designer said. “We just weren’t selling, our stuff went on sale really fast, which our other stores didn’t like, and after two seasons Ssense decided not to look at our collection the next market.” He focused on the silver lining: “We need exposure so, yeah, some people got our clothes on sale at Ssense, and maybe they’ll come to our shop if they really like it.”
Ryan Williams worked for several years as an Ssense buyer, before helping lead its efforts into “brand development,” which included taking equity stakes in apparel lines that Ssense helped advise, produce and distribute. He told me, “the onus is ultimately on brands to be custodians of their own business,” pointing to Kiko Kostadinov as “a great example of someone who was slow and steady — if something did well, we’d tell him, ‘We want more,’ but he’d cap what he sold us.” Williams added, “You’ve got to think beyond the first check. But it’s hard to turn down that check!”
Some of Ssense’s buying policies represent an improvement, for designers, over department-store contracts, which often included (and can still include) HELLA WACK “Return to Vendor” (RTV) clauses, which leave a brand on the hook to buy back unsold clothes. Some stores obligate designers to pony up $$ to help offset the losses from markdowns. A former Ssense buyer told me the site does enter into RTV agreements, but infrequently and mostly with larger brands: “Usually it happened with core items, because it’s hard to get an RTV on seasonal styles, but if you have too many Valentino Rockstud sneakers, they have other distribution channels where they can put that stock, so you can maybe negotiate an RTV with them on those.”
In his experience, RTVs sometimes happened with small brands at Ssense, too: “The way you’d position it would be, ‘If I return x amount of this unsold SKU to you, your sell-through rate for the season jumps up to this number, which allows a budget increase for next season.’ It’s, Do you want to take an L on this style, grow the budget, and hope things go better next season? But, at least when I was there, you didn’t really want to do that to small labels, because you’d be harming them.”
One New York designer who asked to remain anonymous told me he is disinclined to sell his clothes on Ssense because “there’s no brand storytelling” on the site.
Similarly, Evan Kinori told me, “if you’re trying to do something that’s unique in some capacity, I think you need a wholesale partner who’s able to tell unique stories, and who are themselves unique. It fits together like puzzle pieces. Imagine a couple of kids fresh out of school, getting their weird line going — now imagine them on a white website with 475 other brands. Are they being brought to life? Does it feel special?”
He pointed to shops like Neighbour and C’H’C’M’, the downtown NYC institution run by a tasteful British king named Sweetu Patel. At C’H’C’M’, “you feel like you’re going into a record shop in the ‘80s in London, where Sweetu’s going to tell you about all this s**t you never heard of,” Kinori said. “You might go in knowing nothing about any of his brands, but he’ll tell you all about them. Or you might see a bigger brand like Margaret Howell in there, and he makes it feel like a select-shop thing — because for a legacy brand to be in a shop like that makes them seem relevant and cool. That’s a one-of-a-kind place.”
When I asked a former Ssense merchandiser what mechanisms the site uses to give lifts to lesser-known brands, they pointed to the practice of “cross-brand styling,” where a customer looking at a listing for, say, a Gucci shirt might be intrigued by the model’s pants, which turn out to be made by a small line.
Other mechanisms can be costly, though. An agent told me, “I’ve asked Ssense, Hey, what do we have to do to get your support” in terms of marketing pushes and spotlights for brands he represents. “Is it $5,000? And they say, ‘‘If you want us to do any kind of marketing spend for your brand — digital emailers, promotional spends on things like Google Ads, maybe run an editorial feature or interview or story behind you — you have to give us $25k, $30k.’ And that’s across the board, by the way.”
He said this is standard practice at several other big sites and department stores besides Ssense: “These big players can put a chokehold on designers and say, ‘You’ve got to get on board with marketing cooperation.’ But if you’re a young designer just getting your product out, what money do you have? You don’t have marketing dollars.”
This past January, Ssense laid off 138 employees — about 7% of its workforce and, according to a spokesperson at the time, the first such layoffs in the company’s history. This might be a sign of turbulence at the site, or of broader retail-industry woes.
In recent years, luxury labels and conglomerates like LVMH and Prada have significantly slashed their wholesale business to bring more sales and distribution to their own in-house channels — in the U.S., Ssense’s Prada pages now show up as blank. Against that backdrop, the importance of small brands to Ssense’s bottom line would seem to only grow.
It’s only reasonable to question the feasibility of “luxury arbitrage,” and of growth strategies where a company burns through heaps of money in order to lock down market share — “blitzscaling,” as Am*zon and Uber have famously done. Those companies offer some grim insights into what happens when a single monster player effectively squeezes out most, if not all, of its smaller competition. (Unlike a typical blitzscaler, Ssense claimed in a 2018 Business of Fashion piece to have been “profitable from day one.” The company is privately held so this is impossible to verify.) There’s a clear and concise Cory Doctorow essay here explaining the Am*zon business playbook, and its poisonous economic and social effects. “We know where this story goes, we know where it’s headed,” one designer said. “It’s not just Ssense.”
There are also big questions raised — questions that extend far beyond Ssense — about the consumer culture, and the fundamental tension between making something with human ingenuity and human hands, and then putting it into the undead, uncaring zombie churn of the market !!
Standard & Strange’s Jeremy Smith put it this way: “There’s no more nobility in a single-maker brand than a 5-person brand than a line that’s made with care at a factory, but in all those cases you’ve got something made from precious inputs: cotton, water, air, labor. A place like Ssense decontextualizes all that, and implicitly says, ‘None of that matters. You don’t want to know about everything that informed this thing existing.’ If you took a pic from Ssense, from Huckberry, from End, from Mr. Porter — everything looks the same. You don’t see an identity, nothing that anchors that garment in a time or a place. There’s no further thought into the depth and breadth and meaning of said object, so it almost makes it meaningless.
“It’s ‘Here’s this object, please buy it,’” he said. “That’s it. You might as well be getting it from Google Shopping.” ❖
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