Start-up seeks to help brands sell excess fashion stock

A new software platform that helps major fashion brands offload excess stock to booming discount outlets like those run by TJX promises to improve margins for a business that many like to keep quiet for fear of undermining full-price sales.

"Especially for upscale brands, it is not something they want to publicize, but they have to deal with it," said David Solomon, chief revenue officer for Inturn, which calls itself the first online marketplace for excess stock.

Solomon, who joined from eBay Inc in April, told Reuters that up to 20 percent of brands' inventory goes unsold at the end of a season, meaning the off-price market for fashion and apparel is worth as much as $250 billion.

After a laborious process often involving copy and pasting details in spread sheets, and frequently without relevant photos of the products, the stock is sold on to merchants like TJX's TJMaxx and TKMaxx, as well as smaller specialist stores, which sell it on at 20-80 percent less than the original price.

"Selling off-price inventory is manual, time-consuming and error prone," Solomon said. "They are leaving a lot of money on the table because the process is so inefficient."

Outlets and off-price chains have flourished since the economic crisis, prompting major U.S. department stores like Macy's and Nordstrom to launch their own discount formats despite the risk of cannibalizing their main business.

The U.S. market for off-price apparel and home products could grow 6-8 percent in the next five years, outpacing an expected 4 percent for the wider industry, credit ratings agency Moody's predicts.

Founded two years ago in New York, Inturn says it is working with top brands and retailers but declines to name clients. It has just introduced new features to its private online showrooms that enable brands and retailers to transact globally.

Its software allows brands to upload details of unsold fashion and then presents them to multiple buyers online, creating a real-time market and speeding up sales compared to the current practice of drawn-out negotiations buyer by buyer.

"There is a short half-life. The longer you wait, the more it depreciates in value," Solomon said.

The Inturn system allows brands to set rules such as which countries its goods can be sold in and whether or not they can be made available online. It also allows them to decide whether to sell by batch or allow retailers to pick individual items.

Inturn is backed by venture capitalists including Hong Kong tycoon Silas Chou, who revived the Tommy Hilfiger and Michael Kors brands, and Ken Seiff, founder of Bluefly, an online retailer of discounted designer clothing.