Today, BoF can exclusively reveal that Australia-based custom footwear e-tailer Shoes of Prey has raised a $5.5 Million Series A round, led by Khosla Ventures.
Shoes of Prey at David Jones department store in Sydney | Source: Courtesy
SYDNEY, Australia — Shoes of Prey, a fashion e-tailer that lets users design their own shoes, has raised $5.5 million in a Series A round of funding. (Previously, it raised a AU$4.45 million seed round.) The Series A was led by Silcon Valley-based Khosla Ventures and also includes funding from Bonobos co-founder and CEO Andy Dunn, as well as individual investments by ThirdLove co-founders Heidi Zak and Dave Spector, a former partner at Sequoia Capital.
Founded in 2009 by lawyer Jodie Fox, Google sales executive Michael Fox and Google engineer Mike Knapp, Shoes of Prey allows customers to design their own shoes from heel to toe. “To be really honest, it was a personal problem that I was solving,” says Ms. Fox. “I couldn’t find what I loved. The heel height wasn’t right, or the colour of the leather was a bit off.” Fox, a frequent traveller, began getting custom shoes made in Hong Kong and soon friends were asking her for the same.
Shoes of Prey offers 12 different styles — including ballet flats, heeled oxfords and wedge sandals — in over 300,000 trillion permutations, taking into account a wide range of size and style options, like heel height, leather type and colour. Most pairs cost well under $200 and are made on demand, after a customer orders them, which allows the company to eliminate the traditional costs of holding inventory and managing excess stock.
Armed with the new funding, Shoes of Prey plans to open a second factory. The company vertically integrated its operations in 2013, opening its first dedicated factory in Southeast Asia. But the second factory will be able to handle five times more orders than the first. The new investment will also help facilitate a partnership with Nordstrom. The e-tailer opened a shop-in-shop in the department store’s Bellevue, Washington flagship on November 17 and plans to roll out five more shop-in-shops over the next year.
Much like Bonobos and other digital retailers who have opened physical spaces that operate like showrooms linked to e-commerce, Shoes of Prey’s shop-in-shops will not hold actual inventory. Instead, they will give customers an opportunity to see, touch and try on products that can be customised and ordered via iPad, meaning the shop-in-shops stand to yield higher sales densities than traditional retail spaces.
“If you had told me that we would be opening physical stores a couple of years ago, I would have thought you were crazy, but being able to touch the product really is the perfect complement,” says Fox. A partnership with David Jones, a department store in Australia where Shoes of Prey doubled its sales targets in the first year, provided a test case for the Nordstrom push. In December, the company will also open its first standalone physical retail presence, leveraging the same model, in at the Westfield mall in Sydney’s Bondi Junction.
The company declined to disclose sales figures, although Fox will say that the business crossed over into profitability within two months of launch and began generating multi-million dollar revenue in under two years. Users of the Shoes of Prey website have designed four million pairs of shoes since launch, although many of these pairs were not purchased. The company currently employs 75 people at offices in Sydney, New York, Tokyo, Hong Kong and Manila.
Shoes of Prey faces plenty of competitors, however, which, following in the footsteps of pioneering platform Nike iD, are also targeting the opportunity in mass customisation, including the UK-based Upper Street, which acquired US-based Milk & Honey earlier this year for an undisclosed sum. Fox, however, believes Shoes of Prey’s vertically integrated approach sets the company apart. The company has also teamed up with Mad Men costumer Janie Bryant and New York-based contemporary designer Jonathan Simkhai for one-off collections.
The space has grown in recent years, yet mass customisation has still not hit an inflection point — that moment when it actually goes ‘mass’. But Fox (who hopes to break into other categories, first handbags and then, potentially, apparel and homewares) believes demand for customised products is there.
As evidence, she points to how current customers are using the Shoes of Prey website. While the brand provides a gallery of shoe designs for inspiration, “Rarely do we see a pair of shoes purchased as it is,” she says. “There’s always some sort of modification.”
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