Women’s apparel e-commerce business Lulus on Wednesday announced a $120 million investment from venture capital and growth equity firm IVP and global investment management firm Canada Pension Plan Investment Board. The company’s first outside investment came from H.I.G. Growth Partners four years ago, according to a company press release.
IVP has also backed companies like Glossier, HomeAway, The Honest Company, MasterClass, Snap, Supercell and Twitter; IVP General Partner Eric Liaw will join the Lulus Board of Directors. The new funds will go to the company's expansion, although no details, including any try at brick and mortar, were specified.
Lulus was founded in 1996 by mother-daughter team Colleen Winter and Debra Cannon as a vintage boutique in Chico, CA, where it’s still headquartered today. The retailer shifted to an online-only model 10 years ago, and now sells its own apparel label along with a few brands like Free People. Nordstrom also sells some Lulus merchandise.
Last year, e-commerce sales rose by almost 15% year over year, according to Gartner L2’s Digital IQ Index: Specialty Retail report. And Lulus is a millennial favorite, especially among younger 20-somethings of that generation, according to a blog post Thursday from the digital marketing research firm.
That's partly what attracted CPPIB, according to a statement from the firm’s Managing Director and Head of Thematic Investing and External Portfolio Management Poul Winslow. "Lulus' proven track record as a successful retailer targeted to millennial women and as an early participant in the e-commerce space demonstrates their ability to thrive in the rapidly changing retail segment where customers are increasingly shopping online," Winslow said.
Certainly the merchandise is resonating. But Gartner L2 also said Lulus’ website and social media game are contributors to its success. Digital sales of apparel can be challenging because shoppers miss out on the crucial touch, feel and fit opportunities in stores.
"Lulus uses a variety of features to keep customers satisfied online, including a visual search tool and an extensive product review section," wrote Alizah Farooqi, content and marketing associate at Gartner L2. "Brands with agile digital strategies like these are more able to steal market share from legacy brands that have traditionally dominated the industry."
More than 85% of Lulus’ merchandise is from its own private label. Over the years, it has collected 1.3 million Instagram followers who get a good look at those items every time the brand posts using the hashtag #LoveLulus. That’s an important advantage on a platform that has "captured an impressive 96% of total social media interactions for retailers over the last year alone," according to Gartner L2.