Five years ago, most consumers had not heard of many online retailers now considered staples or constantly mentioned inthe press.
such asZulily(ZU) ,Nasty Gal,Warby ParkerandWayfair(W-Get Report) , to name but a few, each taking on categories such as children's clothing, fashion, eye wear and furniture, respectively.
Now, these retailers are generating hundreds of millions in sales.
It is evidence of how muchconsumer retail has evolvedin recent years as lower barriers to entry have allowed a new generation of retailers to steal market share, said Andrea Weiss, founding partner of advisory firm O Alliance.
In the old days, it could take years to achieve proof of concept, with the challenge of successfully opening at least 40 stores in select locations around the U.S, Weiss said. That involved knowledge of real estate and sourcing, and required a lot of capital up front, she added.
Today, an entrepreneur can start a business at a much lower capital level, build a customer base and take revenue from nothing to $200 million within a few years without ever opening a physical retail store, Weiss explained.
"The day you open an online site, you are a global business," she stated.
By effectively utilizing social media, such startups can reach a large audience without spending much on advertising.
After growing rapidly via the Internet, an emerging retailer might consider establishing physical locations in select locations to give the curious as well as loyal customers a venue to test new merchandise.
In the spirit of the holiday shopping season and aware that retailers can go from anonymity to category prominence within a few years, here are the 10 technology-savvy retailers we are eyeing as the next wave of potential winners, listed in no particular order.
1.Jane, which does business asJane.com, is an online retailer that features over 200 daily deals on items ranging from clothing for women and children to home decor. The company had revenue of nearly $57 million in 2014, according to Inc. magazine. It is one of the fastest-growing companies in the U.S., largely thanks to mobile. Most of the Lehi, Utah-based retailer's revenue is generated by its customers' mobile devices. Mike McEwan founded Jane in 2011.
2.Frank & Oak, based in Montreal, Canada, was founded by Ethan Song and Hicham Ratnani in 2012. Its aim is to sell men's clothing, which it does both online and in 12 of its own physical locations, to millennial men who are more discerning about what they wear.
In 2012, the company was on track to achieve $6 million in revenue, according to previous reports, and has grown several times over since. Deloitte named Frank & Oak as one of the top technology companies in Canada as a result of a revenue growth rate of 18,480% over a four-year period. The retailer features affordable prices made possible by sourcing the manufacturing itself and then selling the items, which it also designs, directly to customers.
3.Journelle, which also sells apparel both online and in physical stores, was founded in 2007 by Claire Chambers and is based in New York. Chambers started the lingerie retailer as a much-needed alternative to Victoria's Secret. The company likely reels in revenue in the range of $20 million to $100 million, according to an industry source, as it successfully spreads the word that lingerie should not only be worn on special occasions.
4.Adore Me.com, based in New York, is an Internet retailer of lingerie with a fast fashion approach that includes offering dozens of new items on a monthly basis at affordable prices. The company was founded by Morgan Hermand-Waiche, a French native, in 2010. In 2014, after several years of rapid growth, Adore Me generated about $16 million in revenue, according to Inc. magazine. The e-commerce player also offers unlimited returns and free shipping to win the loyalty of its customers.
5.Andra Group, which is based in Dallas, operates the websitesHerRoom.comandHisRoom.com. The company was founded by Tomima Edmark in 1998 and sells undergarments, swimwear and sleepwear to men and women. The company had revenue of around $40 million in 2013 and has continued its rapid growth. Edmark's aim in founding the business was to give her customers the same sense of ease that they had in buying bras as they did in purchasing T-shirts.
6.Apaposh, based in San Francisco, does business under the name Brandy Melville and sells teen fashion to girls. The company is a purveyor of items such as beanies, dresses and denim jeans, inspired by a California aesthetic or lifestyle. According to its Web site, it has 49 physical stores and is sold in 15Nordstrom(JWN-Get Report) locations in addition to online. The teen brand is said to now have revenue somewhere between $50 million and $100 million. Although launched in the U.S. only a few years ago, the brand was actually founded in Italy around a couple of decades ago. But in the few years in the U.S., it quickly found a void in the marketplace, stealing customers away from aging brands such as Wet Seal. The company's growth may be partially due to its use of Instagram. Its account on the social media site has more than 3 million followers.
7.Lulu's Fashion Lounge, which operates e-commerce Web siteLulus.comand is based in Chico, Calif., sells affordable fashion to women by mixing trendy items with classic pieces. Most dresses, for example, sell for well under $100. It was started by the mother-and-daughter team of Debra Cannon and Colleen Winter (respectively) in 1996, first as a brick-and-mortar operation and then adding online retail in 2005. In 2009, the company sold its physical store to focus on its web-based operation. Lulu's was last reported to have had revenue of about $17 million. In 2014, the retailer attracted investment dollars from H.I.G. Growth Partners.
8.Knot Standard, based in New York, sells custom-made men's clothing online, including button-down shirts, suits and coats. It also operates private showrooms in major metropolitan areas. The retailer provides a decent fit by creating a "body profile."
The profile is generated by either having the customer provide the name of the brand that fits best or by letting him choose between its webcam scanning system or its do-it-yourself tape measuring video. Apparently the company has come up with the right formula because it has rapidly achieved revenue of more than $3 million after being founded in 2010 by Matt Mueller and John Ballay. Knot Standard recently announced that it even attracted private equity investment from Traub Capital, the investment arm of Marvin Traub Associates.
9.Johnnie-O, based in Santa Monica, Calif., is a purveyor of clothing for men and children whose aesthetic is described as a hybrid of surf and prep. The company coins its style "West Coast prep." A button-down shirt sells for nearly $100 while a pair of board shorts sell for close to $80. The retailer was founded in 2005 by John O'Donnell, who split the years of childhood through college between Chicago and Los Angeles. The company sells online and is a wholesaler to brick-and-mortar retailers.
10.LaFleur, which does business under the brand name MM.LaFleur, was founded in 2013 by Sarah LaFleur, Miyako Nakamura and Narie Foster in an effort to shake up the world of women's workwear. It sells its clothing via its Web site
mmlafleur.com. The company utilizes an unusual tactic by having customers give it information about their bodies.
Based on that data, MM.LaFleur chooses the clothing items it think will look best and puts items in a bento box. It has already gained a loyal following, according to reports, having racked up a long waiting list of nearly 1,000 women as of late September for a black wrap dress called the Tory made of crÃªpe from Osaka, Japan. The dress costs $235.