Flash Deals Site Totsy Lands $18.5M To Take On Zulily In The Battle For Shopping Moms
techcrunch.com | July 17, 2012
By Rip Empson
It’s been awhile since we’ve heard from Totsy, which, for those unfamiliar, was one of the first flash sales sites to focus exclusively on mothers. The startup launched in 2009, capitalizing early on what would become the Flash Sales Gold Rush, following in the footsteps of successful predecessors like Rue La La and Gilt Groupe. From the outset, Totsy sought to differentiate itself from the crowd by focusing not on fashion, but on offering deals on products that busy young mothers need — everything from prenatal products and baby gear to toys and clothing.
In two-and-a-half years, Totsy has been quick to scale, growing to a team of over 110 employees that now serves more than 3 million moms. This came, in part, from the $5 million in Series A funding it raised in the winter of 2010 from DFJ Gotham and Rho Ventures. In spite of a crowded and now consolidating space, Totsy’s laser focus on providing big deals for new parents, strong early growth, and an Eco-friendly bent, has convinced its investors that big things remain ahead for the site.
Today, both DFJ Gotham and Rho Ventures have renewed their commitment to Totsy in a big way, sinking $18.5 million into the New York City-based startup. The Series B round comes on top of Totsy’s strong year-over-year revenue growth, 125 percent, and will allow the company to focus on expanding its strategic industry relationships and continue growing its user base, said Totsy CEO and co-founder, Guillaume Gauthereau. As a result of the round, Rho Ventures Managing Partner Habib Kairouz will be joining the startup’s board of directors.
Again, if you’ve had any experience with the tried-and-true model of flash sites, Totsy’s spin will sound familiar: The startup holds designer-specific “shopping events,” which are held over a 72-hour period. However, Totsy is invite-only (although membership is free) and offers members brand-specific sales on products for new moms, parents, and children at discounted prices, which can be as high as 90 percent off retail price.
The 72-hour flash sales events focus on one particular designer, offering, say, clothing, bedding and toys from Ed Hardy Kids during the event. Yet, Totsy works purely on consignment, rather than having to fill out inventory, like so many brands, in which the pressure is on quick-buys. Totsy works with over 4K brands, an average of 500 to 600 brands every month, with brands shipping products to Totsy’s warehouse, which the startup then delivers to its customers.
Because so many luxury-focused flash sales sites have to work within the excess inventory offered by their luxury suppliers, many of them end up offering the same items for sale over and over, as if on repeat. Many of these startups, Groupon included, struggle to offer great deals consistently, so to combat this, Gauthereau says that Totsy has built a big stable of brands and focuses on everyday products for parents, while adding advice and tips from expert mom bloggers to make the site a destination — not just a shopping resource for coupon-clipping moms.
Totsy’s new, sizable infusion of capital will also help it get more competitive with Zulily, a similarly-targeted deals site offers an assortment of baby-centric deals. The Seattle-based company and raised $43 million last August and has grown to a team of 300+ with some 5 million users.
At this point, Zulily remains bigger in most respects, but the Totsy co-founders are quick to point out that they have been able to gain a larger following on Facebook, something they hope to leverage as they strive to meet their goal of becoming profitable by 2013. The founders also want to be more than just a point-of-sale site, they want to give specialty products, those produced by mom-and-pop stores (the ones most likely to be wiped out by the growth of eCommerce and flash sales portals) a place to live online.
They also hope to gain a leg-up on competitors like Zulily by maintaining an Eco-friendly mission, both in the products it offers and the way it approaches its customers. Totsy wants to encourage trust among moms and, in building a community of like-minded, kid-focused consumers, the founders think it can manufacture some staying power.
For more on this, readers can also check out our coverage of Baby.com.br, a parent-focused shopping site that’s trying to bring some new life to eCommerce in Brazil — or on NoMoreRack, the Fab.com for the mass market.
Check out Totsy at home here.