European online portal cuts a dash in fashion world

With the glitz of Milan's latest Fashion Week extravaganza just beginning to settle on the floor of the Feria Milano, one small Italian company is already working hard to translate this season's fabric and design trends into new business opportunities for its fast-growing online user base.

From modest offices near the shores of Lake Como, one of the world's most important textile and fashion hubs, ItalianModa has grown from a two-person operation two years ago into one of Europe's most influential business-to-business (B2B) portals.

Founded in early 2000 with just E100,000 start-up capital by Maurizio Verga and Antonio D'Este, the company was quick to recognise the potential of online trading in a country where highly specialised small and medium-sized enterprises (SMEs) still predominate over mass-market producers.

Using English as its working language, the ItalianModa exchange not only helps these companies find one another, but allows the myriad foreign buyers keen to exploit Italy's reputation for top-quality fashion products to make rapid contact with a vast number of textile, clothing, footwear and accessory suppliers.

Unlike many now-defunct competitors, ItalianModa built its operation around paid subscriptions, with members' comprehensive storefront web pages supplemented by in-brief listings from around 6,000 additional suppliers spanning the full gamut of fashion, textiles, and production services.

Currently restricted to Italian companies trading domestically and abroad, members pay E750 a year for a turnkey service including in-house development of storefronts, inclusion in ItalianModa's search engines, listing in the online supplier directory, and a referral service whereby ItalianModa staff match suppliers to requests from professional buyers.

Chief executive Maurizio Verga says paid subscriptions not only provide a predictable financial base for ongoing activities and expansion, but ensure the quality of the site's contacts.

"The commission-based model is one reason so many B2B sites failed," he says. "You're not only obliged to make an up-front investment, but you're entirely dependent on suppliers' sales skills. It also encourages participation by companies who aren't really serious, which can reflect badly on your site."

Another important element of ItalianModa's success is the expertise of its two principals, both of whom boast many years' experience in textiles and fashion. According to William Woods, co-author of niche best-seller B2B Exchanges, getting the right mix in the B2B environment means a combination of independence and industry know-how. "Independence gets the buy-in of major players, which gives exchanges the liquidity they need to be credible. How well you know the business is also critical, because you understand your clients and can build your service around the way people really work," he says.

One good example is ItalianModa's 24-hour sample service, which allows buyers to request rapid delivery of samples of fabrics, leathers or finished goods before placing a definitive order.

Another is the company's online colourway service, which allows buyers to select fabric designs and create their own colour combinations directly on the web, with enormous savings in time and money.

"Traditionally, large buyers would choose a fabric and request samples of their own desired colour combinations. Manufacturers had to undertake a number of costly sample runs of these 'colourways', with the buyer generally settling on just one or two. Now, buyers can evaluate colour combinations immediately on-screen, and can even transmit the data corresponding to their chosen colourways directly to manufacturers' inkjet fabric printers, resulting in very fast turnaround for sample or full-scale fabric runs," says Mr Verga.

Visuals

The impeccable industry credentials of the ItalianModa management are backed by a strong technical team committed to expanding the portal's features and services. Examples include Sell2Italy, launched last October, which helps foreign producers locate Italian buyers, Moda Display, which allows visitors to view visuals of items by product category, and new large volume tendering and group buying services, planned for later this year.

With more than 7,000 registered professional users and 80,000 visitors in January alone, ItalianModa has already won the confidence of many of Italy's best-known industry names, including the Stefanel Group, owner of the New England, Museum and Island menswear brands, and DianaSport, a leading swimwear manufacturer and official supplier to the UK national swim team.

Matteo Bechis, DianaSport director, praises the quality of the exchange's business leads, and says membership has greatly increased his company's visibility and geographical reach.

"The modest cost of the service has repaid itself many times over through our improved ability to make key contacts and conclude important new deals which, without ItalianModa, would simply not have been possible," he says.

According to Mr Verga, more than 85 per cent of companies who join ItalianModa renew their membership. Proof, he says, that customers are getting value for money. While he is adamant the company will continue to maintain a very tight vertical market focus, geographical expansion has already seen the establishment of two sister exchanges in eastern Europe, Romania's RomTextiles, and a new Bulgarian site, BGTextiles, which opens its doors to customers later this month.

Both locations were chosen because of their strong export trade in textiles and leathers, and the availability of experienced local partners. The two operations represent a long-term strategy that should begin to generate revenues in around 18 months, says Mr Verga.

Not so for the Italian operation, which last year turned a profit at the same time as many competitors were closing their doors. Starting up without venture capital funding helped enforce tight budgetary control, which continues to stand the company in good stead, says Mr Verga.

"When the money doesn't come from your own pocket, you're not so careful how you spend it," he adds. "But at ItalianModa, we simply replaced cash with hard work and dedication to a business we love."