Children’s clothing retailer Kidbox.com LLC just secured a $15.3 million funding round.
The new funds will be used to expand the retailer’s data science team and to ramp up customer acquisition, the retailer says. Overall, Kidbox plans to grow its team by 34% by year end. Investment firm Canvas Ventures led the round, which brings Kidbox’s total funding to $28 million. This is the second time this week that a children’s apparel subscription box retailer announced funding, as Mac & Mia also raised $5 million in a Series A funding round.
Kidbox, which sends a box of styled children’s apparel five times a year, launched in 2016. The retailer grew its new customers in Q1 2018 more than three-times over Q1 2017, the web-only retailer announced. More than 1.2 million shoppers have ordered from the retailer, Kidbox says.
The service sends shoppers six to seven name-brand clothes chosen via a combination of stylists and a machine-learning algorithm that makes the best matches from Kidbox’s product catalog with the answers provided in a 20-plus question style quiz at signup. Each box costs $98 for all of the products. Shoppers keep and pay for the products they like and return the products they don’t want at no charge.
“The preponderance of our customers are keeping the entire box, which we find very exciting,” CEO Miki Racine Berardelli told Internet Retailer in January.
The retailer also collects data about each order, such as which styles perform the best or which items a shopper returns, to refine the next order. For example, if a shopper returns a shirt because it was too small, the data about that return and the product is logged in the customer’s account and used so that if Kidbox ships another shirt of that brand to the customer, it knows to go one size up.
Data science is key to Kidbox’s success, so the retailer doesn’t have to increase its styling team as the retailer grows, Berardelli says. For example, the algorithm knows which order a certain stylist should fulfill based on that stylist’s “full-box keep rate” in terms of boys vs. girls, sporty vs. preppy or baby vs. big kids. This makes it more likely that the customer will keep all of the products in the box and improves how many boxes a stylist can put together in an hour, Berardelli says.
Berardelli’s goal is to have each box fueled by 80% science and 20% human touch, but in reality it is about 50-50 today, she says.
Overall, Berardelli says customer retention rates are healthy and the retailer is encouraged by the repeat purchase rates.
“We see really strong repeat rates from the first season to second season, and the drop off is only incremental from there to the following season, and then it remains very steady season to season,” Berardelli says.
For every entire box of clothes a shopper keeps, Kidbox donates an outfit. By the start of 2017, Kidbox had donated nearly $2 million worth of clothing to children in distressed situations via nonprofit organization Delivering Good, Berardelli says.
In terms of customer acquisition, Kidbox isn’t afraid to test new strategies, Berardelli says. The retailer uses a combination of social media marketing, affiliate marketing, email prospecting and search engine marketing, plus billboard advertising, to acquire customers.
Kidbox launched with about 30 brands, Berardelli says, and now it offers clothing from more than 100 brands. This is an important piece of the retailer’s customer acquisition strategy, she says. For example, if a shopper is looking for a specific brand of kids’ clothing, Kidbox could now show up in search results if it carries it.
“Going from 30 brands to 85 and now up to 100, think about how that translates into search,” Berardelli says. “As our brand portfolio grows, we’ve been able to tap into more paid and organic search traffic as a result of building our brand portfolio.”
This spring, Kidbox is launching its Moment boxes, which are apparel boxes around a theme, such as a go-to-camp box, a uniform box or a holiday pajama box. The retailer also has hopes for international growth, but only when that makes sense, Berardelli says.