Online fashion business remains an iffy market

You have to hand it to Jaclyn Shanfeld, a 29-year-old entrepreneur who within several days managed to score a few hundred thousand dollars in seed money for an online startup that arranges the buying and selling of used high-end fashion. "I was just the girl with a concept," Shanfeld told me in describing how she caught the attention of a United Talent Agency executive who quickly contacted a bunch of local investors. "We're all about building brands, and that brand can be an actor, a television show, a line of consumer products, or a company," said Brent Weinstein, who is in charge of digital media at UTA. Anyway, one thing led to another and today Shanfeld is trying to thrive in a very crowded marketplace. Her site, Shop Hers, seems to be doing well, although the online fashion world remains a tough place to make a buck, as I write about in the August issue of Los Angeles magazine.

L.A. has become a hotbed for online entrepreneurs, many of them in the fashion business. Some have received millions of dollars in venture financing; others are struggling to get beyond early-stage funding. Nearly all are still grappling with how to attract and hold onto a fickle customer who is not entirely sold on Internet shopping. "You want to make sure people like the stuff you're selling, and you want to make sure people know about it," says Jeremy Liew, a partner at Silicon Valley's Lightspeed Venture Partners, which has invested in numerous online sites, including LivingSocial and Flixster.

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Online fashion has become congested and intensely competitive (one young entrepreneur I spoke to says she counted roughly 700 fashion sites that have received funding). It's easy to get in the game--all you need is an idea, a Web site, off-the-shelf software to keep track of the money and merchandise, and a plan to generate traffic. Entering the space, however, is not the same as prospering in it. Early gimmicks have fallen out of favor, such as member subscriptions, a riff on the old Book-of-the-Month Club where shoppers are expected to make monthly or quarterly purchases. ShoeDazzle abandoned that model when revenues began falling (not many customers were willing to buy a pair of shoes each month), though [investor Brian] Lee says that a course correction last year is working well.

Check out the LA magazine website for more about Shanfeld and the online market.