TryNow Secures Funding to Expand "Try Before You Buy" Service

Amazon’s Prime Wardrobe has proven instrumental in the e-commerce giant’s expansion within the clothing and apparel market.

By offering shoppers a convenient method to test items, return unwanted selections, and only pay for kept merchandise, Amazon has effectively bridged the gap between online and traditional brick-and-mortar fashion retail.

Startup Offers Prime Wardrobe Functionality to Smaller Retailers

Now, TryNow, a startup providing a “Prime Wardrobe as a service” solution, has announced new funding to broaden its business operations.

The company empowers smaller online retailers to deliver a similar try-on experience to their customers.

$12 Million Funding Round

TryNow has successfully raised $12 million in funding.

These funds will be allocated towards continued business expansion and development of its technology platform.

Current Clientele and Growth

Based in San Francisco, TryNow currently collaborates with approximately 50 emerging online retailers.

These retailers generate between $10 million and $100 million in annual revenue, and include brands like Universal Standard, Roolee, Western Rise, and Solid & Striped.

Founder and CEO Benjamin Davis noted a six-fold increase in business over the past year.

This growth is attributed to the increased shift towards online shopping spurred by the pandemic.

Service Benefits for Brands

TryNow asserts that its service can significantly enhance key performance indicators for brands.

• Average order value can increase by 63%.
• Conversion rates can improve by 22%.
• Return on ad spend can be boosted by 76%.

Expanding Beyond Fashion

While fashion has been the primary focus for “try before you buy” services, the model’s applicability extends beyond apparel.

Davis believes the model can improve the profitability of online sales in other categories, such as cookware.

He suggests that any discretionary purchase benefits from a try-before-you-buy approach.

Notable Investors

The Series A funding round attracted investment from a prominent group of backers.

Investors include Shine Capital, Craft Ventures, SciFi VC (co-founded by Max Levchin of Affirm), Third Kind, and the co-founders of Plaid, Zachary Perret and William Hockey.

This investment demonstrates the perceived potential within this evolving market.

A New Approach to E-commerce: TryNow's "Try Now, Buy Later" Service

TryNow represents a growing trend of specialized commerce and financial services designed to empower entrepreneurs by providing essential technology where core business focus lies elsewhere.

The core concept is that developing payment systems or similar functionalities can be intricate and resource-intensive, making it impractical for companies whose primary expertise isn't in financial technology to build these solutions in-house – much like most businesses opt to utilize established accounting software rather than developing their own.

Addressing Competitive Pressures and Market Demand

As major competitors, such as Amazon, increasingly develop proprietary technology to maintain their market position, the demand for sophisticated, tech-enabled tools continues to rise. These tools are frequently delivered as a service, recognizing that smaller businesses often lack the financial resources and personnel to create them independently.

Davis explained that TryNow strategically chose to focus exclusively on Shopify, and specifically Shopify Plus, due to its dominant role within the e-commerce ecosystem and its comprehensive feature set for high-volume retailers.

Expansion Plans and Platform Compatibility

While currently centered on Shopify, TryNow acknowledges requests from retailers utilizing platforms like BigCommerce and Adobe’s Magento. Future expansion to these platforms is planned, but the company believes that “Shopify currently offers the most robust and rapidly expanding environment, presenting the greatest opportunity at the point of checkout,” according to Davis. He estimates this represents a multibillion-dollar market.

TryNow has refined its functionality to a highly specialized niche within the e-commerce landscape.

Core Functionality and Integrations

The company does not directly manage checkout processes – that remains the domain of Shopify. Similarly, transaction processing is handled by established payment companies, and buy-now-pay-later options are provided by firms like TryNow itself. Returns are facilitated through integrations with Happy Returns, Loop Returns, and Returnly, while customer communication and marketing are managed via Klaviyo.

TryNow’s primary contribution lies in providing analytics for risk management and technology to streamline the payment and returns experience, ensuring payment is triggered upon procurement, refunds are issued for retained items, and potential fraud is flagged for future transactions.

The Unique Challenges of Online Apparel Retail

The apparel industry has faced particular difficulties in replicating the in-store shopping experience online.

The inherent physicality of apparel shopping – the need to try items on, browse extensive selections, and only pay for what is ultimately purchased – presents a significant challenge for e-commerce. This has spurred innovation and the emergence of numerous startups.

These startups are leveraging advancements in computer vision, artificial intelligence, mobile camera technology, and manufacturing processes to bridge the gap between online and brick-and-mortar shopping experiences.

(Snap Inc.’s recent acquisition of Fit Analytics, a company specializing in size estimation tools for online shoppers, exemplifies this trend. Snap intends to integrate this technology to enhance advertising capabilities and expand its shopping features on Snapchat and other platforms.)

Prior to the advent of try-now-pay-later models, online fashion retail often operated on the assumption that customers would accept the inherent risks of purchasing apparel without the ability to physically try it on first.

Davis articulated this point, stating, “The traditional approach of charging a credit card upfront and offering refunds for unwanted items is fundamentally different from the brick-and-mortar experience, where customers try on clothes before making a purchase. This is an unnatural process that can hinder growth.” He further noted that this approach can be particularly challenging for higher-priced items.

Distinguishing TryNow from Existing Models

While companies like Le Tote, Stitch Fix, and Wantable have pioneered the “try first, pay later” model, fewer businesses have focused on providing this functionality as a standalone, business-to-business (B2B) service. (The viability of the try-before-you-buy model can be complex, as evidenced by the challenges faced by Le Tote, currently in Chapter 11, and the now-defunct Lumoid.)

Brian Murray, managing director at Craft Ventures, commented, “Ben and the TryNow team are leveraging their experience from Affirm and Stitch Fix to introduce a superior checkout option: try now, buy later. This translates into increased order volume and improved profitability. The desire to try before buying is universal, and it’s only a matter of time before TryNow’s solution becomes the industry standard.”

However, competition exists. BlackCart, a Canadian company, also offers try-now-pay-later as a service, integrating with a broader range of storefront platforms. (BlackCart employs a different risk mitigation strategy, making upfront payments for goods and reconciling with retailers based on returns.) Amazon’s potential to offer Prime Wardrobe as a service to other retailers also represents a competitive threat.

TryNow has recently appointed Jessica Baier (formerly of Stitch Fix) as VP of growth strategy and Jonathan Kayne (formerly of Affirm) as VP of platform, signaling its long-term competitive positioning.

Investor Landscape and Future Directions

The company’s recent funding round attracted a diverse group of investors, hinting at potential future expansion areas.

Shine, a new firm co-founded by Mo Koyfman and Josh Mohrer, focuses on early-stage investments, with Koyfman having previously invested in numerous e-commerce companies. Craft is another early-stage firm, co-founded by David Sacks and Bill Lee. SciFi VC, led by Max and Nellie Levchin, brings Max’s extensive e-commerce experience, including his role as founder and CEO of Affirm, to the table.

Third Kind has consistently invested in e-commerce technology, and the involvement of Plaid’s founders suggests potential diversification into specialized vertical tools, including more flexible payment and procurement options.

Koyfman stated, “At Shine, we seek businesses with straightforward yet impactful insights that can drive the creation of highly scalable platforms. TryNow’s recognition that a lack of tactile experience limits e-commerce growth has created an opportunity to establish and expand the Try Now Buy Later category. We are excited to partner with Benjamin and the entire TryNow team as they scale their innovative platform and help e-commerce brands overcome the conversion gap with traditional retail.”

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