A recent Forrester report, U.S. Online Retail Forecast, 2011 to 2016, estimates that online retail shopping in the country will grow 45% from $226 billion for the current year to $327 billion in 2016. Last year, the online retail industry in the U.S. was estimated to be worth $202 billion. Forrester estimates that the growth will come from an increase in the number of online shoppers and the average amount they spend. U.S. online consumers are projected to grow from 167 million this year to 192 million by 2016. The average amount spent by these consumers online is projected to grow from $1,207 this year to $1,738 by 2016.
Boston-based Karmaloop was founded by Greg Selkoe in 2000 in his parents’ basement as an online retailer in street fashion. Today, the company is a well-known one-stop shop for the verge culture, which Selkoe defines as a demographic “that refuses to be defined by race or ethnicity” as well as a community of members who are on the lookout for the latest fashions and products. Karmaloop is among the largest and most respected online retailers of streetwear. Its multi-platform retail and lifestyle website attracts more than 4.5 million unique monthly visitors. The flagship site, Karmaloop.com, retails more than 500 brands to a customer base that is spread across 80 countries.
The company’s online portfolio includes an Internet TV station, KarmaloopTV.com, which was launched in 2008 as a multi-platform broadband programming network. The 24-hour cable television channel’s digital content includes more than 69 million video shows of exclusive original programs and features that focus on the emerging trends in fashion, music, film, and other creative fields. The site’s popularity can be gauged from the list of celebrities such as Kim Kardashian and Lady Gaga, who have been featured on the site.
Besides online properties, Karmaloop also owns several private label clothing brands such as Advocate, Fenced, Flud, KLP, Pilot Licensing, Society Original Products, and Spool & Thread.
Karmaloop has reported strong revenues over the past few years. In 2011, revenues grew 81% over the year to $130 million. For the current year, the company aims for revenues of more than $200 million. The company has received $35 million in venture funding from Insight Ventures and another $19 million in debt financing from the Comvest Group. Karmaloop is looking to go public within the next year.
Karmaloop’s Digital Content
Over the past year, Karmaloop has been working with Comcast to launch its own cable channel to promote the verge culture. However, after investing more than $7 million in the venture and realizing the arguably weakened state of cable TV, it decided to abandon its cable plans. Karmaloop will instead focus on building its online content for the KarmaloopTV.com website. Earlier this year, it launched a premium content channel on YouTube that is among the top 100 channels on the site.
Last month, it also launched a full-service video production company, Karmaloop Media, which will provide access to its creative and video production talent. Through the service, content directors will be able to use Karmaloop’s in-house team of video editors, graphics specialists, and their New York City studio and offices.
Forrester estimates that online retail sales will account for 9% of total retail sales in 2016 in the U.S.. Online retailers will have to work to attract and retain their customers through features such as loyalty programs and improved online access to help grow online retail sales. Karmaloop plans to address the market by engaging its youth consumer base through other digital media.