Founder Series: How to Manage Fashion's Unsold Stock with AI, Finds, Andrea & Jules

When Jules met Andrea

Could you imagine an industry that's ready to make a circular leap, leveraging AI and data to manage surplus stocks and optimize clearance campaigns? Andrea and Jules, the founders of Finds, certainly can.  That's how their shared vision brought them together to launch an impact startup in Paris; Andrea having the experience in fashion and Jules having the entrepreneurial experience to make it work.

Solving Surplus Stock Issues with AI

With host, Peter Jeun Ho Tsang, the discussion delves into the AGEC law and its repercussions for the fashion industry, along with the solutions Finds provides to centralize stock management, doing away with the cumbersome and monotonous Excel sheets. We shed light on the role of AI in solving sustainability issues and making informed data-driven decisions. However, fashion is still taking its sweet time adopting sustainable innovations and we find out why this is.

This episode is a must-listen for anyone interested in the circular fashion, entrepreneurship, and sustainability.

Listen to Andrea's episode about their Techstar journey: https://shorturl.at/vJX06
Find out more about Finds: finds.solutions/

Transcript

Peter Jeun Ho Tsang: 0:04

Every startup begins with an ambitious founder and an idea, but what inspires them to take the leap into the entrepreneurial world? I'm Peter Jeun Ho Tsang, founder and CEO of Beyond Form, and welcome to our new founder series. I'll be sitting down with a few of our startup founders to hear about their journey as entrepreneurs in the fashion tech world. On today's episode, I'm sitting down with Andrea and Jules, co-founders of Finds, to talk about their personal journey into entrepreneurship. You may remember, 12 months ago, we spoke to Andrea as the Finds team were about to finish their Techstars acceleration, but what's happened since then? A lot. The Finds platform is now fully functional and the fashion industry is taking a look at how it can leverage data to manage surplus stock. We find out in this episode what it's taken the team to get to this point and if such platforms can get the industry to become truly circular.

Jules-Adrien Néret: 0:54

AI is an amazing opportunity to help fashion brands to more easily manage this complex topic with our product. Instead of setting up a stock clearance campaign, you will be able to just ask Find's 'I want to create an offer for my outlets, I want to bring in the best product' and boom. Finds will automatically set up an offer for you.

Peter Jeun Ho Tsang: 1:23

Let's get started with Andreq and Jules' founder journey on this episode of Venturing into Fashion Tech. How are you today, andrea? How are you Jules? Great Hi, peter, I'm great. Thanks, happy to be here. Good to hear that. I'm looking forward to today's episode recording. So obviously we recorded you nearly 12 months ago, andrea. So today's episode is going to be a bit of an update as to what's been happening in the world of Fine and the subject of surplus stock and sustainability and AI as well. I'm also looking forward to see how you guys have progressed.

Peter Jeun Ho Tsang: 1:55

But before we actually go into the episode, I'm going to give some context to our listeners as to what's happening in the space itself. So 62% of larger retailers confirm that they were struggling with excess inventory competitive 42% of SMEs. So this was a study created by an inventory planner that served 500 retailers, with specific mentions on Gap, asus and Jules, which are really suffering. Amongst the very large retailers, around one-third of clothes produced every year are never sold, so it's a huge, a huge problem for the entire world. And the case of the retailers mentioned just earlier, this amounts to more than 100 million euros in excess stock every year. They have got warehouses piled with lots of stuff and then to do something with it.

Peter Jeun Ho Tsang: 2:45

So this is where Fine comes in, I think and we'll talk a little bit more about that later on and last time in your episode, andrea we talked about the Arzac Law that came into full force in France in 2022, which bans the destruction of fashion products, so they need to do something with it. However, this has instigated a number of French fashion brands, but change seems to be still very slow in the industry in general, and I think that's where the Fine's team has the great opportunity. So we're going to get straight into it. We've heard Andrea's story previously, in the previous episode, so for those of you that are listening, there will be a link to the episode as well in the description to Andrea's journey. But, gilles, it's your first time on the show. What's your story? How did you get into entrepreneurship and how did you decide to join Andrea?

Jules-Adrien Néret: 3:36

Actually, I got this in this journey. More than 10 years ago, in the middle of my schooling. I decided to create, with my friend, a first company in the web. It was a tech company, tried to build a social network who will help an entrepreneur to build projects. But we were also young, so maybe not enough experiences. So we ran this project for one year approximately and after that we decided we'd just approximated the same team to create another company in the cosmetic and vape industry. We were liquid, illiquid producers. Then we also opened some shop Retain in Paris and this adventure was a seven years project for me and in 2020, I decided to quit and to join Andrea, who already creates the first ad-lib ad in the version of Evenly, the Retouch Exactly, I was previously called the Retouch and for me it was a super interesting topic in general, something really big.

Jules-Adrien Néret: 5:12

Previously I worked in the vape industry. It was such a new industry. The fashion industry was called Super Interesting because it's super big A lot of actors around the world and a lot of culture and ink visit and big, big, big challenge. I was always super sensitive about the environment problem and when Andrea started to explain me the volume, give me some some numbers about the fashion industry and waste problem.

Peter Jeun Ho Tsang: 5:54

I was super interested and obviously, jules, you don't come from the fashion world, as you've just mentioned. We know from the vape world prior to fine, and you obviously come from the fashion world. How you studied it as well, jules. How did it feel, or how does it feel to enter into this new industry, where it's very different to what you were previously doing?

Jules-Adrien Néret: 6:14

Yeah, of course. Yeah, you just need to visit a vape shop and to go in the fashion retail shop Just after trying to understand the difference. I mean, it was, you know, really interesting. First, you see fashion people care. You heard about fashion show and so on and so on, and more you deep dive. You also meet a really technical person. Today we deal in exchange with supply chain manager, stock manager, so also a lot of in general, maybe more high than you know in the in this business. You don't see them. I mean, fashion is not a super particular business. It's a business with a lot of different kind of people who collaborate together to run this industry. And yeah, I can find my place in.

Peter Jeun Ho Tsang: 7:15

So and you just to remind our listeners just very quick 30 seconds about who you are.

Andrea Herget: 7:21

Yeah, so I came to. I'm Austrian originally. I came to Paris around seven years ago. I have an economics and management background, but in Paris I specialized immediately on everything which is circular economy. I've written a piece on that seven years ago how fashion should adapt and can adopt circular economy and because I was researching so much on this topic, I thought I want to apply it and the best way is to create a startup and working innovation and try to change things.

Peter Jeun Ho Tsang: 7:57

So you really want to be an agent of change is what I understand. So we get all the ask all the time beyond phone by founders. I really want to find a co-founder. I need a founding team. I'm a bit lonely by myself. What was the moment, andrew, that you realized that you needed jewels in this startup?

Andrea Herget: 8:18

Well, actually the idea, even for before you joined me, we had it together. We were already collaborating on. I was working as a freelancer with a brand on sustainability topics. We were already working previously on this subject as well. So, because it was working well and we complement each other quite well, we had the idea to do a project together. And, yeah, and honestly, until you don't work together, you will not know if it really works out. So I would say, in any case, as long as you can try to work together before you actually create a startup or do some engagement, that is the best way. Yeah.

Peter Jeun Ho Tsang: 9:05

But for our listeners, you guys were once three co-founders together it went down to two. What did you feel like saying to the third co-founder that didn't fit, as you were saying, Andrew, you have to find a fit Like what was it like saying, okay, this potentially isn't working? How did you navigate that?

Jules-Adrien Néret: 9:24

I mean, for us this was maybe more easy because it was the situation changed and with 5-HOTS from something where our ex-co-founder fit with to something we not fit with. So it was more natural and it was really okay for him and for us to say okay, for the rest of the path of the research now finds, I will not be able to bring value and I don't, you know, in the day-to-day job I don't also fit and I'm not really interested by the next study. Yeah, and now we are three again because we found another co-founder who is a tech guy, because our major pivot was to go from a company to a tech company, restart up also. So, yeah, we have Kevin, our CTO.

Peter Jeun Ho Tsang: 10:37

So for our concept of our listeners nice setup, by the way, joel for me, previously, the research was more like a service-led company providing retouching services and trying to get the Uber of retouching. As you just said, joel, you found that actually it was more important to be a tech company really servicing the surface stock market. What are the challenges that you've seen in the market? There are lots of research that you've done over the last few years Now. I've been following you guys for three and a half years now. It's gone really quickly and you guys have done a lot of research in the space. What are the challenges that you have seen? That has led you onto this current version of Fines.

Andrea Herget: 11:18

Yes, First of all, as you mentioned, Peter, the market issue is there. We, every year, one third of clothes are not sold. Just that sums up already to 100 billion units of fashion, but also beauty, because we're dealing with both industries. 100 billion products have to be managed year by year by these brands and have to find new solutions, new life, so that could be resale, donation and recycling. That is the overall problem of the market. And then there is also a legislative that comes to it, which is the Ajax, which France is the first country that has prohibited in 2022 the destruction of onslaught clothes. But also the EU is following since this July with the ESPR, the Equal Design Regulation that will also prohibit in the next two years in European wide and also framework this topic. So that's the tendency in the market, which then leads to the brands are waking up, and we have sensed this over the past years that the brands are waking up to change the processes and to change how they are dealing with their surplus stocks.

Jules-Adrien Néret: 12:45

Yeah, and as you mentioned, so fashion brand and the market have a lot of challenges compliance, volume and so on and today everything and it was really analyzed from every actor we met today all of that is managed manually and fashion brand are not equipped to meet their objective in this topic, because you need to manage a lot of stock with a lot of different partners and, yeah, to do it manually it's really a big pain point and that's why Fines tried to solve this problem by bringing and offered to the market a structural answer.

Peter Jeun Ho Tsang: 13:38

And I mentioned in introduction that brands like Gap, paysauce and Jule are really struggling with this subject. You think that's one of the reasons, or those are the reasons as to why they're stripping so much?

Andrea Herget: 13:48

What we analyzed, that this issue is present in all the categories fast fashion, premium and luxury. Every brand, every category has a different issue, slightly different issue. Of course, when you talk about fast fashion, there will be a volume issue and you will not be able to easily sell on an off-price market, so there will be other solutions to find. So we'll be in the premium or in the luxury. So our tool is, of course, also proposing solutions where the goods go, but it's more really a structural solution where we will help them to digitalize the processes and to gain efficiency and more quickly also get rid of those access stocks.

Peter Jeun Ho Tsang: 14:41

And in terms of you guys pivoting together, did you just like one day decide and woke up and like we need to pivot, we need to change quickly now to be reaction faster to the market? How does that conversation even happen about pivoting?

Andrea Herget: 14:56

You will laugh, but actually with one pivot yes, it happened one day to the other because there was COVID, so COVID was happening very fast. So as a business, sometimes in this kind of situation you have to take also fast decisions because we didn't know how long COVID will stay. But okay, that was our pivot one when we got to upcycling. But actually the last periods were really deep conversations and also testing, test and trial on the market. You propose something and we see if it works. Or can we also as a team feel like this is something where we want to bring value, because it's not just what is the market, but also who are we as a startup and what impact do we want to create? And so it's both sides.

Jules-Adrien Néret: 15:47

In my perspective, the main pivot was when we decided to go from the B2C to the B2B, and all of the past after this precise moment was to deep dive and invest a lot and find, sometime, just a reason to meet, because you cannot go into I don't know LVM and show you, go boss with nothing. So to have something, to be able to speak with the brand, speak with the people who managed this problem, and to understand and learn about what they are doing today and, yeah, day after day, we build a big culture about all of this topic and it allows us to bring a solution on the market. So what is that solution then, jules? So this solution is called Fines. It's end-to-end solution enable fashion brand to manage the stock clearance campaign.

Jules-Adrien Néret: 17:05

I would say, maybe differently. It's a stock management system for unsolved products. So the goal of Fines is to help the stock manager, or the people in charge of this topic in the brand, to be able to take decisions based on data instead to manage it manually, and also to enabled the brand to leverage more from their off-priced activities, because the resetting of the product when it's not on the global market and for really, really few price, it's also one of the best way to have a sustainable strategy. So to reset it to your customer not really few price, but to try to keep it margin. So yeah, fines helped fashion brand in this way to optimize their stock, their off-priced activities, by being kind of pro-tool internally, but also by being an intermediary between all the brand and all the actors capable to absorb stock.

Peter Jeun Ho Tsang: 18:28

So it's really helping fashion brand to digitize and feel a bit more efficient with how they handle all of their stock. That's just sitting all of these warehouses, basically, and they have no proof as to what's happening. Is that correct?

Andrea Herget: 18:44

I wouldn't say some brands. They have their strategies. Let's say, a premium brand has 80% of their channels are maybe internal outlets or external actors on the off-priced market, so they have already processes. But the goal of Fines is really to digitize and to gain more efficiency with a database model. So instead of using Excel sheets and sending them separately to different outlets etc. That will all. Everything will happen in Fines and communication and exchanges will be so much easier and quicker. So that way you gain efficiency. But also you can have more offers from partners because it's easy to send them out and compare your offers easily and do reporting. So it's a centralized system which fits very well to even big groups, because groups have, for example, the problem of centralizing the data and comparing actions that have been done in the past.

Peter Jeun Ho Tsang: 19:49

You probably won't know this drill, but you mentioned that Excel spreadsheets, andrea the fashion, the fact that there's Excel spreadsheets. For some reason they love to have things on paper written down. I'm sure a lot of the fashion brands that you're speaking to right now they still write things on a paper. I am not talking about that Certainly want to have work with. Some of my clients usually say, oh, my goodness, how do they survive and get things done with this very low-flying, non-technical way of doing things? I don't know why it's really like taking this room. But yeah, especially in France.

Jules-Adrien Néret: 20:24

Yeah, it's also that's why the tool use a lot of table company and user what not lose on our tool. And of course we had a lot of shortcuts where brands and user can import directly their Excel sheet and then combine an Excel work with our solution.

Peter Jeun Ho Tsang: 20:52

So then you mentioned earlier, andrea, that Ajax Law forbidding fashion brands to destroy their products. What is the reaction, or what has been your reaction, from the fashion brands that you have been speaking to?

Andrea Herget: 21:07

Yes, the reaction is that we see a tendency of more interest in recycling and to, in general, have also the CSR implemented into the conversation, which before was mostly done by their supply chain merchandising, and now we also see that CSR will want to be part of the conversation, wants to know where does the products go, is all the solutions sustainable? And so we see this change of really like looking into the solutions, what we have today, but maybe adding and exchanging some of them with more circular solutions. And recycling is definitely a trend that will come thanks to the loss, and we already invested a lot of time in this topic and we see that it is really at the beginning. There is a lot of innovation coming and the recycling will be fully possible of any composition in the next years. Now it's, of course, very dependent on the composition. That's why Fiennes is pushing the data, because once you know the data, you can easily stream to different recycling actors. So if you have a cotton t-shirt, it will be easy to stream to different recycling actors.

Jules-Adrien Néret: 22:31

Especially for chemical recycling, because for mechanical recycling composition is less important. But we really think from our students on the market that chemical recycling will be the future of the recycling. What is chemical recycling? The chemical recycling is you will globally, to make something easy to understand, you will put your textile, it can be garment, it can be a mix of garment into products I don't know exactly the word in English and you will be able to separate whole of raw material, even for some technology to have directly on the bottom of the machine. But the recipient, you will have the strong part of the garment. So with this technology the fashion industry will be able to completely resign their product. But the problem is today this technology are in the pilot project, not at scale, and that's why also brand need and already invest to push this technology and in this particular case the data about the composition really really matter.

Peter Jeun Ho Tsang: 23:58

So just to make that a little bit careful, a lesson is essentially chemical. Recycling is when, if you imagine this big cauldron and all the products put into it, and then the chemical liquid is then added to the big cauldron, it's actually break down the fibers. Yeah, to be reused again. Exactly, it's a reactive, so it sounds like witchcraft A little bit.

Andrea Herget: 24:18

Yeah, and yeah, recycling today is very costly, yeah, so that is the issue. So these kind of technologies will resolve part of this issue, because today, before you even can recycle, you need to remove the trims. So that is done sometimes manually, or, yeah, and in particular, on time as well, it takes a long time. And then there is the sorting of the different fight, of the different compositions, and that is also sometimes done, still manually. So, yeah, there are costs to it. And then, of course, the energy of the recycling itself and the machine and so on and so forth.

Peter Jeun Ho Tsang: 24:54

So you've been having all of these super interesting and insightful conversations with fashion brands. In your opinions, do you think the fashion industry is working quick enough to implement the Azure Clio and to meet the sustainability goals, or do you think we need to do something more to speed it up?

Andrea Herget: 25:12

Yeah, being an actor in innovation and pushing so clarity. Of course, for us in our position it's not fast enough. We see that as any kind of innovation or startup, that if you talk to big corporations, decision-making processes take a long time and that is how it is. It's an orchestra in the industry, no problem, and so of course it can be faster and I think with even their year regulations things will even speed up. But things are moving. I've been in the space in seven years, in Paris only, and seven years ago there was no incubators of circularity or sustainability or few startups really on hand for in this space, and now it's a lot. So even in the past seven years there was already a big evolution and I think from now it will accelerate.

Jules-Adrien Néret: 26:09

Yeah, and I think one of the purpose of a company startup like us, it's to also, you know, we are in a capitalist world and our system and we must show to fashion brand that they can reach their sustainability goal by being even more profitable. Don't speak about cross-off, but I really think, and it's why it's what we try to bring with funds it's by have a better management, more sustainable management on this topic and so on. So management, you can extra more value from your product. And yeah, I think it's the key points for help sustainability or help company to be more and more sustainable, is to show them they can improve also their revenue from that.

Peter Jeun Ho Tsang: 27:11

So certainly improving the bottom line, but really tapping into all of the stock that's just sat there essentially with a solution like fine. So let's go back to the product jewel. So you are leading more on the product side of things, and at the heart of fines is AI. What does that mean specifically and why is it really important for AI to be integrated into the fine solution?

Jules-Adrien Néret: 27:37

I think AI is a tool for leverage the most important thing on this topic with data.

Jules-Adrien Néret: 27:47

So, as we mentioned previously, our goal is a fashion brand to extract the more value as possible from them.

Jules-Adrien Néret: 27:56

Data to be able to take data driven decision. But also our first API which we want to offer to brands is the acceleration of their stock rotation. To do this, we already automatize some parts of the process and we want to automatize more and more to make that brand, in the end of the day, just need to take decision and not lose a lot of time to do things manually. So in this way, AI is an amazing opportunity to help fashion brand to more easily manage this complex topic of our product. For example, instead to set up a stock clearance campaign, you will be able to just ask to find to create an offer for my outlets and I want to bring in the best product I have in the stock with a nomodging stock and boom, fines will automatically set up an offer for you. So, yeah, it's how we think that AI can bring value in this topic and that's why it's so important for us to deep dive. We'll make some tests. It's already it's worked, but yeah, to put it that scale. We need some more time.

Peter Jeun Ho Tsang: 29:32

You need more time. You need more data. I think you are in a chicken egg situation, where you do need more fashion brands to be on board with you guys, to be like, okay, we're going to give you all the data, because that's essentially how the AI is going to run. It needs to be able to understand what is out there, to process that information, to give the recommendations, and I think we are at the start. I think all of this conversation is currently we're still at the start of surface stock and ministry management. The Argec law. It's there, but, as you're saying, andrea, it could go a lot quicker from your perspective and I completely agree with that fashion and that's, assuming, the fastest industries when it comes to innovations, but it's still an exciting space. Do you think, then, the future of fashion is AI? Is it all about solutions like fines? Where do you think is going in terms of sustainability?

Jules-Adrien Néret: 30:23

I think fines is a success. It's a web model, but also hardware product will have big, big part on the role to play in the raw material, in the production, on demand and so on and so on. Previously, maybe a hundred will have something to say about this topic. But you say, yeah, we must have more and more company, it's true, but in general, the innovation, you can drive innovation just by being in and with the fashion brand and with the brand, with the private actors and also with the financial world. So, yeah, for green innovation we must be together, young, startup like us, with the role of innovator, but also with the user and people who have the information, the data, the knowledge about the product and hand in hand with the financial world who will help to leverage and to scale good product who have a good impact.

Andrea Herget: 31:43

So I think the future will be sustainability, but backed by tech. We already see, step by step, that this is happening. For example, with the second hand market, we see that now it became a norm that every brand has a second hand platform, what there are tech startups who doing that for brand so, or even within, comes to transparency and traceability. Also, text up, such as family made, etc. Make it happen to for the customer, but also for the brand to to be really following the, the KPI, sustainable KPI. So we already see, and this is just gonna grow, and with the AI I think things will even more accelerate, even in other topics which are not like design, etc. So, yeah, tech will be, will be part of fashion, because fashion is still in fashion, so it has to follow fashion is still in the ground, follow the fashion in the world.

Peter Jeun Ho Tsang: 32:48

So I finished off this episode with a quick fire round of questions. The first answer that comes into your head Are you ready?

Andrea Herget: 32:56

so that last comment that you donated that's so tough because I only donate every two years, I think.

Jules-Adrien Néret: 33:03

I need was 10 days ago, on 20 days ago. What is the basket? Or stickers, and the trouser?

Peter Jeun Ho Tsang: 33:11

I think, yeah, trouser those are the two products. Okay, two products. One brand, you think, is killing it with dealing with sustainability issues.

Andrea Herget: 33:19

So if we think about France, because we're Parisian startup, we could maybe say SMC P. We follow them since a long time and it was SMC P For our own sorry, it's the group which is Sandra Marsh, chloe Piallo, and the first time it's French premium group and they have been, as I was mentioning, implementing this kind of tech solutions already, like second hand platforms, traceability we fairly made communicating all their compositions to their customers. So in France, I would say it's a good example for sustainability and also innovation.

Peter Jeun Ho Tsang: 34:00

And then once that you would give to our listeners on the general public as to how they can be more sustainable by the consistent in the sorting on the on their waste, but you got them.

Andrea Herget: 34:12

Well, in the car, in a brand, but then also in your own home, being looking at your wardrobe and trying to compose a wardrobe that is mainly not only new products, but maybe you buy also products from the second hand market or try to rent part of your clothes and, if you don't like any, any clothes, your clothes anymore. Maybe try to do some different actions than you would usually just donate bags and bags of clothes, because, yeah, that is not necessarily the best solution we are. We already know that 80% of the clothes and up, unfortunately, in In Latvils. So, instead of doing these actions, maybe find a exchange clothes with friends or resell a part of it and, yeah, be maybe more creative than and that's the same for brands actually, how do you manage your stock of clothes? And try to find a diversity of solutions.

Jules-Adrien Néret: 35:15

My advice would be to just have a white black shirt and wear approximately every day to have the same style. The French lips.

Peter Jeun Ho Tsang: 35:24

You know, black, what we did today, and some chinos right at the Parisian, in you and everything about your fashion.

Andrea Herget: 35:34

I know that leave is, for example, is an innovative company and doing AI, proposing personalized looks based on your purchase history are proposing products that would be great fit for you. That will be very helpful for the consumer to take faster decisions.

Peter Jeun Ho Tsang: 35:52

Okay, so recommendations and personalization one head that you would give to entrepreneurs working in the sustainable fashion space. Are looking to work in the sustainable fashion space?

Andrea Herget: 36:03

Yeah, the tip would be because we went to this iteration. So before you actually decide to do iteration, you always have to make sure that To talk to the actors, as we mentioned before, talk to brands to make to create, get a confirmation, basically before you invest in creating, for example, attack product or any product. So try to get the confirmation before you do it more.

Peter Jeun Ho Tsang: 36:28

Markups, markup, and then they're pain of your life the last 12 months, those markups. Thank you very much for this episode and thank you, thank you very much, thank you very much.