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Online fashion retailer Zozo simplifies measurement process

Disappointing Q2 earnings leave investors wary of private brand venture

Zozo CEO Yusaku Maezawa says his company now has sufficient data on body measurements in Japan to simplify the process.  (Photo by Ken Kobayashi)

TOKYO -- Japanese online fashion retailer Zozo has altered its service to allow it to take down the unique size of individual customers from just a few basic questions, founder Yusaku Maezawa said during Wednesday's quarterly meeting with analysts.

This year, the company formerly known as Start Today launched the "Zozosuit" -- a tight-fitting bodysuit covered with dots that is worn by customers. A picture of the customer wearing the suit is taken in the Zozo app, which reads their measurements based on the position of the dots. Zozo's private label brand offers clothes that are made to fit individuals based on these measurements.

According to Maezawa, the company has now collected sufficient data from customers using the Zozosuit in Japan to deduce measurements using machine learning. It already offers T-shirts and jeans from the private label without the need for a Zozosuit. To order the items, customers need only enter the answers to basic questions on the website such as their height, weight and age.

In the future, other items would also not require the use of a Zozosuit, Maezawa said. Outside of Japan however, customers will still need to use a Zozosuit to purchase any of Zozo's private items because the company needs to collect more data on different body types.

While Zozo continues to launch new products and technologies to woo new customers, its earnings report for the second quarter between April and September showed that not everything is going as planned.

Using the dotted bodysuit and a smartphone app, Zozo customers can take 3D images of their bodies with measurements from their neck to their ankles. (Courtesy of Zozo) 

Its operating profit was 10 billion yen ($88.3 million), a drop of 27.3% from the previous year. Neither gross merchandise value nor profit met their targets due to disappointing performances by the private label and other services such as advertising. The annual target of 40 billion yen in operating profit remains unchanged.

At one point on Tuesday Zozo's share price reached a low for this year of 2,481 yen, amid investor wariness. Costs associated with the development and promotion of the private brand have been high, and deliveries of the private label business suit it launched in July have been delayed due to production difficulties.

Zozo was previously aiming to deliver up to 10 million Zozosuits to customers for free, to ramp up private label sales. With the new measuring process, Maezawa changed the target to 3 million, saying this will result in cost savings of billions of yen.

Regarding production of the business suit, Maezawa assured analysts that delays would be resolved within this year. He said that production of the private brand, which was created as an attempt to produce made-to-order clothes quickly through the use of technology, was a "challenge because nobody has done it before."

Maezawa also said the company had "various plans" to push up the sales of Zozotown, its core online mall business.

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