If you have a design in mind for a piece of jewellery, generative AI now lets you create a realistic rendering of it.

The start-up Arcade wants to take it a step further and let you buy a physical version.

The company launched its AI product creation platform in September with the promise to “turn your thoughts into things.” Customers are able to generate jewellery designs as if they were using an AI tool like Midjourney or Dall-E — except in this case they can choose different options for sizing and materials, such as sterling silver or 14k yellow gold, get a price for their item and actually have it made. Depending on the piece, it takes about two weeks, according to co-founder Mariam Naficy.

Naficy is a familiar name in entrepreneurial circles. She founded the early online cosmetics retailer Eve.com, which she sold in 2000, and then tapped into the burgeoning creator economy in 2007 with Minted, a design marketplace where users can buy items like holiday cards and art prints from independent makers. AI-generated products are her next big bet.

“Once I started seeing Midjourney and Dall-E images come out, I thought people are going to want to own those things,” she said.

She recruited her co-founder, Will Zhuk, from OpenAI to lead the technical side, and with her venture studio Heretic, they began creating products with AI and sending the images to manufacturers to see if they could produce faithful reproductions. They could, and Arcade was born. The company has raised $17 million from investors including Reid Hoffman and Brit Morin of Offline Ventures, Ashton Kutcher’s Sound Ventures, Karlie Kloss, Colin Kaepernick and others.

If Arcade’s premise sounds simple, making it work wasn’t. It shows both the potential in AI-generated products and how much labour is required behind the scenes to build an AI platform shoppers can use.

A strength of generative AI is that it can allow anyone to easily produce realistic imagery, for example, but that imagery might also defy the laws of reality. That’s not ideal if your aim is to create manufacturable products. Anyone who has played around with AI image generators also knows how difficult it can be to write prompts that yield the results you want. Shoppers, however, probably won’t spend a lot of time figuring out what to type in to create the clasp that attaches a charm to a chain (called a bail) and get it to look modern rather than like an antique.

Arcade had to train its AI — a mix of open-source models including Midjourney and Stable Diffusion — specifically to deal with these sorts of issues. When users type their ideas into Arcade, it also runs their text through a “prompt layer” that translates it into language that will yield the best output while blocking other outcomes. Arcade only wants the AI to generate images of jewellery, and doesn’t want it reproducing brand trademarks or sexually explicit content — some of the first things people tried to create, according to Naficy. Similarly, if a user uploads an image, Arcade will create AI-generated variations but not an exact recreation.

“The hardest part to build was the detection models that size the product,” Naficy said. “The volumetric model decides how big it is, how much it weighs and then applies pricing algorithms that we design.”

Those prices, which vary based on the design and materials, had to be negotiated with Arcade’s supply chain. Its supplier network consists of a dozen producers, ranging from individual artisans to small workshops, and spans locations from the US to India, with more producers to come. The platform uses an automatic routing mechanism to choose which supplier will make each item, based on the team’s ratings of who it deems best at that type of work. One might excel with enamel pieces; another could be a master with gems.

Each time a shopper places an order, the chosen supplier will get the AI-generated design and recreate it in physical form from the image alone. Users’ designs are available for others to buy as well, letting Arcade double as a marketplace where creators can earn a commission.

“From first impressions, I was like, ‘Oh my God, I’m in love with this platform,’” said Karine Hsu, founder of creative firm Slope Agency, who ended up spending a couple of hours on Arcade when it launched coming up with designs, including a pair of earrings based on celebrity hippo Moo Deng.

Hsu, a self-proclaimed jewellery lover who said she regularly plays with new AI tools, liked that she could generate jewellery with nothing more than a text prompt and that it would actually look nice. Though she ultimately didn’t buy anything, she said, because she was moving between cities and didn’t know where to have the items shipped. Her main criticism of Arcade was that, in her experience, prices were either around $150 for cheaper pieces or jumped straight to $500, with few options in between.

The generative-AI boom has spawned several companies trying to wrestle the technology into different types of user-friendly creative tools. A number of start-ups are using it to build design platforms for fashion, and Arcade isn’t the only one thinking about letting consumers turn AI designs into physical goods. The app Off/Script, which launched last year, allows users to mock up products from clothing to home decor. But they only go into production if they meet certain conditions: A design needs to collect 100 likes to be considered, and then the team assigns a sales price and order quantity. If the item then gets enough pre-orders, Off/Script will produce it.

Arcade wants to create a scenario where shoppers can see their AI designs and turn them into reality with a credit card and the click of a button.

“There’s something very shocking about that experience,” Naficy said. “I feel like it can be very addictive actually.”

The company is already thinking of how to expand. It’s branching into materials including platinum and lab-grown diamonds, and plans to launch engagement rings with diamond certification. It’s also working on upgraded features for customers and suppliers, like an editing tool so shoppers can tweak their designs. Eventually it could offer additional manufacturing techniques, too, like 3D printing.

Could the company one day apply the idea to fashion?

“I just really think that would be the very last thing we would do,” Naficy said. Producing one-off pieces of individually sized apparel isn’t easy or cost-effective.

Arcade chose to sell jewellery because it “would be more viral,” according to Naficy. People would go out wearing statement pieces they created themselves. “Also, you could bring it to life on TikTok and other social media platforms,” she added, “and critically, we thought Gen-Zers would be interested.”

Camille Weston’s breast augmentation carried a $7,000 price tag. Her insurance, of course, wouldn’t cover it.

But a lender happily would. So the 22-year-old Salt Lake City resident opened a credit line — interest free for six months — and went under the knife. The procedure could turbocharge her TikTok following and might help the social media agency she runs with her sister, too. She repaid the debt before a single cent of interest accrued.

Weston is part of a growing cohort eager to spend on ultra-pricey cosmetic work and willing to borrow to fund it. Procedures like tummy tucks and lip fillers are on the rise, helped along by scores of social media influencers flaunting their results. And the bills that go along with them are increasingly being financed by specialty lenders, attracted by unusually high credit scores and even higher price tags.

“You wouldn’t think that they would need to have this type of financing,” said Shawna Chrisman, founder of Destination Aesthetics Medical Spa in Sacramento, California. “These are responsible people with their money, but they’re using this as an option to ideally get packages and higher-service treatments that have a higher ticket price.”

A setup like that is a sort of siren call for Wall Street. Major procedures like liposuctions and buccal fat pad removal were both up 7 percent in 2023 from the year before, according to the American Society of Plastic Surgeons. Injections like Botox were up 9 percent in the same period, with over 25 million minimally invasive procedures performed. With price tags that easily run up to several thousand dollars, financing all of this represents a new, unusual opportunity to put money to work.

When bankers packaged $250 million of cosmetic procedure loans into a bond earlier this year, debt investors placed so many orders that the deal was upsized to $400 million. The riskiest slices of the bond were even made cheaper, a sign of ravenous investor demand.

Investors said they bought the bonds because of their exposure to a prime consumer who can afford to spend money for Botox, dental work and other procedures. Many require repeat use. Botox lasts three to four months. Fillers a bit longer. Chemical peels should be done every few weeks to years, depending on the type. This keeps consumers borrowing, but given the profile of the borrower, likely to repay. About half of the loans in the bond were taken out by borrowers with credit scores of 700 to 850, according to bond documents seen by Bloomberg.

All of the loans in the deal were issued by Cherry Technologies, a buy-now-pay-later company laser-focused on healthcare. Cherry breaks down treatment bills ranging from $200 to $10,000 into smaller instalments for customers and is one of several financing options available at clinics like Chrisman’s.

Big Loan Book

It was the first time Cherry assembled a loan book big enough to tap the broader financial markets after having done smaller, private financings in the past. The growth comes as prices for the procedures soar: The average price of a breast augmentation increased 13 percent from 2022 to 2023. Brazilian butt lifts went up 19 percent to $7,264 and facelifts 22% to $11,395.

With prices like that, it’s not a wonder a cosmetic lending boom is afoot. Consumers who can’t borrow to cover the costs, or choose not to, sometimes turn to more extreme methods of financing the procedures.

“I just wanted to feel better about myself,” said Bree Cruz, a 32-year-old stay-at-home mom from Temecula, California. She paid for a tummy tuck and breast augmentation in part by serving as a surrogate. “This gave me a lot more confidence. It just made me feel like myself again.”

Back at Chrisman’s clinic, a variety of financing options are available. Chrisman offers clients payment through Alle, a partnership between Cherry and Allergan, the maker of Botox. She also offers CareCredit, a health and wellness credit card by the financial firm Synchrony that can be used on cosmetic procedures.

CareCredit and competitors like Alphaeon give users low-to-no interest promotional periods they would not get from other cards. For the current 12 months, Chrisman clocked about $771,000 in sales using CareCredit — up from roughly $474,000 in the previous 12 months. Meanwhile, the average credit score for CareCredit users at her practice is 710.

There are concerns that financing cosmetic work incentivises consumers to spend on services they don’t need and also can’t afford. At the same time, research from the Federal Reserve Bank of New York found that buy now, pay later plans are disproportionately used by people with more fragile financial situations, including those with lower incomes, lower credit scores and those who have been recently rejected for credit applications.

Specialised Cards

After promotional periods end, annual percentage rates for specialised credit cards are higher than average. The most recent national average APR across all credit cards is 21.76 percent, according to data from the Federal Reserve Bank of St. Louis. CareCredit’s can be 32.99 percent. Alphaeon’s can reach 31.99 percent. This shouldn’t make a difference if users pay their balances off in full, but could sting if they fall behind.

Executives at CareCredit and Alphaeon say their underwriting systems help avoid lending to consumers who can’t afford to repay their loans. Cherry declined to comment.

Lisa Homsy didn’t finance her procedure, but still went to great lengths to get the best value for her money.

The 36-year-old content creator from Canada was quoted $14,000 for a breast augmentation domestically. Even in Mexico, the cost was $7,000.

Instead, she travelled to Turkey, where she got the surgery and a seven-night stay in a hotel for about $6,000. She found the clinic through TikTok and sent them a message via WhatsApp. To figure out which surgeon would do the procedure, they asked her to send a photo of her breasts.

“I was like ‘where are these photos going?’” Homsy said. “They were like, ‘Yeah we just want to connect you with the right doctor.’”

It all worked out, and she is pleased with the results.

By Charlie Wells, Carmen Arroyo and Claire Ballentine

US shippers are steering clear of East and Gulf Coast ports amid worries the 45,000 dockworkers at those trade hubs will go on strike again if their union leader does not land a new contract with employers by a Jan. 15 deadline.

The International Longshoremen’s Association labour union and the United States Maritime Alliance employer group had ended a three-day strike in October with a tentative agreement on wages, but left the thorny issue of port automation still to be resolved.

“Anything we expect that we need in the back half of January, we’re effectively diverting to the West Coast,” said Chris Peterson, CEO of Graco high chair and Crock-Pot cooker maker Newell Brands, referring to the period after the new contract negotiating deadline.

Peterson said the company switched a “couple of hundred containers” of critical materials to the opposite coast to get ahead of what he expects will be a second strike lasting, at most, two weeks.

The Oct. 3 deal between the ILA and USMX gave workers a wage hike of around 62 percent over six years and restarted work at 36 affected ports that handle about one-half of US ocean trade.

Remaining contract issues include automation, a key sticking point in negotiations as unions see it as a job-killer while companies view it as a path to better profit.

ILA union leader Harold Daggett wants employers to ditch automation projects that could threaten jobs, even though US ports risk falling behind key global rivals that are embracing technology.

While the union on Friday said it planned to return to the bargaining table next month, many shippers are skeptical that an agreement can be reached without again stopping work at key ports like New York and New Jersey, Houston and Savannah.

“I’m concerned that we could be right back where we were just a few weeks ago,” said Mike Steenhoek, executive director of the Soy Transportation Coalition.

Salvatore Stile, founder of New York-based freight forwarder Alba Wheels Up International, put the risk of a second strike at 60-70 percent and said his clients also are avoiding East Coast ports.

“The main issue has always been automation, not the money. I think it’s going to go hard core,” Stile said of union bargaining.

Atlanta-based Newell is again rerouting goods after arranging for hundreds of containers filled with items manufactured in Asia to arrive at West Coast ports instead of East Coast facilities in October.

Volumes at the dominant West Coast ports in Los Angeles and Long Beach touched new record highs this summer, when shippers like club store operator Costco and jeans seller Levi Strauss swapped coasts or moved extra goods prior to the original contract deadline on Sept. 30.

“I’ve not heard anybody saying that they’re going to have a quick shift back in allocations to the East and Gulf Coast based on the tentative agreement,” said Port of Los Angeles Executive

Director Gene Seroka, who added that October is shaping up to be another strong month.

Meanwhile, some strike-affected ports are still working to clear cargo ships that got stuck when work stopped.

Three weeks out from the end of the October strike, the total number of waiting container ships is 31 compared with 54 on the day after the strike ended, according to Mirko Woitzik, global director of intelligence for Everstream Analytics.

“Savannah and Houston are still pretty congested following the strike,” Woitzik said.

Retailers likely saved Christmas by rushing in goods early, said Matthew Shay, CEO of the National Retail Federation, which counts Walmart and Target - the biggest users of container shipping - among its members.

Still, the knock-on effects of the strike hurt communities across the country, Shay said. “We certainly don’t want to see that continue into the next year.”

By Lisa Baertlein, Doyinsola Oladipo and Jessica DiNapoli; Editing by Marguerita Choy

Learn more:

US Port Strike Comes to Temporary End

Dockworkers responsible for unloading shipments on the East and Gulf Coast ports decided to resume wage negotiations suspend their strike until Jan. 19, one day after it commenced.

Next Plc raised its profit guidance for the third time this fiscal year on strong sales, even as British consumer confidence weakens ahead of expected tax rises in Wednesday’s budget.

The British fashion and homewares company said that its annual pretax profit is now expected to top £1 billion ($1.3 billion) for the first time, up from previous guidance of £995 million. Next had already raised its outlook in August from £980 million.

Full price sales rose almost 8 percent in the third quarter compared with the previous year, helped by the early arrival of cold weather which encouraged shoppers to stock up on winter clothing, the company said.

Next shares rose 2.8 percent in early trading in London. The stock is up more than 50 percent in the past 12 months.

The improved outlook appears to be “driven by a combination of buoyant international expansion and good domestic traction,” James Grzinic, equity analyst at Jefferies, wrote in a note to clients. Next previously said its overseas business, where it sells clothes online in Europe, parts of the Middle East and Asia Pacific, helped offset some summer weakness in the UK.

“The online channel is likely to remain the main growth driver,” wrote Aarin Chiekrie, equity analyst at Hargreaves Lansdown, in a note. “It already brings in more than half of the group’s sales, and expansion overseas is still in its infancy.”

However, he added that given the potential size of the overseas markets where Next is gaining traction “there’s a big opportunity if Next can execute its expansion plans well.”

Next’s performance stands in contrast to the rest of the sector, with fashion retailers contending with weaker spending. Last month Associated British Foods Plc, which owns discount fashion retailer Primark, blamed unseasonable weather for a decline in footfall and softer volumes in the second half.

The results come just hours ahead of what could be one of the UK’s biggest-ever tax raising budget announcements. Rachel Reeves, chancellor of the Exchequer, is expected to raise about £35 billion a year in tax and welfare savings by the final year of the parliament, and propose another inflation-busting minimum wage increase.

Next’s Chief Executive Officer Simon Wolfson has previously warned that higher wages may result in store closures.

By Jennifer Creery

Learn more:

Next Loses Equal Pay Claim Against Mostly Female Retail Workers

An employment tribunal has ruled that British retailer Next Plc must pay over £30 million in back pay to 3,540 current and former in-store sales workers, predominantly women, who were found to be underpaid compared to their male warehouse counterparts.

H&M- and Vargas-backed polyester recycler Syre is aiming to bring its first commercial production plant online by the middle of next year.

The company launched earlier this year with high-powered backers and has already raised $160 million. It has laid out plans for an ambitious sprint to scale from pilot to industrial production of its textile-to-textile recycling technology within the next decade.

On Wednesday it announced plans to partner with polyester producer Selenis to expand an existing plant in North Carolina. With the addition of Syre’s recycling operations, the facility will be capable of producing 10,000 tonnes of recycled polyester by mid-2025.

”This is truly an important milestone on our journey to drive the great textile shift,” Syre CEO Dennis Nobelius said in a statement. The company is aiming to rapidly expand beyond this “blueprint plant” with ambitions to build 12 industrial facilities capable of producing more than 3 million tonnes globally by 2034.

Syre is racing to scale in a challenging market. The company launched shortly after Renewcell (another H&M-backed venture) went bankrupt, highlighting the technical and commercial hurdles that still face efforts to industrialise textile-to-textile recycling innovations. Renewcell was acquired out of administration in June and rebranded as Circulose.

The failure spurred a push to forge broader partnerships that could support innovators attempting to scale, which many see as critical to meeting the fashion industry’s sustainability goals. Syre launched with a $600 million take-or-pay contract from H&M.

Meanwhile, the company’s plans for a new plant are one of a flurry of new partnerships announced by recycling start-ups this week: Indian conglomerate Aditya Birla Group committed to buy up 5,000 tonnes of raw material from textile-to-textile recycler Circ; outerwear brand Arc’teryx partnered with LA-based recycler Ambercycle to start using its material from 2026; and Paris-based recycler Reju announced plans to team up with Goodwill and waste management company WM to develop infrastructure for textile collection, sorting, reuse and recycling in the US.

Learn more:

H&M-Backed Textile Recycler Syre Raises $100 Million

The joint venture formed by the fashion giant and green industry investor Vargas in March aims to start building two commercial facilities by 2025.

Prada Group continues to defy luxury’s downturn, reporting nine-month net revenues up 18 percent year-on-year.

Growth was powered by Miu Miu, whose wonky yet wearable wardrobe wrapped in a message of empowered girlishness for all ages fuelled retail sales that more than doubled in the third quarter, rising 105 percent year-on-year. The eye-popping expansion is all the more impressive as it comes on top of 58 percent growth last year.

Prada’s retail sales slowed compared to the first half of the year, but remained in positive territory. Third-quarter retail sales rose 2 percent year-on-year.

The group’s emphasis on innovative products and marketing activities that maintain its cultural clout has helped the group to continue to outperform rivals in a slowing luxury market, which has seen sales sputter for even the industry’s biggest and most powerful players. LVMH reported fashion sales down 5 percent in the third quarter; Gucci owner Kering’s revenues plunged 15 percent.

Prada, Hermès and Brunello Cucinelli are the only brands to have reported rising sales this quarter.

Stay tuned to BoF for updates on this developing story.