ONCE CONFINED TO LOCAL HIGH STREETS, THE PRE-LOVED LUXURY GOODS MARKET HAS EXPANDED TO A GLOBAL STAGE, THANKS TO E-COMMERCE KNOW-HOW AND THE RIGHT PARTNERS.
Designer bags are so often worn a few times and now sit at the bottom of a wardrobe, seen a few times in public or possibly never at all. What if we told you of a company that can make great use of it? Meet The Luxury Closet.
So where do luxury goods go to get another lease of life? “People have closets full of stuff that they don’t know what to do with,” Kunal Kapoor, head of pre-loved designer fashion business The Luxury Closet told us from his office in Dubai.
“They want to be able to sell this off just to get more space and find something else.”
Classic design is one reason why the luxury second-hand Small to Medium Enterprise (SME) market is growing so fast. According to the Thred-Up report for 2017, resale fashion is now worth US$18bn and a third of women say they are happy to buy pre-owned apparel.
Fashion is only one area for The Luxury Closet. The biggest sellers are from the accessories category: “If you look at the handbag range, a vast majority has stayed the same for many, many years. The Louis Vuitton Speedy was first designed in 1940 for Audrey Hepburn. There was one small change in the shape and since then it has stayed exactly the same for many decades. That’s what makes the model work.”
Kunal set up the new business in 2012 in Dubai after a chance phone conversation with a friend. “Why can you buy a used BMW at 50% off but why can’t you buy a Louis Vuitton at 50% off? Why can you sell a car and why can’t you sell a bag?”
Originally from India, Kunal learned the basics in his family’s footwear company before business school and a spell with Louis Vuitton led him to launch his first registered company. “The core of the model is having the expertise. The biggest challenge is to work out how to get from one brand to multiple brands – and then multiple categories. In the beginning, you would get a new bag and you’d have to spend hours on research. Then we started to get in the talent and the business accelerated. We had someone who worked with Dior, Gucci, then someone who had been in the watch industry – then jewelry. Today, we have about 18,000 products online and another three and a half to four thousand more every month.”
The move from ambitious startup to thriving SME requires a change of thinking though, which was front of mind for Kunal in his planning. “When the company becomes larger, there’s a lot of process to manage. The most basic is a team rhythm so we have a weekly, closed-door meeting – the entire top management and the advisor team inside a room for a few hours every week. We schedule an hour but it can be five minutes: "Everything’s good, everything’s on track – let’s go."
So, how does a growing business acquire the skills required to progress? Kunal’s answer was surprising: “YouTube. We gather people in meetings and we go over topics and almost always there is a resource from YouTube. You want to look inside a competitor’s warehouse? YouTube. You want to learn how to do photography? There’s a Farfetch review. There are lots of resources there."
Kunal admits that not everything can be learned online: "Sometimes, you just have to throw yourself into it. The best way to learn to be a general manager is to be a general manager … I don’t think I have ever headed into a week not knowing the three must-dos for the week – or for the day – or gone to sleep not knowing my calendar for the next day – or the week.”
Kunal also has some sound advice, based on experience learned the hard way, about setting up for the future. “For every single key role, try to hire for a few years down the line – you see how fast people will grow. For every process, and technology as well, when you’re building it, think a year, two years down the line – think of the scale. “We started with a Wordpress website we kind of relied on and it was completely not scalable. Everything we had done from 2013 to 2015, we threw away and started again."
So, having built The Luxury Closet into a multi-million dollar business in a little over five years, what advice would he give to others starting on the road to launching their own SME? “A critical mistake is starting a model where there is a small market. Dubai has become a very exciting place to start a company – with the eco-system for small businesses to start and grow. Dubai has the highest per capita spend on luxury items in the world. People buy higher-end things, so they’re more special, and they buy more things on average so need to have a bigger wardrobe. The other two markets are the United States and Saudi Arabia.”
To reach international audiences, Kunal has partnered with DHL, as a strong and reliable distribution network is key to any international SME’s expansion. “In e-commerce business it’s very important that you do something when you said you will. The customer is far away. What is most important is you turn up on time. DHL have very professional on-boarding. They very actively manage their client and try to resolve any problems." And a final word for those thinking of starting their own business? “I think I underestimated how hard it is. There’s at least double the complexity, double the effort. But it’s a great journey.”