The Rich, Devil & Others Too Wear Prada
Several e-commerce platforms selling pre-owned luxury goods have made Pradas and LVs of the world more affordable
Coco chanel had rightly said, “The best things in life are free. The second best are very, very expensive.” True as that is, when has pricey tags discouraged connoisseurs of luxury from aspiring for the good things. And now with a host of start-ups selling second-hand high-end goods, luxury is more affordable than ever before.
For Anandita Singh, co-founder of the e-commerce platform for pre-owned luxury brands, Envoged, the inspiration for the startup came easy. In love with designer goods, she would often exchange her 'clothes, shoes and bags' with friend Manisha Barnwal for other equally coveted brands. That’s when it struck the IIT Kharagpur graduates that this could be a great business — selling their used stuff. Anandita left her job at JP Morgan Chase and Manisha quit Bank of America to set up Envoged in April 2015.
“Starting from picking up the product, authenticating, sanitising, photographing and cataloguing it online, to delivering it to the buyer, we handle it all. Once a product is sold, the seller is credited the due amount (which is the listing price minus our commission),” says Singh, adding, “We have the biggest international luxury brands available at 60-90 per cent discounts.”
Recently, Envoged raised an undisclosed amount in seed funding from Nijhawan Group’s Ankush Nijhawan, Mediology Software director Manish Dhingra and AMG Investment’s Gaurav Bhatnagar.
The Many Players
In used luxury products, the biggest concern is quality and authenticty. Singh agrees. “It is our job to guarantee the quality, condition and authenticity of everything we sell. An in-house team of luxury brand experts takes care of that,” she says. The company charges a 20 per cent commission on the listing price of products for its services.
Another well-known e-commerce player in the segment is Delhi-based Luxurystation; it has more than 50 brands on its website, with a focus on those without a retail presence in India, such as Prada, YSL, MiuMiu, Alexander McQueen, Valentino, Tory Burch, etc. “Our efficient sourcing tie-ups have helped us to match the European retail prices,” says Kapila Gupta, chief executive of Luxurystation.com.
The site claims to be the only platform in India to offer new products, directly imported from the US and Europe; a celebrity closet in its true form; and it’s soon to launch bag spa service.
“We offer authenticity guarantee to the extent of two times the invoice price. We are also one of the recommended sellers of Authenticate First, one of the largest US-based multinationals to validate luxury products, which further strengthens our claim to authenticity,” says Gupta.
Bollywood celebrities such as Soha Ali Khan, Ameesha Patel, Sharmila Tagore and Sophie Choudhary have partnered with Luxurystation to offer their beloved luxury products for sale. Part of the proceeds from the sale would go to an identified charity.
Currently, Luxurystation.com has 5,000 registered users and over 300 buyers, with average 50 to 75 transactions a month. “We intend to invest $5 million over the next two years and the first million will come from us before seeking external funding,” says Gupta.
Last month, the third generation scion of the Birla family, Ananya Birla, launched CuroCarte — a global e-commerce platform that provides rare, handmade, high-end luxury products, curated currently from nine countries including India, Spain, Portugal, Vietnam, Thailand, Morocco and France. The portal is an eclectic mix of design, beauty and lifestyle with 1,500 products across 70 categories such as wall décor, crockery, jewellery boxes, etc. The initial investment for the venture is Rs 6 crore.
“CuroCarte will bring inaccessible, aesthetically appealing products from all around the world to Indians. We are trying to organise the unorganised market through technology,” says 22-year-old Ananya Birla, founder and CEO, CuroCarte.
The Growing Market
Co-founder of Luxepolis Vijay KG believes Indians wouldn’t mind buying pre-owned goods, if they carry a value that can be realised. The growing number of startups in the second-hand luxury goods’ market space such as Zapyle, Confidential Couture, and Spoyl, only prove his point. “The market is huge and largely under-penetrated,” says Vijay.
While the overall used-goods market is estimated to be worth $20 billion and growing at 15 per cent year on year, the used luxury goods market in India is worth a tenth of that, and growing at 25 per cent every year, he claims. “There’s a huge gap between aspirations and affordability and we aim to bridge it,” he says.
In the four months since starting up, he claims Luxepolis has sold goods worth Rs 11 crore; with 40 per cent of sales coming from tier II and III cities. With an average ticket size of Rs 38,000, the startup claims it sells 10-29 high value products a day.
“We are a cash positive, tightly run company; we have above 11,000 stock keeping units (SKUs),” says Vijay, refusing to divulge details of the funding it has received.
According to an Assocham-KPMG study, the Indian luxury market is expected to cross $18.3 billion by the end of 2016 from the current level of $14.7 billion, growing with a compound annual growth rate of about 25 per cent. Indians’ love for luxury items, even in tier II and tier III cities, along with high-disposable income shall lead to approximately 100 million transactions on the Internet alone by 2020.
The luxury consumption is going to increase manifold in the country. While segments such as luxury cars, home décor, watches, are still bought offline, fashion, lifestyle and personal care segments are becoming big categories in the online space.
Currently, the market for pre-owned luxury products is bigger in the online space, but as the supply increases with several new startups, the market for new products shall also increase significantly.
Luxury experts feel that luxury is still not associated with e-commerce, as the luxury buyer wants an experiential purchase. “It will take another six to eight years for e-commerce players to see the light,” says marketing guru Harish Bijoor.
In 1991, Yashodhara and Sanjay Shroff founded ffolio, a multi-designer luxury retail store in Bangalore, which was a success. Taking their two decades of experience in the luxury industry, they launched the online luxury store Styletag.com in 2013, with three other co-founders. “Within a year of the launch, we realised that luxury as an e-commerce platform is not sustainable, so we switched to affordable and premium items,” says Sanjay Shroff, CEO and co-founder Styletag.com.
“For Indians, holidays and gold are big investments. Luxury is still nascent, and on an e-commerce platform, it is difficult to scale,” says Shroff.
After the switch, Styletag.com has witnessed a drastic increase from 200-300 orders a month to 400-500 orders a day. Last November, it raised a funding of Rs 50 crore from Embassy Group, with which it aims to open more kiosks by the end of this year. This seed round is probably the biggest seed round ever invested in any startup in India.
This article was published in BW Businessworld issue dated 'Oct. 17, 2016' with cover story titled 'The Luxury Special 2016'
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