Catching Up

How The 2009 Financial Crisis Was A Blessing In Disguise For This Now Multi-Million Company

If you say money can’t buy happiness, then clearly you don’t know where to shop.

Have you ever strolled down New York’s Fifth Avenue, or Rodeo Drive in the heart of Beverly Hills?

Step into one of the glass-walled designer boutiques and you’ll find yourself surrounded by all sorts of expensive leather goods.

And once you walk out of the shop with your new purchase cradled in a crisp paper bag, don’t say that you don’t feel like you’re on cloud nine, because I know that’s a lie.

Sure, some might retort – what’s the point of shelling out a few thousands for a luxury good if you end up with an empty wallet and have nothing else to show for it?

Well, you’d be happy to know that you don’t necessarily have to break your bank to own a designer item anymore.

Making Luxury Accessible For All

Meet Reebonz (pronounced ‘ribbons’), an e-commerce platform that boasts a community of independent multi-brand boutiques, pre-owned luxury merchants, and vintage dealers from all over the world.

Samuel Lim, co-founder and CEO of Reebonz, further describes it as a “one-stop luxury ecosystem that allows customers to buy and sell luxury products through various channels catered to their needs.”

Screenshot of Reebonz homepage

And you’d be surprised to know that three Singaporean men are the brains behind this venture.

Reebonz is co-founded by Benjamin Han (33), and the Lim brothers – Samuel (38) and Daniel (33). Both Benjamin and Daniel were friends since their army days before they became business partners.

So what prompted these guys to dive into a woman’s world of luxury handbags?

It was not started by in-depth research, but rather by our observation of consumers’ shopping behaviours in outlet malls in Europe and the United States. We saw how online luxury shopping was evolving [and] there was a clear gap in market demand to target the rising middle class market in Asia.

Moreover, Reebonz was established in 2009 when e-commerce was just taking off in Asia so there were no clear market leader yet.

That year was also during the global financial crisis, when many brands and companies were dealing with overstock.

They had to turn to new avenues to liquidate their inventory, so the trio figured that this would serve as a very opportune time for them to make a move into the luxury e-commerce space.

As a pioneer in the industry, Reebonz have worked hard to carve out a niche for themselves and evolve over the years to continue to stay ahead of the pack.

It was built on the idea of making luxury accessible, and that vision continues to drive its business growth today.

Gaining Consumers’ Trust And Confidence

Starting out was a challenge for them because there was a clear distrust among consumers in the authenticity of luxury goods sold online.

The idea of purchasing big-ticket items on the Internet was simply disconcerting because it lacked the tactile element.

People were unwilling to readily trust a new startup and shell out good money for a luxury bag that you cannot even touch and inspect before purchase.

Reebonz then recognised the need to step up to the plate and establish themselves as a trusted online e-tailer.

They also needed to reflect the personal touch and exclusivity of shopping at a physical boutique to the online shopping experience.

Reebonz delivery / Image Credit: Reebonz Malaysia

“What helped immensely was to provide a great customer experience — quick responses to enquiries, exquisite packaging, and reliable delivery,” said Daniel Lim, Chief Product Officer of Reebonz, in a separate interview with High Net Worth.

“By being very focused on our target market and having a clear value proposition, we were fortunate to have a group of early adopters who became our brand promoters.”

In order to build customer confidence and trust, Reebonz today have an internationally-trained team of ateliers that authenticate not just bags, but also shoes, accessories, small leather goods, apparel, jewelry, and timepieces.

Reebonz atelier / Image Credit: Reebonz

On average, a Reebonz atelier can go through some 50 branded items daily, while the more senior and experienced ones can authenticate up to 100 in a day.

Private viewings are also available for items retailing above $3,000 – this is an effort to replicate the experience one would typically expect from a traditional luxury house.

But here’s the million-dollar question that’s been weighing on everyone’s minds: if it’s really authentic, then why are their prices much lower compared to retail price, with markdowns as high as 80 per cent?

Samuel explained that their merchandise are sourced from various authorised distributors across different territories.

“As our business is focused primarily on the online retail channel, we incur lower overheads associated with running multiple physical stores. These cost savings are presented to customers through our affordable pricing.”

Nurturing A Bankable Idea

Image Credit: Reebonz

Despite the initial trust issue, when the firm ran their first flash sale in 2009, their merchandise sold out within minutes. That’s when they knew that they had a “bankable idea” even though they had no expertise in online luxury or e-commerce.

“In view that we were very new to the business, a lot of experiments and iterations had to be done to thoroughly understand the market and the needs of our customers,” said Samuel.

“The advantage of not being retailers was that we were able to approach building the brand Reebonz with new pair of eyes. Progressively, we moved on to being innovative in creating new concepts like pop-up stores, online instalment payment plans, packaging aesthetics and many other strategies.”

A lot of effort goes into enhancing their customer touch points, from the flash sales to product delivery, so as to ensure a seamless shopping experience.

For instance, all orders are delivered within just three working days so as to alleviate the hassle of a drawn-out wait.

And to bridge the gap of the lack of touch element in the online sphere, the team launched Reebonz SPACE to let customers see and feel the luxury products.

Image Credit: Chocolate Cats

According to Daniel, both physical and online retail must co-exist to form an omni-channel strategy, and to satisfy differing consumption preferences.

Ultimately, this space serves as a way for them to create a seamless brand experience with the online, office and mobile channels.

Evolving From B2C To C2C

Ultimately, Benjamin, General Manager of Reebonz, said that it is important for a company to “be agile” and “adapt quickly to environmental changes”.

This includes knowing your target audience and the landscape you’re playing in, so you can evolve accordingly as they change.

Reebonz actually started out as a B2C (business-to-consumer) retailer.

Its core business models include Reebonz.com, which allows customers to purchase new and pre-owned luxury; as well as Merchant Boutiques – housed within the site – to connect customers to reputable fashion boutiques from around the world.

The latter platform gives access to curated luxury collections so customers can shop rare and limited edition products from coveted brands like Hermés and Chanel.

It also opens up another avenue for consumers to access luxury, either via lower price points, or in vintage models and styles that are otherwise hard to access.

Reebonz Closets app

In 2015, Reebonz launched three C2C (consumer-to-consumer) platforms to accommodate to consumers’ needs.

It first rolled out Closets, a standalone app for individuals to buy and sell pre-owned luxury goods directly to one another. It works pretty much like Carousell (though Daniel claimed that they took inspiration from Instagram), where sellers simply snap photos of their products, upload it on the platform, and then get paid when it’s sold.

The app was very well-received, with over 10,000 transactions completed within its first year of business.

To complement the selling process, Reebonz introduced White Glove, a premium end-to-end service that takes care of everything for customers, from pickup to professional photography, and delivery to end buyers.

Last quarter, it also launched the Sell-back programme, which allows customers to trade in their past Reebonz purchase(s) for credits to offset their future purchases.

“We are focused on iterating and rapidly experimenting our existing product platforms and services to evolve and improve the customer experience,” said Samuel.

“Our strategy is the shared vision of making luxury accessible whenever and wherever customers may be in their luxury consumption journey.”

Continually Growing To Greater Heights

Reebonz has come a very long way.

From a small pioneering team of around 20 people, it has grown to over 300 staff today.

It also has expanded into eight countries within the region, with offices in Singapore, Malaysia, Thailand, Indonesia, Australia, Taiwan, Hong Kong, South Korea and China.

For the past eight years, Reebonz has recorded some impressive numbers for itself. Its membership has grown from 50,000 members in 2009 to 4.5 million in 2015, with orders multiplying by 300% (from 3,885 to 135,000) during that period.

A small fraction of Reebonz’s inventory / Image Credit: Reebonz

Its inventory has also increased, and as of last year, they carry approximately 800 designer brands.

When asked about sales figures, the co-founders refused to disclose any numbers, but let on that its revenue has been growing year on year, while its marketplaces are growing at double-digit rates quarter on quarter.

In fact, Reebonz was touted as the largest online luxury sales company in Southeast Asia in 2014 with an annual turnover of over $120 million globally.

Earlier this year, it also launched an eight-storey e-commerce hub in Tampines worth $40 million.

This 200,000 square feet facility houses more than just an office and showroom, as it also doubles up as an incubator and working space for local designers.

Reebonz’s new e-commerce hub / Image Credit: Reebonz

This new building is four times larger compared to Reebonz’s previous office and distribution centre. In terms of capacity, it can stock over 500,000 types of products, which is more than 11 times the previous capacity of 45,000.

Essentially, this e-commerce hub will enhance Reebonz’s global outreach by significantly improving the company’s capabilities in dispatching goods to its customers, regardless of where they are in the world.

Beyond that, Daniel said that he is considering lending workspace and mentorship to budding retail entrepreneurs within the building.

“The incubation hub opens up exciting opportunities for local designers to transform their skills and tap on readily available platforms to scale their businesses regionally. A section dedicated to Asian Fashion Designers on Reebonz will be their gateway to build awareness and reach the growing e-commerce market in the region.”

By tapping into our database of more than 5 million members, local designers can leverage on our site to showcase their products and gain traction to scale up and enter new markets through our international e-commerce infrastructure and expertise.

Moving forward, Samuel shared that Reebonz will continue to expand its market share in South East Asia and also invest in markets like North America, China and South Korea.

He reasoned that they see the potential in these markets – not just for new products, but also for pre-owned luxury products.

And when asked to share a business advice to impart to fellow entrepreneurs, Samuel said that he believes in the mantra that only the paranoid survives.

“We should constantly seek to improve the way the business is run by inculcating an entrepreneurial mindset. Retailers have to continually innovate, or risk losing their customers. As such, we will continue to scale our marketplaces and build a community of sellers in our luxury ecosystem.”

Also understand that being an entrepreneur is not about instant rewards. You have to look for long-term success instead – find mentors, keep doing what you do till you’re good at it, and stay curious.

Featured Image Credit: Reebonz

 

 

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