Balancing the digital, human experience
Despite hard times in the fashion business, Grana - a two-year-old online fashion brand based in Hong Kong - beat the odds by outperforming its peers with a five-fold growth in 2016, which was seen as one of the toughest years on record for the industry.
The sector's sales performance last year was sluggish, seeing a mere two to three-percent growth with stagnating profit margins, according to a joint report by consulting firm McKinsey and industry news website Business of Fashion.
Luke Grana, chief executive officer and founder of the eponymous brand, however, has projected 300-percent growth for his business this year.
A trip to Peru, where Grana stumbled upon a soft fabric called Peruvian Pima cotton, spurred his idea of creating a brand selling wardrobe basics using quality materials.
"Essentially, a love for quality fabrics prompted me to found Grana," says the 33-year-old entrepreneur.
Although not a fan of faddish trends or textile waste in the fast fashion industry himself, Grana hopes to sell only the essentials at sensible prices. The brand cut out the middlemen in the supply chain, selling online directly to customers and keeping mark-up two to three times, he explains.
During a beta launch in April 2014, some 2,000 Peruvian Pima tees were sold out within three weeks on the platform and shipped to eight markets around the world, mainly through friends, family and word-of-mouth.
Unlike most pure-play online retailers that only connect with their customers on the internet over a screen, the brand invites customers to physically feel the fabrics that Grana is passionate about at its brick-and-mortar stores in multiple locations, and then buy the products online.
With a showroom dubbed The Fitting Room and a pop-up store in Hong Kong's vibrant commercial districts, Grana says the brand's offline presence has helped convert more browsers into paying customers on the online platform.
About 10 percent of Grana's sales come from its offline showrooms, Grana tells China Daily.
"From a business perspective, it enables us to have a two-way profit opportunity that accommodates the new generation of consumers who prefer both an online and offline retail experience," says Grana, stressing the importance of balancing the digital and human experience.
The fashion e-commerce site is not Grana's first attempt at entrepreneurship. The Australian serial entrepreneur opened his first espresso bar in Sydney at 21 during his final year at university. He subsequently opened two more and sold them at a profit.
At the age of 24, he started a company operating electric-vehicle charging stations that was later acquired by Leighton, an Australian construction company. In October 2014, Grana launched his fashion brand in Hong Kong with a $200,000 outlay.
"I bought a one-way ticket and moved to Hong Kong in late 2014 to start a new life, got connected and met up with seed investors to get Grana off the ground," he recalls.
Citing Hong Kong's position as a tax-free port, world-class logistics and air cargo hub, and the headquarters of major sourcing companies, Grana was convinced the city would make an ideal location as a warehouse and base, with help from Invest Hong Kong - the SAR government's investment promotion agency - in connecting the dots for the company.
Hong Kong's proximity to the Chinese mainland has also enabled Grana's team to make regular visits to its garment manufacturers there.
"Hong Kong should be recognized as a market that can help drive the growth of the e-commerce market in Asia and worldwide," says Grana.
Hong Kong is also where Grana got funded. He secured $10 million in its series A round of funding last year from Alibaba's Hong Kong Entrepreneurs Fund.
With the goal of penetrating the mainland market this year, Grana hopes to use the e-commerce giant's local insights, and expects a soft launch on Tmall - Alibaba's business-to-consumer platform - in the third quarter of this year.
The mainland's e-commerce market is set to grow by 15 per cent to $1.42 trillion by 2020, according to a recent report by international payment company Worldpay.
Apart from online expansion to the mainland, Grana plans to strengthen its offline presence there and abroad by opening showrooms in Shanghai in July and New York City in May this year.
The website will also handle eight new markets, including the Chinese mainland and Japan, by the end of 2017, according to Grana.
As the company continues to scale new heights, managing inventory and communicating with new customers are the biggest challenges ahead, says Grana.
"As we aim to take on new markets, inventory levels have been uppermost in our minds to ensure that we meet customer demand."
"We're also making sure that we tailor our messages to each market appropriately to meet customers' expectations and create a positive shopping experience with us."