Strandbags owner invests $8 million in luggage startup
In this article (5)
Direct-to-consumer luggage brand July has received $10.5 million from investors, including $8 million from Strandbags’ owner Michael Lewis, to take on luggage giant Samsonite.
The online retailer, which opened its first brick-and-mortar store in Melbourne Emporium in August, says it will use some of the capital to launch in Singapore by the end of the year. It also plans to launch in New Zealand in the next six months and further Asia Pacific markets in 2020.
“We’re not just opening stores [in these markets],” Athan Didaskalou, July’s co-founder, told Inside Retail. “We’re setting up warehousing and local teams.”
According to Didaskalou, Australian brands that operate in Asian markets remotely are “arrogant”.
“They think they can do everything from Australia,” he said. “It’s not just about [providing] local delivery and customer service, it’s about understanding the mindset of the country you’re in.”
The elephant in the room
The retailer, which currently offers three sizes of a hard-shell suitcase – carry-on, checked and ‘plus’ – is investing the rest of the capital into product development. Didaskalou declined to provide specific details about forthcoming products but said they would “shock” market leader Samsonite when released next March.
“Samsonite is known for being ‘strong and light’. We’ll be tackling them on that ground,” he said.
Didaskalou said the company is more focused on taking market share from Samsonite than competing with US-based direct-to-consumer rival Away, which entered the Australian market via a Sydney pop-up earlier this year.
“Everyone wants to either talk about Away or Horizn Studios,” he said, referring to a Berlin-based brand in the same vein as July and Away, which was valued at more than US$1.4 billion this year.
“We’re not just opening stores [in these markets],”
“The elephant in the room is the 90 percent market share-holder, which is Samsonite,” he said.
“They own something between 10 and 15 brands and absolutely dominate the market, especially in Asia Pacific. These are the people we’re going after.”
July has another trick up its sleeve. The brand has developed a new method of monogramming its suitcases using ultraviolet light, which will enable the retailer to offer new fonts and designs from artists and personalize products at scale. It currently takes about an hour to hand paint each design.
The new system will launch in three weeks, and Didaskalou anticipates being able to personalize every suitcase it sells in 2020.
Didaskalou said he and fellow July co-founder Richard Li, who also co-founded online furniture brand Brosa, have received “phenomenal” insights and advice on the luggage business from Felicity McGahan,
Strandbags’ managing director, and Lewis, its owner.
“I wouldn’t say it was a formal part of the deal for them to mentor us, it was more that they really know the space and wanted to help support [us],” he said.
Strandbags currently is undergoing a digital transformation, and July is providing the bricks-and-mortar retailer with feedback on how it could operate better online and what today’s customers want in terms of delivery and e-commerce, according to Didaskalou.
July is on track to reach $5 million in sales this year, its first full year in business, and working towards profitability. The company is in the process of opening new stores in Melbourne, Sydney and Singapore, and employs 24 people. It will continue to sell its products exclusively through its own channels.
Questions & Answers
Q.What is July's strategy for expanding into Asian Pacific markets beyond just opening new stores?
What is July's strategy for expanding into Asian Pacific markets beyond just opening new stores?
July plans to establish local warehousing and dedicated teams in new Asian Pacific markets. This approach aims to avoid the perceived 'arrogance' of Australian brands operating remotely, ensuring local delivery, customer service, and cultural understanding.
Q.Which company is July primarily focused on competing with in the luggage market?
Which company is July primarily focused on competing with in the luggage market?
July is primarily focused on taking market share from Samsonite, which holds a dominant position, particularly in the Asia Pacific region. The co-founder indicated they will tackle Samsonite on its reputation for being strong and light.
Q.How will July's new monogramming method benefit the company?
How will July's new monogramming method benefit the company?
The new UV light monogramming system will allow July to offer new fonts and designs from artists, personalising products at scale. This will significantly reduce the current hour-long hand-painting process per design.