How Hong Kong start-up Grana secured $16 million in seed funding in 2 years.
Launched in 2014, the core idea of Grana is to offer luxury clothes made from premium fabrics which are sold at a affordable price. The company announced in October 2016 that it has secured US$10 million in Series A funding led by Alibaba’s entrepreneurship fund. But beyond that, Grana’s success as an e-commerce fashion platforms is still a mystery to many.
With several successful businesses under his belt, Luke moved to Hong Kong in September 2013. According to the young serial entrepreneur, Luke was determined to make Grana work after looking at different business models with US$200k in savings. “I looked at different business models in the market and realised the retail sector is growing. I worked at French Connection and Zara to learn about clothes and realised the price point is important. I also read about ASOS’ logistic; they ship to 240 markets with one warehouse in U.K,” explains Luke. It was at this point the concept was born.
In February 2014 a beta test was launched where 2000 t-shirts from Peru sold out in 3 weeks which was concrete evidence for investors that Grana would work. “ When we launched, we had 1,500 people on our waiting list. We didn’t do anything special and there was no PR involved; it was just leveraging off our own networks to prove the business,” he says. A combination of persistency and a proven business model was the key to succeeding US$1 million of seed funding by October 2014.
Deciding the best city to headquarter Grana was an easy decision for Luke. Not London, not Paris but the world’s largest air cargo hub, Hong Kong. With no tariffs on imported or exported goods and fabrics mills with head offices here, it’s the perfect place to start up a fashion company. By cutting out the middleman and distributing cost and working directly with sources and logistic providers has enabled Grana to keep their price point low. All of Grana’s clothes are produced in their 18,000 sq ft warehouse in the Wong Chuk Hang district and shipped directly to the consumer.
In Hong Kong, the retail industry is a cut-throat business but Grana’s sales growth increases 20% every month. Luke further discusses the strategies that has contributed to the brand’s success:
We focus on building a great working environment for the team. We make sure everyone understands our vision and goals, without a team, it’s very hard for us to grow.
2. Product Quality
If we sell clothes at low quality, no-one will buy.
We listen to what our customer wan.
4. Brand experience
Every single way a consumer interacts with the brand, we want to make sure it’s special. The whole experience is really important; whether it’s their first encounter on the website or simply the gift wrapping.
We’re a data-driven company; we build marketing strategies based on the data and by listening to our customer.
At the beginning, it was all about being an e-commerce brand but the decision to launch a permanent physical store came after the success of their pop-up stores. The store in Sheung Wan, known as The Fitting Room launched in 2015 allows shoppers to try clothes on for size before purchasing online.
“Our pop-up shop created a lot of awareness, it allowed consumers to interact with the brand to get the fit right. One of our best days was through our pop-up shop and we realised having an offline presence is important.”
With plans in 2017 to open 3 full-time Fitting Rooms in key cities like New York and Shanghai, it’s an exciting time for Grana.
*Interview has been transcribed from Luke Grana’s presentation at Retail’s Cutting Edge, Start Me Up.