The Luxury Closet wants to open its doors in Saudi Arabia and India – and the Dubai-based e-commerce company is embarking on a US$10 million funding round to make it happen.
The website, launched by the entrepreneur Kunal Kapoor, specialises in selling used fashion items at knock-down prices. It has already raised $4 million, including funds from Wamda Capital, the venture capital firm led by Aramex founder Fadi Ghandour.
The Luxury Closet, which was founded in 2011, is now embarking on another round of fundraising as it looks to expand regionally.
“This round should take us from a UAE-centric company to a regional company,” said Mr Kapoor.
He added that the company is looking to raise “$10m-plus” over the next six months.
“The funding will allow us to expand the business in Saudi Arabia, Kuwait, Qatar, Bahrain [and] India,” he said. “We will have a physical presence in Saudi Arabia and India. Turkey is also on our map, but we don’t have a timeline for it.”
The Luxury Closet, which made its first sale in January 2012, now has about 40 staff members, and claims “double digit” monthly growth, and more than 150,000 members.
“Currently we’re a company which only has a physical office in the UAE. And most of our sales are also in the UAE. So we’re a very UAE-centric company,” said Mr Kapoor. “But three years down the line, we want to be a company which has a physical presence in the UAE, Saudi … and India.”
The Luxury Closet allows people to sell their branded designer goods, which the company collects and sells via the website, taking a commission of 20 to 35 per cent, depending on the item and price range.
It can ship goods worldwide, but says about 60 per cent of orders are delivered to customers in the UAE. About 80 per cent of the goods it sells come from individuals, with the rest from professional sellers.
“There are around 2,000 items coming in every month … And these are items that we pick up physically, we bring in-house, verify, and we post it online,” said Mr Kapoor.
The company last year secured $2.2m in series A funding, with investors including Abu Dhabi’s twofour54, Dubai Silicon Oasis Authority, Middle East Venture Partners and Mena Venture Investments.
An additional $1m in funding, from Wamda Capital, was announced in December – and Mr Kapoor said he expects the venture capital firm to be part of the upcoming round of investment.
“They’ve come in and identified us as one of the companies that they feel will scale. And they’ve invested a portion of what they want to invest in the upcoming round,” he said. “We’re in talks with other regional funds and some international ones.”
Mr Ghandour, who is executive chairman of Wamda Capital, said the firm expects to make a further investment in The Luxury Closet of between $3m and $4m, depending on which other investors come in.
“They fit right into what we do,” Mr Ghandour told The National. “We came in at a million because we had the opportunity, and we wanted to book our presence in the company so that we go into the [next investment] round … This is the strategy of Wamda Capital. We come in with $1m to $2m, and then we follow on with up to $5m.”
Mr Ghandour said part of the appeal of the investment was the “specialised” service offered by The Luxury Closet.
“They do the warehousing, they do the verification process. So it’s not just a listing process. There is much more to it than that,” he said.
According to the consultancy Bain & Company, Dubai is the world’s 20th top city for luxury goods sales, with the market worth €3 billion (Dh11.97bn) in 2015.
Globally, the personal luxury goods market grew to be worth more than €250bn last year, according to Bain data.
Tags: Abu dhabi | Ajman | Dubai | Fujairah | Middle East | Ras Al Khaimah | Sharjah | Technology | UAE