This Lebanese startup is reinventing secondhand retail

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August 25 was the Secondhand Wardrobe Day and there is a reason to celebrate it. Trashion, bale retail, or secondhand businesses are not new concepts. The trade of secondhand clothing has been a major source for clothing retail for ages, and the global secondhand garment trade is valued at $4.3 billion.

FabricAID is a newborn Lebanese startup that buys used clothes items from NGOs, and resells it to underprivileged clients at decent prices. The concept was launched in December 2016, by Hussam Hanouni, Lynn Abi Aad, and Omar Itani.

“The idea came to my mind around Christmas. I didn't want to donate clothes through an organization because I wanted to see the impact of the donation I am making,” Itani told Wamda.

FabricAID was born last December (Image via FabricAID Facebook)

Using Facebook posts and WhatsApp broadcast messages to spread the word, the team collected 200 kg of clothes in just one week. Some of these items were distributed to underprivileged families, but the lack of a proper database held the team back from reaching out to a bigger number of recipients.  

Outside of the ‘box’

After consulting with charity organizations that operate in the same area, such as Arcenciel, Caritas, and Ibad el Rahman Association, they understood how things run. Most NGOs have a box, where people [mainly from middle and upper social classes] put their unwanted clothes in, and those in need pick items from it.

However, this channel is geographically limited according to Itani, as those who live away from these NGOs cannot always reach their boxes. Additionally, clothes are not sorted which makes distribution difficult. The third inconvenience would be people’s greed, according to Itani, as “many pick up excessively not leaving enough for others.” Secondhand shops are also abusing the system. “They rummage through these boxes and sell what they find in their shops.” There are around 250 secondhand shops in Lebanon mainly spread in underprivileged areas such as in Sabra Palestinian camp and Souk El Ahad (Flea market). Thus, FabricAID aims at developing a system of secondhand clothes retail to cater to two million people that live below poverty lines in Lebanon, including Syrian and Palestinian refugees and 700,000 Lebanese, Itani said.

The startup secured a $20,000 round of funding from the Elevate Impact Accelerator in partnership between Altcity and UNICEF. They also got a $15,000 Kafalat grant, and won a $2,500 prize at Impact Startup Sprint, a competition organized by Bootcamp. The startup was also one of the winners of the Senselab, a three-week bootcamp powered by Makesense Lebanon, that took place last July. The team consists of three and will grow to seven in two months. “We have our on drycleaners, and we will purchase bigger appliances, through the UNICEF fund,” Itani said.

Become a textile reclaimer

Secondhand shops import clothes from global markets, mainly the US and Europe. The US generates 1.4 million tons of used clothing annually, and Europe up to two million tons. Following an extensive research, Itani understood how the secondhand clothes cycle works: European and American NGOs collect clothes door-to-door, 20 percent of this collection is sold to local secondhand shops such as Salvation Army, GoodWill, and Oxfam. 80 percent is sold to a ‘textile reclaimer’, who recycles 30 percent, and sends the rest to wholesalers around the world. The wholesaler sells it to secondhand shops, which sell it to end users. Doing the math: NGOs, textile reclaimers, shipping companies, ports, wholesalers, and secondhand shops are all trying to make profits out of this cycle. Also, the process requires a lot of time, which prevents the piece of clothing from reaching the end user before at least five to six months from its collection, which affects its quality. “We are trying to become a textile reclaimer, a concept that does not exist in the market yet. We buy clothes from NGOs, sort them, and do efficient redistribution,” Itani explained. The SOEX Group are the world’s largest textile reclaimer with processing and distribution outlets all over the world. Over 1,000 tonnes of textiles, clothing and shoes and accessories are multi-level sorted every day.

The pricing and the process

Used clothes in Lebanon are parted into three categories: cream, which is the top quality, barely worn items, that sell at $9 per kg, and that secondhand shops could sell at as high as $20 per piece. This represents around 10 percent of the imported secondhand clothes, Itani said, which is rarely found in rural secondhand shops. 40 percent of imported clothes is called ‘African’, which are items of a lower quality, and 50 percent is called ‘Pakistan’, which refers to clothes with the least quality.

“We buy used clothes from local NGOs such as Caritas, Arcenciel and others, for 500 Lebanese Liras (US$ 0.3) per kilogram. The ton stands at 50,000 Liras ($33.3),” Itani said. FabricAID cleans, washes, sorts depending on size, gender and quality, cures, and tags each item with the price. Clothes are then compiled in bales [packs of sorted clothes] and sold to other secondhand shops. “If they buy the kilogram for $3, we sell it for $2,” Itani said.

The profit model

FabricAID’s profit model is twofold. It sells to pre-existing secondhand shops through bales ranging between 30 to 60 kg at an average price of $2 per kg. The second model is providing underprivileged people the opportunity to operate their own secondhand shops at a zero capital cost through offering the clothes for free and partnering with NGOs and governmental organizations that offers a free working space. After completing the training program, the retail process begins and a revenue sharing model is established between us and the beneficiaries.

If the kilogram is bought for $0.33 and the curing costs 1,000 Liras ($0.6), their profit would stand at $1 per kilogram if they sell to secondhand shops, according to Itani. However, if they are selling to their own shops, each kilogram’s revenues are 10,000 Liras ($6.6) as they are relevant to the sales of each item [each kg could consist of five items, that could be sold at 2,000 Liras ($1.3) per piece for example]. Their profits reach 8,500 Liras ($5.6) prior to sharing the profits with the beneficiaries. This means selling to their own shops is more profitable on the longer term.

Future plans

FabricAID hasn’t started selling yet, but they will as of coming November. So far, they have managed to collect three tons of clothes. Selling can kick-off once they have between five and 10 tons. “Our plan is to open three shops with NGOs in the first six months, and our bigger objective is to reach 16 to 18 shops,” Itani said. He added: “The more free shops we can get from NGOs, the more jobs we create to unemployed people, and this is why NGOs are ready to assist us.”

Feature image via Pixabay.

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