The Luxury Closet (TLC) is an online store that sells pre-owned fashion items founded in Dubai in 2012 by Kunal Kapoor. The company recently raised a growth funding round, taking its total investment up to $11 million and in keeping with retail trends in the region, TLC just opened a physical store in Dubai’s Marina Mall.
Born into an entrepreneurial family in India, Kapoor his homeland to study in the US and returned to work at his father’s shoe manufacturing business. He later completed an MBA at the INSEAD business school and went on to work for French luxury brand Louis Vuitton before founding TLC.
We spoke with Kapoor about his entrepreneurial journey.
Why did you become an entrepreneur?
I was always pretty sure I would start my own company. My father was an entrepreneur, so it came naturally. As an entrepreneur you can really create an impact if you put all the work behind it and be smart.
How did the idea for TLC come about?
I wanted to start a business that had core completeness, I found that fascinating. There were used cars, so why not used bags? I realised it already existed in the offline model in South East Asia and online in the US and I decided to go with the online model because it could scale a lot larger. It was easier to solve the problem with the online model.
What were your main challenges when you first started?
The ecosystem was very small, it was fairly hard to make decisions on how to get everything up and running. Solving the basic problems was very challenging, how do you build the technology, how do you ship items, the basics of e-commerce. The ecosystem was very small and the knowledge was quite hard to get. I had to literally figure out everything myself, I learned advertising, how to build technology, how to run e-commerce, customer care, payment, all this stuff was quite challenging in the beginning.
Funding was another challenge, but seed stage funding now is way easier.
What are your challenges now?
The problems now are of a very different complexity: how do you cater models to different countries, how you build a solution that impacts everyone, how do you get everyone to sell?
What is unique about our company is that we have a very unique supply chain, we do what no one else does in terms of incoming supply chain. We reach out to a fragmented place of sellers who are hard to find and have very high standards and then convince them to give us their prized possessions.
We’ve also identified 500 brands with a back catalogue of 20 years, recording the item, price, what we should price it at and the next step is to automate that.
Tell us about your recent acquisition of the operations of Guiltless in Hong Kong
We’re taking over their customers, operations and inventory, which means we will now have operations in Hong Kong, it’s a complete foray outside the GCC.
The Middle East closet has a very high value and has the highest per capita spend on luxury in the world. The buyers here are collectors, they’re finding the best of items the world over. Put that into numbers and the Middle East residents of the UAE, Saudi Arabia and Kuwait buy $1 billion dollars of items from Western Europe. When we lift these amazing closets, they’re wanted all over the world and this makes us one of the few Middle East businesses that was global from day one. A Chanel bag is a Chanel bag where you go and already our second biggest country we sell to is the US.
What will your industry look like in the next decade?
There will be two big changes: the percentage of people going online will rise and the 9 per cent of the luxury goods sold online will go up to 25 per cent by 2025. The next step is the share of the pre-owned will go up, but it will all become circular and the brands will become part of this. Look at the car industry, they manufacture a car knowing it will have multiple owners. The brands design the car around that, it will know the warranty will need to be transferred and people will buy it and resell it. In fashion, the brands will become the major contributors and enable the pre-owned and circular economy.
How can the fashion brands do this?
Moving authentication and identification to blockchain. Louis Vuitton will adopt the blockchain and identify every single item and transfer to owners which will be very interesting. Brands will enable their customers to give back old items and then take new items, this allows trade. Five to 10 years ago, a brand like Cartier would do this if they made unique items.
Wamda Capital has invested in The Luxury Closet