Canadian re-commerce company LXRandCo taking luxury vintage shopping into the future
A Canadian re-commerce company does the treasure hunting for you
You've probably heard of e-commerce. But what about re-commerce?
It's the business of buying and selling used items.
There's a Canadian company, LXRandCo, that's carving out a niche for itself in this category. It deals in the vintage luxury market, which is growing 14 per cent every year, according to the experts at Canaccord Genuity, a financial services company.
At first look, a $34,000 used handbag doesn't sound like a deal. But upon closer inspection, the Hermès Bolide 45 Shark Palladium Hardware travel bag, shown above in perfect condition, crafted in France, is on offer for about half of what it retails for new. That's the appeal of re-commerce.
"We have a unique business proposition in that we offer great brands such as Louis Vuitton, Chanel, Hermes, among other brands at great value," LXRandCo CEO Fred Mannella told CBC's On The Money in a recent interview.
"We do this by offering products that are slightly used or pre-loved."
According to the company's latest financial snapshot, business is brisk, and ramping up. The company's second quarter revenue rose 73 per cent in the past year to $7.2 million from $4.1 million.
That company has 61 stores with plans to expand to 122 by year's end.
That may sound like a daunting task, but its stores will piggyback on existing department and discount stores, including Hudson's Bay in Canada.
Rather than building a retail space from scratch, it will open pop-up kiosks, as it has already done in this country, the U.S., Germany, Belgium and the U.A.E.
LXRandCo continues to do business online as well, but many of the company's new initiatives are focused on enticing customers to set foot in their stores, driving traffic into their partner stores.
Right now, they purchase most of their goods from wholesalers and auction houses in Japan but the company is looking to increase the amount of items it buys from people who come into their retail locations.
Mannella says that plan has the potential to boost LXRandCo's bottom line.
"We want to increase our gross margins by having a very interesting new category of our business which is the in-store buying program. We're currently doing this in about 29 of our stores and we're buying directly from the consumer in-store," he says.
Letting people come into the stores with their high-end vintage goods and sell them for cash on the spot is meant to make the experience more fun for customers. "It allows great retail entertainment," Mannella says.
Canaccord Genuity analyst Derek Dley writes that key people are among LXRandCo's greatest assets. Specifically, retail icon Joe Mimran (the founder of Club Monaco and Joe Fresh), who is director and chair of the company's international business development committee. Mimran is also a Dragons' Den dragon.
The people behind the company are such an asset, Dley says, that losing someone like Mimran is one of the biggest risks the company faces.
And there's the danger of what the discovery of a fake could do to the company's reputation.
"If LXR were to retail a counterfeit item, we believe the company would face serious challenges in retaining customers and meeting growth targets," Dley said in a recent report on the company.
LXRandCo has a system for authenticating its luxury vintage offerings that, thanks to state-of-the-art technology, can verify a product's legitimacy in about an hour.
This process is used for all its items, which range in price from a few hundred, to several thousand dollars. The average price of an item is about $750.
"These are the creme de la creme, these are the best products that are out there," Manella says of his company's wares. "We like to say we're offering a little piece of luxury for everybody."