I guess you didn't see my last post?

BBS is in the same industry, but I wouldn't say it's the same business model (e.g. they don't buy pre-owned goods). They raised $27M from VCs since launching and just closed another $10M. Can you say cash burn?

 

You're right Simon, I missed the note. The same guys who were involved in classmates.com I believe may also have positions at BBS. We have some stuff out with some the former CEO from classmates.com but no position in this particular deal.

My point is that the bags are pre-owned as soon as they are LEASED so I look at it all as used. BBS acquires the bags at a HUGE discount since the manufacturers want to push the product into the market. It's a really tough model, but the fact that they were able to raise $37MM would indicate confidence in their ideas, nonetheless... Maybe they were charging a premium to be the first through the 5th person to lease the LV bag or whatever. Just didn't seem viable to me because of the precipitous decline in value of their carried inventory. From that standpoint, your customers get a VERY low risk deal since they aren't liable for much. I felt that the problem was with the guy forced to hold the inventory.

It's the same basic model. Leasing handbags. My wife loved the idea initially but we've had great instincts when working together. I was 180 degrees from her on this one. It's all used in the end. Insuring the merchandise and etc... Just seems like there's no collateral value in the contract so someone has to lose big. At least with another "retail leasing operation" like NETFLIX we all understand that the movie is $0.25 per copy so the guy who doesn't return it hasn't copped much more than my FEDEX expense. It may be that there's an associated accessories business where you make another $5.00 or something like that by selling earrings or other trinketds to the people who want to lease the bags. All I know if that it's a tough model but you've got guts to go for it.

Best regards,

SY

 

Great insights. I've been told that they actually purchase some of the higher end bags (Louis Vuitton and Chanel) at retail stores at full MSRP! I'm pretty sure they do not have the support of LVMH, Chanel, etc. since they mention that they are not affiliated with these companies on every product page. That being said, I do know that an investment firm affiliated with Richmont (a Swiss luxury goods conglomerate) has invested in the company.

Warning, extremely subjective opinion to follow:

It's an interesting business model and they definitely have good traction, but I've always thought there was a fundamental flaw with their model: pride of ownership (or lack thereof). One of the main reasons consumers buy luxury goods such as handbags is to "show it off" to their friends. After all, if you lived on an isolated island, would you care about what you were wearing? This flaw became even more evident after I asked my wife to sign up to BBS and rent a handbag - for research After receiving the bag, she said, "don't tell my friends it's rented!" I knew right then and there that there was a problem with BBS's business model. What kind of business thrives on its customers wanting to keep it a secret? (Well, except maybe Viagra ) This lack of word of mouth advertising (which is critical for new businesses) is a problem for them. I suspect that's why they need so much cash to acquire new customers - their existing customer base isn't helping.

I don't think this problem exists for purchasing pre-owned luxury goods. I've never seen anyone embarrassed because they bought a used Porsche or Rolex. However, if I rented a Ferrari for my high school reunion, I sure wouldn't want people to know

 

^^^ Agree - I prefer to own my bags.

 

+1. then if you decide to go out and you really need a particular style or color, you already have it on hand if you own it. but if you had just rented it, it wouldn't always be available. =)

 

^^ I agree, it's like renting an exotic car and pretending you own it... it just doesn't feel right.

 

Simon

You have a very well thought idea and I wish the best for you. I kam sure you can make it work.

Josh

 

Simon, congrats on the new venture. Looks like a viable model. When it comes to lux handbags, I hear the same from my female friends. They want to own and there is a stigma to "renting", which is a tough hurdle to overcome for BBS.

PM me if you would like an intro to the CEO at Wishpot.com. They are essentially like a universal wishlist for internet shopping. I just placed the CEO over there. I'm sure Todd would be happy to connect. And I agree that you should add watches to your site. Would be a complementary product line. I need more Panerai!

Jim

 

A good friend of mine just launched a leasing company focused on sports equipment. The first sport they've launched is for golf equipment. It's basically the Netflix model (or BBS) for drivers, wedges, putters, etc. You pay a monthly fee to 'check out' the latest golf gear. Check it back in when you're done and get another set.

I'm not a golfer, but it sounds like a great idea since it seems that golfers always gotta have the latest and greatest stuff.

 

how do you guarantee all your used goods are authentic?

 

You can view this page for details: http://www.yoogiscloset.com/guaranteedauthentic.aspx

We are the only online retailer that I know of that offers a 30-day return policy + free return shipping (each order ships with a return label) on pre-owned luxury items.

We're actually working on an online authenticity guide for Louis Vuitton, Chanel, Hermes, etc. Should go live soon.

 

Nice job Simon!! great looking site!

 

i sent someone to your webpage simon. he was from another forum. he said he saw someone on 6 that was selling handbags and i thought of you. i hope he enjoys your website and picks up something! i told him your a very trustworthy guy and a 6speedbuddy of mine. =)

 

I think it is an excellent idea overall. My wife would not buy one new or rent one. She does see the tangible benefit to buying one pre-owned.

Also, don't be so quick to dismiss Stealths offer. Imelda (sp) Marcos has nothing on his Fiancee.

 

Thanks, Jody. You rock