Richard Birnbaum: When I gave you the example of their cost of goods at 8% of retail, nothing is a secret. If we’re able to buy aged inventory from the stores, depending on the brand, deal and condition, it’s worth paying anywhere between 15 cents to 35 cents on retail price.
We’re giving a terrific value to the consumer. The brand is selling more goods to the authorized dealer. We’ve made ourselves the first and only official partner of the brands who are sanctioned to sell their goods online. We’re selling the latest, the greatest, and the best, but it’s at full retail. Maybe you’ll find a 10% coupon online. We’re offering a tremendous value to the consumer.
Our deal with the brands is that we’re paying in first-quality dollars, so we expect first-quality products. We understand the goods may be shop-worn. The shop may be slightly worn. Of course, all the products are handled every night when they come out to the showcase and they go into the vault. The goods are truly shop-worn.
As our relationships with brands deepen, the brands are also mixing in with those shop-worn goods. I hate to use the word new because new is the worst word in the world for the internet. Now we are also getting some goods that seem to be completely unworn. The brands are looking at us as a sanctioned opportunity of e-commerce, because we promised that we’re not going to sell the goods as new.
Even if the goods are never touched with no blemishes, we are still selling the goods as shop-worn. Where I had a 15-year career of being a brand killer, the only reason I have to be in business is to be a brand protector. We will protect the brands. We don’t sell the goods as new.
To the consumer, we underpromise and overdeliver. If you see our reviews on TrustPilot, we are the number two rated watch seller out of hundreds of websites.
Sramana Mitra: It sounds like your domain expertise is in handling after-market goods.
Richard Birnbaum: Absolutely.
Sramana Mitra: You’ve been at this for a very long time. You’ve seen lots of trends come and go. What is new these days?
Richard Birnbaum: I think that in the luxury field, everybody is obsessed with how to approach the millennials and Gen Z. I read these articles all the time. Just in the last couple of weeks, we saw how LVMH signed a deal with Rihanna to produce a line with her after they did a test for a year of a Rihanna fragrance.
Karen did $15 billion in sales last year, a third of which was Gucci. I think two-thirds of Gucci’s $5 billion in sales was to young consumers aged 35 and under. Everybody including us is obsessed with the younger consumer today.
Sramana Mitra: Great. Thanks for your time.