Thought Leaders in E-Commerce: Eyelation CEO Brad Kirschner (Part 1)

I have always believed in the power of niche e-commerce to build sustainable businesses. Eyelation is a great example. Read on for more.

Sramana Mitra: Let’s start by introducing our audience to yourself and Eyelation.

Brad Kirschner: I’m the CEO and Founder of Eyelation. We’ve been in business since 2009. I developed a self-service safety eyewear kiosk for factories. It’s available for people to buy their prescription eyewear from. The first one was out in 2011.

Building Businesses in Aftermarket Designer Merchandise: ShopWorn CEO Richard Birnbaum (Part 6)

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.

Building Businesses in Aftermarket Designer Merchandise: ShopWorn CEO Richard Birnbaum (Part 5)

Richard Birnbaum: We also noticed that the brands were beginning to end distributor contracts and were setting up their own distribution companies in the United States. For example, their cost of goods on an item was 8% of retail. Their biggest cost is not the cost of goods. It’s the marketing and advertising. It’s the romancing of the product.

Their business model was basically working on about 70% margins. Their cost on the goods would be 8% of retail. Then they would sell the goods to their offshore distributors for about 30% of retail. Those distributors would go out to the retail stores and wholesale for about 50% of retail. Some brands have 45% offline discount. That’s the way the model is built.

Building Businesses in Aftermarket Designer Merchandise: ShopWorn CEO Richard Birnbaum (Part 4)

Richard Birnbaum: Even though distributors around the world were back-dooring the goods into the United States through e-commerce, I personally believe that the brands just closed one eye. It gave them deniability. The deniability factor is very important for them because when the dealers would start to complain, the brand would say, “We have no idea how they got the goods. We didn’t sell it to them. We have no idea how they got it.”

The fact of the matter is, of course, the brand knew how they got it. They got it because they sold it to a distributor who gave them false promises. The goods ended up exactly where the goods weren’t supposed to end up.

Building Businesses in Aftermarket Designer Merchandise: ShopWorn CEO Richard Birnbaum (Part 3)

Sramana Mitra: This business started with you taking consignment inventory. Is that how you continued or did you switch to buying inventory?

Richard Birnbaum: The next step was going to the 47th Street in Manhattan and checking out all the different vendors. I was trying to learn the distribution model of dealers of these great brands of watches. They were selling at discounted rates, but they weren’t authorized dealers.

Building Businesses in Aftermarket Designer Merchandise: ShopWorn CEO Richard Birnbaum (Part 2)

Richard Birnbaum: We realized that the garment business was not for long term. We were buying back in the late 80’s. We were buying designer goods in the United States. We were buying Tommy Hilfiger, Calvin Klein, and Ralph Lauren. Back in those days, e-commerce was not what it is today.

Building Businesses in Aftermarket Designer Merchandise: ShopWorn CEO Richard Birnbaum (Part 1)

If you haven’t already, please study our Bootstrapping Course and Investor Introductions page. 

Richard has built several business in the “shopworn” designer merchandise segment. Learn more about the business through his journey.

Sramana Mitra: Let’s start at the very beginning of your journey. Where are you from? Where were you born, raised, and in what kind of background?

Richard Birnbaum: I grew up in Brooklyn, New York. I was born into a family of merchants. My father taught me at a young age that everything is about value. Even when we’d go to a diner as a kid, he couldn’t go on raving enough about what a great deal it is they’re offering us. He’d say, “We get a salad. We got Jell-O for dessert.” He instilled in me, at an early age, that it’s all about value and giving the customer a great deal.

Thought Leaders in E-Commerce: Ethan McAfee, CEO of Amify (Part 5)

Sramana Mitra: The big problem with the Shopify stock is the threat from Amazon. It has had a very good run because the trend is towards massive growth in ecommerce. Shopify has benefited from that.

Furthermore, there’s been a massive shift from brick-and-mortar to e-commerce from a small merchant point of view. Instead of setting up a shop in downtown, people now setup e-commerce sites on Shopify. That has been the trend.