HK’s Leanest Startup, Grana, Disrupts The Fashion Industry By Focusing On Product – Forbes

Grana

Grana HQ Centralized Warehouse in HK

It’s not often that a startup founder is brave enough to attempt disrupting a well established industry such as fashion. But that is exactly what Luke Grana did when he decided to launch Grana.com in 2014. In just a short two and a half years the company has not only raised well over US$10 million from the likes of Alibaba’s Entrepreneurs Fund, 500 Startups and MindWorks Ventures, they are well their way to becoming Hong Kong’s hottest e-commerce fashion brand.

Grana, a serial entrepreneur from Australia, set up his very first venture while still in university which was an on-campus coffee shop which he spent AUD$20,000 setting up. Within nine months, Grana saw his first exit and was able to sell the shop for AUD$190,000. From that moment, he knew that he was born to be an entrepreneur.

In 2013, Grana visited his brother who was living in Peru and it was then that he discovered Peruvian Pima cotton and the high quality soft fabric that came from it which would make for a great T-shirt. But having no prior experience in fashion or retail, Grana decided to learn from the ground up and spent half a year working at both Zara and French Connection, learning the basics of selling, customer service, pricing and of course, style. It was then that he realized that fashion had a very big legacy component with thousands of retail shops, warehouses and middlemen that would make a perfect next challenge for him to tackle.

Photographer: Xaume Olleros/Bloomberg

Disrupting fashion with lean inventory

Grana’s business model is very simple: his team sources the best fabrics from around the world (think Peruvian cotton, Chinese silk, Japanese denim and Irish linen), cuts out the middlemen and has no retail stores leaving him with a pure direct-to-consumer e-commerce model which turns a near 50% profit margin. As consumer behavior continues to shift there are more and more customers who realize that clothes can actually be purchased over the internet (at half the price) as opposed to going to a store to try on the products. Grana strategically relocated his business to Hong Kong due to the city’s strength in logistics after he was able to secure extraordinary rates and times on global DHL shipping. Grana now boasts two day shipping to over 60 countries around the world.

Photographer: Xaume Olleros/Bloomberg

For most large fashion brands, due to the variety of product offerings, their inventory gets split up all around the world. Grana learned quickly that inventory is a killer to many businesses so his goal was to create a business with very low inventory, all stored in one central location that could be shipped globally.

“We’re very data-driven. So, in any new product that we launch, we’ll always do very limited colors and limited numbers. And if we sell well, we’ll see that very quickly. And then if it’s doing well, then obviously we have a chase order, and then we will put that product in one of our timeless collections, timeless products.”

In true lean startup fashion, instead of carrying excess inventory on product lines that might not sell (which end up having to get discounted), Grana leverages the direct relationships he’s established with the fabric mills and garment makers to start lean, establish proof on concept and then replenish as needed. What usually takes a large brand nine months in design and development, Grana can achieve in four.

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