Ep. 16: FashionPhile CEO Ben Hemminger on Driving Growth through Authentic Relationships
Darren Reinke chats with Ben Hemminger, Co-Founder and CEO of FASHIONPHILE. Ben discusses how a lack of job opportunities in Hawaii led him to "re"-commerce, the importance of having relevant metrics to assess growth, and why FASHIONPHILE’s first value is “We believe in Authenticity.”
FASHIONPHILE is the ultra-luxury re-commerce leader, focusing on high-quality and exclusive ultra-luxury brands, specifically, handbags and accessories, including watches, jewelry, and shoes.
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SHOW NOTES
How "Re"-commerce is Different from E-Commerce [0:55]
How Ben Started FASHIONPHILE [3:55]
How Ben Become Immersed in Ultra Luxury [9:44]
Why FASHIONPHILE Describes its Handbags as Certified Preowned [12:00]
How the Ultra Luxury Brands Reacted to a Secondary Market [15:50]
The Challenges FASHIONPHILE Faced Creating a Two Sided Marketplace [19:50]
FASHIONPHILE’s Key Metric to Measure Available Growth in a Supply Constrained Market [24:56]
How FASHIONPHILE Cultivates World Class Relationships With its Sellers [28:55]
The Importance of Authenticity to the FASHIONPHILEBrand [35:03]
Why Ben Believes the Current Tailwinds Will Continue to Fuel FASHIONPHILE’s Growth[39:14]
SHOW LINKS
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POSCAST TRANSCRIPT
Darren Reinke: Welcome to The Savage Leader Podcast, where I interview leaders from all walks of life so that you can walk away with tips to apply to your life and your career. But this isn't your traditional leadership podcast because I believe that leadership tips come from successful entrepreneurs and business executives, of course. Still, they also come from unexpected places, like Navy SEALs, successful professional athletes, sports coaches, musicians, entertainers, and more. So let's dive right into today's episode; my hope is you walk away with something tangible that you can apply immediately to your life in your career. Today's guest on the Savage leader podcast is Ben. Ben is the co-founder and CEO of fashion file. A leading luxury re commerce company. Ben, thanks for coming on today. Thank you. They're great. So just to level set for people, I don't think many people, I hadn't heard of re commerce. What is recall?
How "Re"-commerce is Different from E-Commerce [0:55]
Ben Hemminger: Yeah, it's e-commerce of course, but with a secondary good, so secondary market that's all online. So could be any product, musical instruments, clothing, cars, watches, anything that's bought and sold in the secondary market. So, it's from a customer, sells it to us, and then we sell it back, you know, on our platform on fastball.com.
Darren Reinke: That's interesting. So, can you dig into that a little bit more? I think it's just, it's really fascinating business model. I think people might be interested in and how, what they can learn from it, how they can apply to their companies. Yeah.
Ben Hemminger: I mean, we, commerce is kind of a new, newly coined word. You know, you had consignment shops, you had used car dealerships and things like that in the past. It didn't really have its own name as a part of the broader economy, but since, uh, in the last five years or so, there's been, you know, companies like reverb does musical instruments, and they've, you know, A billion-dollar company on just musical instruments, buying and selling and trading, and there's watch companies that are getting into it. There's the real, real, uh, which is now probably traded company that is basically an online consent. Store where you sell clothing and accessories and furniture and are all on this platform. So because these companies have gotten big and got noticed that they've made a name for it, and there's a real appetite for it in the market. And I think it's a lot of combination, maybe that the next generation of shoppers is a little bit more. Oh, there's eco factor. You know, when you buy something from the secondary market, it didn't get created a second time. So, no resources where additional resources were used. So, that's an appeal. And also just the internet, I think, has brought that marketplace to life. I mean, eBay really started to recover in a big way online because that's the first marketplace where you could really advise something that someone else already. So, I think the Internet's brought that about that people can actually find a lot more of those items out there than they could have before when it was just mom-and-pop consignment stores. I mean, that's a really hard way to shop. If you have to go from shop to shop, you know, that didn't work, but once you put it all online, you can actually create a marketplace that works for buyers and sellers.
Darren Reinke: Interesting. What a fascinating use of internet technology.
Ben Hemminger: Yeah, it really is. I mean, Craigslist E-bay, that was like the pioneers. And then I think from the sources people split off and said, well, you know, I can't just sell luxury handbags on Craigslist or eBay because there's an authenticity thing. There's kind of a luxury appeal. So, you'd have companies that split off from those platforms to create niche re commerce. And that's how we started. We were originally an eBay seller split off. It became our own e-commerce plus.
How Ben Started FASHIONPHILE [3:55]
Darren Reinke: Yeah, I was going to ask you because I always think, uh, an origin story is so interesting because people just think about, they look at fashion, and how look at other companies and think I was just, it was an easy start, but can you talk a little bit about that in terms of how the business got started and how you got involved with it?
Ben Hemminger: Yeah, it's been awhile, you know, the festival officially began in business in 2006. So, we've been around for a long time and prior to 2006, My partner, my business partner, Sarah and I had each had our own independent kind of side hustles. You'd say today in recovery. I was doing basically started off, and we lived in Hawaii and my wife went to school in Hawaii just for one year. And we were on kind of less populated side of the island looking for a job. There's nothing really, there are no jobs out there, especially just for one year. And so, what I had, what I did was take a little bit of my experience, selling stuff on eBay as a hobby. And I tried to find something that was available in Hawaii, that you could sell on eBay, where people from the mainland may not have had as much access to it. So, I thought, well, maybe Hawaiian shirts like theirs, they can be pretty expensive, collectable shirts and things like that. So, I went to consignment stores, thrift stores, things like that. In Honolulu, looking specifically at first for just Hawaiian shirts that I could sell on eBay for more. And really it was learning what brands had the best resell value. Like there's rain, Spooner, Tommy Bahama cook street. There are a couple of different brands. I would just buy them for like literally $5, $1. Maybe $10 for the nice ones, come back and sell them for 20 to $50. And so, that's really was a fun way to, you know, kind of make money when I was in Hawaii and that evolved and do other things at those stores that have value Birkenstocks or women's clothing labels, like, you know, they had that had good resale value. So, that's kind of how I got a little momentum in the, in the commerce myself, all the while. Sarah from Texas, where she was living, was doing the kind of the same thing. And she kind of honed in on a niche. That was a little bit upper end, like the handbags. And she started a kind of narrowing in on Louis Vuitton as a thing. Ben Hemminger: So you go with, go to a consignment store, look for a Louis Vuitton. They may only have one or two by. And then go to eBay and then kind of do a better job presenting it. So anyway, so in 2006, we kind of came together and said, Hey, we both got this interest and the experience, but her product of blue button was just a higher ticket item than mine. They're like, let's join together and focus on this Louie thing. And we started selling Louis Vuitton only on eBay in 2006. And then that grew to. Well, why don't we do Chanel? Why don't we do? And so from that, it grew, and now we're you know, that's 2006, you know, we started off just her and me and our spouses kind of doing it. And you know, now we've grown up to where we are today and where I'm you know, we have 200 or actually 325 employees across the country. You know, and we're partnered with Neiman Marcus, and we've, you know, we're looking at over $300 million in gross revenue for 2021. So, it's kind of how it's how it started and where it's grown and that whole re. The market came up around us. We were just doing our thing, Hocking bags at the beginning, not thinking, oh, we're part of recom or worse, or this is how it's going to go. Or with no idea, we were just taking one bag at a time. And since the time we started it, the awareness of e-commerce and sustainable fashion, things like that have come up around us, and we've been able to ride the growth, which is just really good timing, I guess, on our part have had worked out all our kinks before it was really even popular in most of the customers eyes.
Darren Reinke: Yeah. I imagine that when people look at your website to think about ultra-luxury, to think about you parading around the streets of the, Sean's say in Paris and Milan and then London and other things. But I remember you talking about just hopping from consignment, sorta consignments, or I think in San Francisco.
Ben Hemminger: Yeah. I mean, we started off in Hawaiian. It was like a couple of thrift stores called value village there, or savers. It's a chain that was like, you know, that was the spot. And so, once we moved back from the mainland, and we're living in the Bay Area, we're like, Hey, that worked, you know, the Hawaiian shirts, you know, had a little value, but it was really the other stuff that had the most value. So, we kept on doing that. My wife and me, and we were on Saturday's drive to all the different consignment shops and thrift stores. Kind of vetted out like the good ones. There's one, a good one, in Palo Alto. There's a good one in Menlo Park. There's one in Los Altos. And we had to hit the one in Danville, and we were all around the Bay Area every Saturday, just collecting the stuff. And then during the week outside of our regular jobs, we would post the stuff on events and sell it. But that's yeah, the, the non-glamorous, uh, beginnings to the business.
Darren Reinke: Yeah, I think what's interesting is people just, they see the glam of the website, the finished product, if you will, obviously businesses never finished product, but people gloss over those hard times when people are packing their own boxes. They're sweeping the floors that think is important to go back to those.
Ben Hemminger: Yeah, we did that for many years, even before 2006 official startup fashion file. It was just, you know, yeah. Going to the post office with boxes of stuff that you packed and dealing with the customer service never turns. And you know, it's definitely, uh, it was a lot of work. Even after we started, fashion palette was several years. We were doing all those jobs. You know, you're taking the pictures and measuring the item and answering the emails and all that kind of. Yeah.
How Ben Become Immersed in Ultra Luxury [9:44]
Darren Reinke: I don't know if you've always been an ultra-luxury or handbag guy, but how do you go about just learning and getting immersed in the ultra-luxury business?
Ben Hemminger: Yeah, that's ultra Lux will be defined by the way, just for anyone who may not understand luxury can be broadly defined as fashion. That's nice, I guess, but all its her legs. Would it be like those kinds of worldwide iconic brands? Gucci Louis Vuitton Chanel, you know, in the car, in the jewelry world, be Cardiay or van Cleef and, you know, Rolex for watches. Like that's the, that's what we mean by the ultra luxury. And we had all for the beginning, we stayed ultra-luxury and not to offend anyone who might have these bags. Because they're certainly fine, but we don't do that. You know, brands like coach Kate spade, Michael Kors, those are fine American brands, but they don't have the lifetime value that stays with them year after year. So, that's kind of where we made the decision to say, we're not going to do, even though there's money to be made in things that are quote unquote, not ultra-luxury, but just luxury. We decided to stay ultra-luxury. And that's kind of a branding strategy. We felt like from the beginning, if we wanted to overcome what was, what was, we felt like a stigma of selling used items, you know? So, you know, buying something, you know, Historically, and still to this day, a little bit, a little bit of a weird feeling like, oh, sorry, you as much as I feel comfortable, you know, wearing something someone else had. So, we stuck to handbags and accessories cause a little less personal than clothing, you know, as far as buying someone else's stuff. And then we stuck those ultra-luxury brands to really shut ourselves from. Feeling that it was like a thrift store or, uh, you know, we wanted to be an alternative for a shopper who is accustomed to going to a Louis Vuitton boutique or Chanel boutique, or a Neiman Marcus store. They would feel just as comfortable shopping the merchandise that we had. And we didn't mix it up with a lot of other things that maybe they didn't want. So, we always try to keep it very high end strategically. And I think that's proven to be a good decision for us in LA.
Darren Reinke: Yeah, it reminds me of living in Brazil. There's a term called semi Nova, which basically it's like semi new. So, it seems like that's in a lot of ways describing.
Why FASHIONPHILE Describes its Handbags as Certified Preowned [12:00]
Ben Hemminger: Yeah. I mean, pre loved, uh, you know, people use different euphemisms for, you know, used pre-owned, it's probably the best we can kind of like to characterize yourselves or at least in your, in the customer's mind as something akin to like a certified pre-owned Mercedes or Lexus, like perfectly acceptable, every Luxury karmic has a certified pre-owned option. And that doesn't seem to be weird for people to sit in someone else's seat that someone else sat in for two years. Driving that car, but we, as consumers, are totally fine buying a two-year-old car and consider that a viable option. So, that's kind of where we like to get in the customer's mind. It's like it's certified pre-owned Chanel, Louis Vuitton. I mean, they still, they selfer, you know, there's still a lot of value, even if you, if it's been carried for off and on for a year or two or three, That's perfectly acceptable. And we've seen that the customers opened up to that more and more over the years. So, it was more of a struggle for us to overcome that kind of, I don't feel very luxury carrying a pre-owned item. That was what we ran into in the early days. And now it's definitely gotten a lot better and people are much more open.
Darren Reinke: That's, it seems like business in general, just different mindsets in terms of how we think about our own properties and our own assets, whether it's a car and using it for Uber or whether it's a house and Airbnb in our properties or living in someone else's properties. So, it really similar in terms of the progression of those minds.
Ben Hemminger: That's true. Yeah. At the beginning of Airbnb and stuff, people thought that'd be crazy to stay in someone else's house now it's um, to me, it seems more appealing than a hotel because it's even more traffic than someone's house. Yeah. That's exactly right.
Darren Reinke: Great way to monetize your existing assets, looking for extra cash flow. Same thing with bags. You know, you want to sell your old bag, get a new one or just then it was just different way of looking at things.
Ben Hemminger: Yeah. I'm not just that whole mindset of this, of the circular economy in re commerce. Like. Let's say that the bag is first sold from, let's say a Neiman Marcus boutique. You can buy a Chanel there, buy it for $4,000 and believe it or not, that is a price that you pay for a good Chanel. So, we paid for 4,000, carry it for a year, but you know, a little bit, then you bring it back to us. That's kind of completing the circle. We pay maybe 2,500 for that bag. So, you really only paid $1,500 for the use of that bag. The year we turn around and sell it for 2,200 or so, or 3,200. And so someone else buys that and then they can sell it back to us again. So, that's the circular economy, but yeah, it gives value to the customer because now they have a closet that's worth something. And before re commerce or fashion file was out there buying back. Your closet was your closet. It's kind of a loss. And so now your closet is really worth a lot more. And what we've found is that actually puts more money into the primary market. So if you have a closet, now you realize I just got to take this thing down into a fascia by location or somewhere else, and I can get $2,000 out of it. Well, that just makes your next bag $2,000 cheaper. It allows you to buy more stuff. And so, we've found that the more people sell of those items, the more they actually buy new. And so, it kind of everyone wins, you know, the brands, Louis, Baton Chanel, et cetera, they could potentially sell a lot more because of the fact that is out there putting money in people's hands who already love their products.
Darren Reinke: Interestingly, I was actually going to ask you about the brands and how they received it. I can imagine maybe they wouldn't be as excited about a secondary marketplace, at least in the early days.
How the Ultra Luxury Brands Reacted to a Secondary Market [15:50]
Ben Hemminger: That's true and still somewhat true. They're very close to it. The biggest brands, I mean, we're talking, you know, most iconic brands would, um, Yeah, they would ignore it at first, assuming it's just not a threat. And then I think, you know, as the years went on, you know, maybe 5, 6, 7 years ago, we started to see the brands not ignoring it, but getting a little litigious kind of trying to Sue everyone, if they could just to slow it down a little bit or to scare you went off. And now I think that's evolved a little bit, and they have started to see that there's either it's not going away. And the canvas waste of money, suing everybody and losing. But now there I'm starting to try and figure out how to participate, how to either invest in it. And some of the brands have started investing in re commerce or possibly, you know, starting up their own, you know, buyback program where they can participate in, in a circular economy themselves, which is what Neiman Marcus did with fashion file. Two years ago, and even invested in fashion file, they put a minority investment into our company. And part of that is that we would locate our fashion pile buying offices inside a Neiman Marcus store, just to fully take advantage of that circular economy that, so they can do that in one shop. You could bring in your bag. Get $2,000 for it off of your next bag, and you'll walk out. So, you walk in with last year's Chanel. You walk out with this year. So now, and you paid a lot less than the guy next to you who just walked in and bought the Chanel. So Neiman kind of saw the vision on that and that's turned out really well. And we're all those locations that we're in are, are, are doing very well. And we're opening up 10 more the next, you know, next. So, it's becoming more integrated with the, with the primary market.
Darren Reinke: So that's actually a really interesting what you said because it's almost like a purchase incentive. If people are aware, when they'm thinking about the brand entry point, the first time you buy a Chanel bag or a Louis Vuitton bag, if you know, you have this way of actually selling it to a re commerce or whatnot, that almost would be an incentive for these brands in this case, Neiman Marcus to actually sell more.
Ben Hemminger: Yeah, I think that's how they see it. They, it's not only that that's totally, that is the vision that it incentivizes people to get into the game of buying these expensive bags, knowing that most people who start buying and start carrying these brands. They don't want to stop. I mean, it's of higher quality. It's just, it feels good to own the best. And once people are in that system, they rarely leave it, but you got to get people into it to begin with. And it does lower the bar a little bit for that first takes away the risk. Like if you buy a $2,000 bag, and you're not happy with it, or if you change your mind, you have an option. You can, you know, you'll get most of your money back for it. So, that is exactly why they would be involved in that.
Darren Reinke: It is just how the market's evolved, had just the mindset and just openness to this new kind of business model has changed over time.
Ben Hemminger: Yeah. It changed a lot in the customer's mind in the brands. A lot of awareness has been, has been made. We have competitors, the real, real I mentioned, and others Poshmark is a marketplace. That's similar to ours, and they have done a lot of advertising, a lot of awareness building, and it's really helped to rise the tide for everyone in re commerce. You know, we haven't done a lot of awareness marketing, but we've definitely benefited from the awareness marketing that others have done to get people into this idea of like, Hey, my closet is worth something. I have options. Now that they're aware of that, you know, that helps, you know, all of us.
The Challenges FASHIONPHILE Faced Creating a Two Sided Marketplace [19:50]
Darren Reinke: Yeah. One thing I think is really interesting, and I think that people eat something you talked about upfront, but what you've basically done is created a two-sided marketplace, where you have people who are selling their products to you guys, and you have an entirely separate markets is actually coming to your website from an e-comm perspective and actually buying those products as a pretty unique challenge because I think many companies are just really focused on building one. And even if I think about you. In the early days in terms of buying product, you're essentially sourcing the product by yourself. And then it's finding the buyers on eBay. How have you gone about building those two different markets, and what challenges did you face?
Ben Hemminger: It is like, almost like, twice the work than a traditional business that might buy something from a home, or they manufactured themselves, or they buy a wholesale lot. What's crazy is that every bag that we sell, every item that we sell. Has been negotiated, like to buy that item from someone else. So, our supplier. Is, you know, hundreds of thousands of individuals and our buyers deal with them. One by one, you can't create a design, an a, an, a skew, and then multiply it by a thousand. You have to go and get each and every one of them. So it is more labor-intensive. So, the way we've kind of done that is that we've focused primarily on the selling customer. We kind of have this philosophy if we treat our sellers right. Then we'll continue to get great inventory. Great. You know, Louis photons, most recent collaborations or the classics that are still in great condition. Our goal is to acquire great and amazing as current as possible bags and accessories. For our customers because once you have great inventory, there's still a problem of having to find a buyer, but that problem is an easier one to solve. Once you have the item, the hard part is the item. So, you can imagine if you have a Rolex, and we do watch enjoy as well. If you had a Rolex, you know, that's an, a desirable color, you know, I'll have a list of specific model in mind, but you haven't sort of $10,000. You will always find a buyer for that. If you put that up their online, someone will buy it. If you, if you have a trusted name for authenticity, but how do you ensure that you're going to get another Rolex tomorrow? That's the hard part. And so, we've gotten to the point where we. Have a supplier network that we've cultivated over 15, 20 years of closets that are used to sending us items and that pipeline to thousands of different closets throughout the country. That's the value that we feel like has been created. And once you have those things coming in, then you know, the digital side, making it look presentable, taking the pictures, you know, doing the digital marketing. Also work, and it also takes some thinking; however, it's definitely secondary to the buying side.
Darren Reinke: You can't sell it unless you've got it. Was that the same approach you took at the very beginning? Or was that something that you learned over time?
Ben Hemminger: The very beginning, it was still, you know, it, it, it wouldn't upset at that back then. We wouldn't characterize it that way, but it was a hundred percent the same in that our focus was always how do you acquire. A great piece of, you know, an item of that brand. That was always where all of our energy was focused. Once we got the item, let's say you got a, an air mez Birkin bag. You know, this is like the iconic Hermes Birkin bag, which is, you know, $12,000 retail. And once you can get one of those in your door, then. You know, the early days were selling on eBay. So yeah, the selling was quote-unquote easy.
Ben Hemminger: All we have to do is post it on Eva, herself, who was always focused on getting it once you got it solid. Even once he went to our website, it was kind of similar. I mean, we would just put on the website, no marketing. It's almost like it markets itself. If you have an airmen Birkin bag in the coveted, you know, orange color that everyone wants that year, then just imagine. How relatively easy it is to sell it because you've got hundreds of thousands of people typing in Google, air mez, Birkin orange. And if they type those words in, they'll find our site because we're one of the few people who actually have an orange Hermes Birkin online. So, it's always been sourcing first and then find a buyer second. And that's played very well. If you go the other way around, and you get a bunch of customers excited about your brand, then they come, and they find that your inventory is small. Then you just wasted all that marketing because they're not going to come back. So, we figure, put all of your effort into getting it first. Then, if anyone comes, they'll find what they want, and they'll come back for more. And that's kind of how we grew up from the, from the beginning.
Darren Reinke: That's interesting. I just see so many connections between other two-sided marketplaces. You know, one thing is just starting. It is proving the harder side of it first, but also just in terms of how you test it, how you build the doubt. So interesting. Just hearing about that, how you focus more on the seller side and less on the buyer side. Yeah.
FASHIONPHILE’s Key Metric to Measure Available Growth in a Supply Constrained Market [24:56]
Ben Hemminger: We always tell a supply constrained market and then because the key concerns. As the supply, you know, it's always been that way and that we always track this number. We call it, call it our daily sales to inventory ratio. So, how many items we sell per day relative to how items we have available. And that percentage has we tracked it back when we only had like a thousand items on the sites, we have a thousand items on the site and 20 would sell in a day. So, the ratio is like, And we've been tracking that. And now we're at almost 40,000 items on the site and 2% still sell every day. So to us that says that that ratio is staying constant, no matter how many items we have, which indicates that there's still more growth to be had, we can put a hundred thousand items on that site. If we can still sell at 2%, then we'll know that the market's not tapped. There's still growth to be.
Darren Reinke: That's an important point you make is just finding those metrics that really are important in terms of assessing your success and also driving your strategy decisions,
Ben Hemminger: because it gets, you have to kind of make your own, your own metrics or decide what's important to you. Because at first, you know, we would look at conversion rate, like e-commerce conversion rate. It was so low. Like we would look at our own conversion rate and be like, people in the industry would look at it and honestly think we'd made a mistake. And then we had the decimal in the wrong points. Like, how could your conversion rate be so low? And we were like, I don't know, maybe we were kind of scratching our heads. Then we kind of thought about it more and realized that you can't compare it to. The conversion rate of a traditional e-commerce website, who's selling stuff. So, for example, take cardiay.com. So we sell cardiac cells. Cardiac. Their conversion has got to be much higher because they have their collection out there. They have a finite number of, of items that are on the site. You go to cardia you, you look for what you want. And then if you go to the next day, it's the same experience. If you go the next week, it's the same stuff. And then maybe only change it, you know, every season for us. We have all different items every single day and every day, another thousand items comes into our site that we didn't, that wasn't there yesterday. So people get to use this habit of just staying on our site, looking around, it's always changing. It's like a, it's like a game. It's a discovery. It's a thrill of the hunt where people are just looking around every day, and they got to go back tomorrow and look at another thousand items because it's always changing. It's unpredictable. So, that leads to a low conversion rate because lots of the traffic is. Kind of shopping and looking around, whereas Cardiac, you'll only go back there when you want to buy something. So, your conversion rates going to be higher because you don't spend all day, every day hanging out on cardio. You already figured it out after the first day. So our conversion rate was very low, but we kind of learned to accept that and kind of use that to our advantage because we had a lot of stickiness on the, on the site. We can use that other.
Darren Reinke: Yeah. They just underscores another point, which is basically metrics are relative to your industry, right? Or in this case, it's traditional retail versus re commerce. Just knowing that if you're comparing yourself to the car DA's of the world, it would look off, but that's not really the right comparison to make.
Ben Hemminger: Yeah, that's true. And this is kind of the same thing with margins is our average ticket is our average sale price per item is 1300. So $1,300 per item. Allows us to live on a margin that might be smaller than some of our competitors who have a little bit larger margins, but they sell everything in the home. So, they might sell twenty-five dollar Nike shorts or a kitchen chair, that brings their average sale price down to like $350. And so, they got to have higher margins to make money. Whereas if we keep our average sell price up to 1500 or higher, then we can live on smaller margins and still pay the bills and be profitable.
How FASHIONPHILE Cultivates World Class Relationships With its Sellers [28:55]
Darren Reinke: I want to circle back to something you mentioned earlier talked about just really focusing on the great relationship with sellers, and maybe you call it the seller experience. I think it reminds me of what so many companies are focusing now on is around creating a, a world-class customer experience. How do you go about creating that great connection with your sellers and as an enduring point of competitive event?
Ben Hemminger: Well, I think one of the big tricks is that we buy the bag out directly. So, we don't do a consignment process. So if you've got. Clothing, accessories, handbags, things like that. And you want to sell them. You probably expect that it's going to be a consignment kind of deal. Cause that's, what's been around forever, consignment stores. And that works where you put that item on the site, on their site, and you get paid, let's say 30% of the sale price after itself. And not only after itself, but after it sells and exceeds the return window. And then they cut you a check and write it to you and of it to. Put your bag up there, that's worth a thousand dollars, and get a $700 check two months later. And you wouldn't even know it's going to be $700 until the two months is over because you don't know if they're going to discount it, it's actually going to sell. So, what we did early on was make the customer a buyout offer. So, we'd said on consignment, you'll probably get 700 bucks. We'd make them. That's it, but if you want to just get rid of it right now, we'll buy it for six 50. So, we would pay a little bit less to take on the risk. So, we started doing this buyout, and we found that even when we gave customers the option. You could get more on consignment or take it now and take a little less, they would choose to take a little bit less for the surety and the quickness of the cash. So, we quickly learned that that was what people wanted, and we did that. And, you know, honestly, it's something that a lot of companies wouldn't do. And won't do now because it's so cash intensive to put all that money up front and take on the inventory risk and the cash risk to put in our case, tens of millions of dollars into the inventory, hoping that it will sell later is a much riskier proposition than a consignment store, which doesn't lose anything. If your item doesn't sell. So, we've put ourselves kind of put the customer first in that case, the seller first thing, that's what they want. Let's give them what they want, even if it's a little bit more painful for us. And that's paid off in that we get those customers coming back to us time after time because they liked the experience. So, there's that. And also we just put a lot of energy into kind of being the experts in the, in the field and knowing what we're talking about. So if you came to us with a special bag that had a different color lining. We would know that like Louis Vuitton with the red Stripe lining, the little Baton Neverfull Dom with the red Stipe lining is worth more than the Louis Vuitton never fall with the tan lining. So, we would know those nuances because we spent years and years documenting all the different jobs. And the different value that they have. And so, we would say, oh, I'll honor that bag with the red lining and give you an extra, a hundred bucks for that. Because I know that that's different. Whereas if we hadn't spent the time to be experts in it, we would just kind of offer them all the same price because they pretty much look the same. The customers who bought that bag, they know, they know it's special and if we don't know it's special, then they won't come back to us. So, we've kind of invested in expertise from the beginning and doing the buyout upfront. I think that's, those are the key factors to our, our growth and the supplier. So.
Darren Reinke: It reminds me of one of our past guests who talked about vans shoes as a company and how a lot of the employees that they hire actual, you know, former professional skaters and snowboarders and surfers and so forth. And just really because they understand the sport, they understand the brand, and then that allows them to get in a better place in terms of the mind of the customer.
Ben Hemminger: That's totally right. And nothing we can, we can do because you have the bio model is we always say that we're not just buying the bag, we're buying the customer. And so. If we've got someone in your negotiating to buy a bag. And if it's like a, maybe a husband whose ex-wife left with a bunch of bags, and he's just selling them one time, we give them the standard price. But if you can see that this is a lady who. By all appearances has an amazing closet and amazing tastes a really strong relationship with a Chanel, you know, sales representative. Like this person is a person who wants a closet that should be in our network. So, we might because we do the buyout model, not a consignment. We can make an on the fly decision to say, let's give this lady an extra a hundred bucks for each bag. We want to make sure she's happy. And that she tells her friends how, how great it is and how much we gave her because we're buying. Closet, not just the bag that we're buying for that day. And I think if you're a consignment model, you can't really make those on the spot changes. You just like everything is 30%. So, you're valuing an old pair of shoes as well as you are like a bag that just came out last week, and it's really popular. You're saying 30% for everything. That's just not the way it is. Like, some things have more value than others. And so with the buyout model and expertise, you can actually, and we've, we've bought bags. We've decided we're only made a 10% margin, which is very low for us. It's not a good way. It's not sustainable, but we'll make accepted to say, we just want that customer. And that bag, even if we lose money on it because what does that say about us? If we were able to get, you know, that hot piece of, uh, you know, jewelry that just dropped last week or whatever.
Darren Reinke: Interesting. Another great key point or differentiator.
Ben Hemminger: Yeah. Yeah. It's ability to treat each customer; however, they need to be treated to be, you know, to stay in our network,
Darren Reinke: which is such a great point. You know, treating individualizing the way you look at your customers or even just your employees as well.
Darren Reinke: I mean, I think about the best leaders who adapt their style to their team members, versus just taking one size fits.
Ben Hemminger: No, that's a good point. That's true.
Darren Reinke: So something that really comes screaming through both in this conversation, but also just in looking around your website, it is, or my favorite words and maybe a cliché word, is authenticity.
The Importance of Authenticity to the FASHIONPHILEBrand [35:03]
Darren Reinke: And then you guys talk about authentication of the products, big insurance, the real product. How do you reinforce that as part of your brand, and how important is that word authenticity in terms of your brand and your culture?
Ben Hemminger: Yeah, we have a set of. Posted up on our break room, which no one goes to anymore because of COVID, but they'll come back to some degree. And our first value is we believe in authenticity, and it's kind of a double meaning because definitely the handbags have to be authentic. The watches' jewelry. That's a separate job, by the way. So, we, we don't love the job of authenticating the merchandise. With any other job. So, we have a check-in crew, we have a photography crew, we have a buying and then the vicinity crew is a separate one, and they just spend their time just handling the bags or the, or the jewelry and looking for those hallmarks of authenticity, whether it be. I've to be the right hardware, the right feel, the right coldness or warmth of the hardware and a certain bag or the right stitching color and sickness. The brand is in Boston, the leather, they look at all those details, smell it, all that kind of stuff. And so, they learn those authenticates. So, that's definitely. Not only a differentiator that we were very good at that, but kind of baseline necessity that we have to do that right. Or else we're really going to be hurting in the long run. So, authenticity is for real, in a very literal sense, but in the other definition of authenticity, we also just kind of believe. We don't want to get too caught up in this luxury stuff. Like we're selling very fine items, but we don't want to take ourselves too seriously and get snooty and kind of found that a lot of times, even sales associates who work in those really high-end stores kind of take on the persona of the bag, and they're like, oh, we're better than everybody else. And kind of, you know, I don't know. We've always kind have been worried about. Authentic. We want to be talking to our customers about what's important to them and not just, you know, being fake and, and, and surface kind of focused. So, we felt like, you know, we hire people. We, we, one of our ways that we stay authentic is that we hire people. For their skills and their attitudes and their humility and their work ethic, not for where they worked for before. Some of our best handbag, authenticators of air mez lose touch. Now, Gucci do are never touched a handbag. Then you weren't even interested in these bags before they were hired. They didn't come from Dr or Louis Vuitton. They came from whatever, you know, many times. Just totally different industries and we taught them what, you know, how to, how to do it. And I think that's how also our, our, some of our best handbag buyers were not coming and come from. They came from research fields, or they came from somewhere where they were good at going online to find comparable prices and they could do it with any product, but we'd kind of train them up in our way. Anyway. So authenticity is important to us. We try to basically quote unquote, keep it real with ourselves and, uh, keep it real with.
Darren Reinke: Now level when there's consistency between those brand values and both in terms of how you represent yourself to the marketplace and how you treat your customers, but also internal in terms of how you work with employees and a great example you gave in terms of how you hire employees as well.
Ben Hemminger: Yeah, it's definitely true. We, we have a great crew. I mean, what are our, um, the head of our, um, handbag buying team, which is like 40 people, large was an animal trainer by trade. She started working with us early on doing customer service and things like that. And we just kind of saw some talent. She grew with the company and is now heading up our buying team and is really one of the world's handbag experts. Now it's easy to become an expert when you see literally thousands of bags every single day and you price each one of them. So she really learned a lot in the last seven years.
Darren Reinke: What a fascinating career path.
Why Ben Believes the Current Tailwinds Will Continue to Fuel FASHIONPHILE’s Growth [39:14]
Ben Hemminger: Yeah. Who knew.
Darren Reinke: moving forward? What's the future hold for fashion file. What are you guys looking at in terms of new industries? New growth opportunities.
Ben Hemminger: Growth is in the future. Interestingly. This year, we're seeing our biggest growth you're ever, and it's really amazing. And people are selling us bags more than ever. We're still able to sell them. We're breaking records every single month for the last six months. Every month is bigger than the, than the one prior. So, growth is there, and we're not going downmarket at all to increase market share. Or revenue we're standing with the ultra luxury. We are making efforts to broaden our joy and watch categories because we feel like that's just, it's a horizontal move, not a vertical move. There's not much farther up. We can go in handbags. We're kind of at the top, but we don't want to go down on handbags as far as like price point and brand value, but we want to go across into jewelry and watches more. We feel. We're very underrepresented in those categories. We have like 10% of our sales are our jewelry and watches. We feel like that could be 30%. So, there's a lot of growth to happen there. There's also home. There's a little bit more we can do in the, in the home sectors, really luxury kind of throw pillows and things like that for the home is an option unity for us to possibly expand horizontally as long as they're brands that have the same value as the brands that we carry for bags. But other than that, it's geographic expansion. We're signing a lease right now for a facility in New York, in New York. And that will be, um, right in Manhattan. And we'll have a second distribution facility there were people can come in and shop. And that will make us bi-coastal in the United States, and we're already looking at Europe. So, we're looking at Paris being the place where we start a European version of passion pile. And if that goes as planned, then we've got the Middle East and Asia to go after that as well. So, our expansion is, is more getting the world onto our platform rather than. Changing anything about who we are and accepting bags we haven't taken. So, we'll stick with what we've got. Expand a little bit, then just get out in front of the whole world. We're still at a very low awareness compared to where we could be.
Darren Reinke: Well, exciting times for fashion file.
Ben Hemminger: Yes. Yeah. A lot of work, a lot of exciting things happen all the time,
Darren Reinke: but where can people go to find out more about your company and perhaps even pick up a handbag or.
Ben Hemminger: Fasfa.com. Everything we sell is even though we mentioned that Neiman Marcus partnership that Neiman Marcus partnership is just for us to buy bags. So you can only go to Neiman and deal with fashion, fall on the selling side. So we can write your check on the spot at a Nieman location. Not all of them, but we'll be in all of, I think at some point, but right now, we're in six, but fascia file.com, and it's spelled fashion. P H I L. Not fashion F I L e. So, the lover of fashion, fashionphile.com.
Darren Reinke: Fantastic. Well, Hey Ben, I really appreciate your time coming on the show today.
Ben Hemminger: Oh, my pleasure. Thanks for having me.
Darren Reinke: Thanks for listening to today's episode of The Savage Leader Podcast. My hope is you walk away with tactics that you can apply to become a better leader in your life and in your career. If you're looking for additional insight in tactics, be sure to check out my book titled The Savage Leader 13 Principles to Become a Better Leader From The Inside Out. Also, be sure to subscribe to the podcast and I would truly appreciate it if you would leave a review and also rate the podcast. Thanks and see you in the next episode.