Online fashion retailer Grana raises $10M led by Alibaba’s entrepreneurship fund

Grana, a two-year-old online fashion retailer based in Hong Kong, has announced that it has raised $10 million in fresh funding led by Alibaba’s entrepreneurship fund.

This is the startup’s Series A round, and it follows $6 million in previous seed funding. The round is led by Alibaba’s Hong Kong-based fund, which was announced last year, and it also includes participation from existing investors Golden Gate Ventures (Singapore) and MindWorks Ventures (Hong Kong).

In an interview with TechCrunch, co-founder and CEO Luke Grana said that the new funding will be put to work expanding his company’s selection of products — all of which are own-brand — and growing its reach beyond the 12 countries that Grana currently ships to. In particular, Grana is focused on expanding its business in the U.S., which is already its largest market alongside Hong Kong, just ahead of Australia and Singapore.

Grana isn’t providing specific business figures at this point, other than to say that it is growing at an average of 15 percent month-on-month. Return rates are single-digital percent, with a flat fee — US$10, SG$10 or HK$20 — charged for a collection direct from the customer.

“We’ve experienced really strong growth [and had a] good couple of years that we need to continue,” Grana, who was born and raised in Sydney, Australia, said.

Grana sells its own-brand fashion items exclusively through its website. The company produces its own high-quality fashion products, sourcing its fabric from Italy, Peru, China and other parts of the world. It has an offline store in Hong Kong and has run temporary ‘pop-up’ stores in four countries, so far. Grana just moved into a new 18,000 square foot warehouse in Hong Kong where all product is stored and shipped, while its entire 50 person team is based in Hong Kong. Keeping the business in a single country may seem strange when its customer base is global, but Grana explained it is all about efficiency everyone involved.

“There are no distributors, middle men or warehouses, so we ship direct to the customer. We cut out all the inefficiencies that we can [so that] customers get a really great product at a quality that they’ve never seen before,” he said.

When it comes to business, Grana explained that Hong Kong’s status as the world’s largest air cargo hub, and DHL’s shipping rates, mean that its next-day/two-day delivery service to the U.S. and other countries are on par with any local service. That’s based on both speed for the customer and price for Grana. For that reason, Grana hasn’t opened warehouses in the U.S. or other places to store product locally.

In terms of passing on costs to the customer, Grana said most fashion items carry a mark-up of around seven-to-eight times the cost due to the chain of process. But by stripping out the aforementioned middlemen and fees, Grana — he said — sells at just 2-3X mark-up.

“We travel the world to find the best fabric to make modern wardrobe essentials: great quality items that a large market can wear,” Grana added. “We want to replicate ASOS but using our own brand.”

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There’s no plan to introduce its items via offline retailers, nor will Grana become a sales front for other like-minded, independent fashion brands. The goal is to continue on as is, but grow its reach and scope.

Global expansion is on the agenda for 2017, but CEO Luke Grana isn’t being too specific on exactly which countries will be targeted. China is one confirmed name on the list with a soft launch likely to happen “sometime next year.” For that move, Grana is likely to shift its distribution model somewhat and align itself with existing e-commerce portals to gain reach. Grana hinted that Alibaba’s Taobao marketplace could be an ideal entrance point, and he said his company is working closely with the e-commerce giant to weigh up its method of entry into China.

“There’s a really good fit with Alibaba, strategically we are leaning a lot about e-commerce in China and getting logistics and infrastructure support,” he said.

On the product side, Grana’s range spans 10 fabrics, 90 styles and 3,000 SKUs across shorts, sweaters, swimwear and underwear in both men’s and women’s fashion. Grana said the company plans to expand to sportswear, bags and accessories early next year, while he’d like to also begin producing and selling items like shoes in the longer term.