10 Feb 2015
Impressed by the quality of Pima cotton he came across during a trip to Peru, Mr Grana was keen to introduce the luxury fabric to the global market. His online retail store, Grana, also sources materials from other countries famous for such fabrics as Huzhou silk and Japanese denim.
The business, which sells classic essentials at affordable prices, has garnered a strong following, including at pop-up stores launched in Australia and currently, Hong Kong. Mr Grana says Hong Kong’s competitive shipping costs and efficient delivery have been key to the company’s success.
Why did you set up Grana?
There are many fashion brands that source products from mass distributors in China, but I wanted to do something different. When I was travelling in Peru in 2013, I came across the Peruvian Pima cotton, which is extra long staple cotton that is very soft and durable. It’s a higher grade cotton than others in the market.
I gave these T-shirts to my friends when I returned home and they were amazed by the quality of the T-shirts. I thought that was a really great business proposition to specialise in top-notch fabrics.
We choose our fabrics based on their stories. Our silk comes from Huzhou, China. Huzhou is the start of the Silk Road and has been producing the world’s finest silk for a long time. For our denim, we went to Japan, where they have a very strong denim culture. We are also doing linen from Ireland, a place where they originally started making it.
Tell us about your business model.
We deliver high-quality fashion at disruptive prices. Our business model is a little bit different; we deal directly with fabric mills instead of going through distributors or agents. Also, by operating online, we don’t have to pay rent. So when fashion retailers put in mark-ups along the way, our pricing is really simple: each of our shirts cost US$6, we retail that for US$12; jeans are US$20, we sell that for US$40. It’s a really honest and transparent pricing model and I think that’s what our, Generation Y customers prefer.
How have you developed the business?
I started out by setting up a small warehouse in Kennedy Town and ordered our first batch of 2,000 pieces of Peruvian Pima T-shirts. Within the first three weeks of sales, we sold out all our stock. We shipped T-shirts to more than eight countries and the shipping rates were good.
The quality of products we received was really high, proving the business model to our investors, including Hong Kong-based fashion retailer Bluebell Group. With the capital raised, we built a strong team and re-launched the business with a new website last October. We have really strong sales, recording up to 700 per cent increase each month, which is really exciting.
Where do pop-up stores fit in your marketing strategy?
Pop-up stores really attract attention and bring in new customers. All of our new orders come from customers from our pop-up stores. The repeat-order rate is high as well. Last year, we did one in Australia, and we made more than A$60,000 in sales. This year, we are hosting a one-month store in Hong Kong, and we will also be doing one later in Singapore. In the second half of the year, we plan to start one in San Francisco. I think it’s a really great way to introduce the brand.
You chose Hong Kong over Singapore as the company’s base. How important is the city to your business?
Hong Kong is really our best choice to set up our warehouse because it’s a tax-free port. That’s brilliant for us because we ship a lot of products in and out of the warehouse.
“I arrived in Hong Kong in October 2013, and by June 2014 I had raised US$1million in capital. I think that’s testament to the strength of Hong Kong in terms of building and funding a new business.”
The second thing is that Hong Kong is the world’s sourcing city. A lot of factories and fabric mills have offices in Hong Kong, making it really easy for us to get new samples and deal with them. And most importantly, it is the city’s strength in logistics. As much as it is a fashion and clothing business, Grana is more of a logistics business.
DHL has five planes going to Australia every day, 12 to the United States and 15 planes to Europe. Since they have so much volume going direct from Hong Kong, we are able to negotiate really good shopping rates when I reach out to them. They can offer same-day delivery in Hong Kong, and next-day delivery to Australia at better rates than most Australian logistics companies can offer domestically.
When compared to Australia and any other parts of the world, Hong Kong is very exciting. It’s a dynamic city and things can happen very quickly. There’s a lot of energy in Hong Kong, people get excited by new ideas, there’s a lot of capital to back ideas up. I arrived in Hong Kong in October 2013 and by June 2014 I had raised US$1million in capital. I think that’s just testament to the strength of Hong Kong in terms of building and funding a new business.
What’s next for Grana in 2015?
This year we are opening in China, Europe, Japan, South Korea and Dubai. We are also releasing new products: Mongolian cashmere sweaters, Irish linen shirts, French poplin shirts and US twill chinos. We are also looking to expand into accessories.