Business Type:Multichannel retailer
"We use DEAR for everything — from booking an item, to sales, to managing customers and sellers, it's all there and it's a fantastic solution"
This multichannel retailer has a unique twist on second-hand sales – and in this case study, they find out that that DEAR’s got the goods
- They use DEAR for keeping inventory counts seamless, no matter where goods are sold – online, or in-store.
- Second-hand retailing and consignment selling can be really complex – but DEAR makes it easy
- DEAR has made it possible to automate the entire business, and thanks to DEAR’s integration with Xero, back-office work and compliance is a breeze
Find out why South Africa’s number-one sustainable luxury goods retailer says that DEAR Systems is a “fantastic solution.”
Second-hand stores and pawnshops are nothing new, but South African company Luxity has reinvented the age-old concept with a unique twist. They buy and sell second-hand high-end luxury goods, via both ecommerce and bricks-and-mortar stores.
But behind this simple concept lurks a minefield of complexity. Selling other people’s goods means either up-front offers or working on commission. And supporting multichannel sales requires tight inventory management — without it, the business risks selling something twice, or even losing goods entirely.
Managing this kind of tricky business model requires a broad set of skills. Luckily, Luxity has its very own multi-faceted gem in Florian Engi, who handles admin, operations, and finance.
Born in Switzerland, Florian’s eclectic career covers a stint at the UN, running a model agency, and working in PR. A decade ago, he moved to South Africa, and began working with Luxity co-founder Luke Calitz at a digital agency. In the course of their work, they noticed a lot of consumer desire for luxury goods and a gap in the local market. The opportunity was wide open, so they jumped in.
“It was almost a two-man show — Luke and I did pretty much everything ourselves, but on a different, very basic stock management system.”
For a while, this was enough. But Luxity had hit on a winning formula, and they were growing quickly.
“We deal with everything: Louis Vuitton, Gucci, Prada, Burberry, Chanel, Hermes, etc,” Florian says. “In the beginning, it was shoes, sunglasses, handbags. Recently we started doing jewelry, watches and even clothing from all those big brands.”
With this kind of growth, and with ambitions to go multi-channel, Luxity quickly realized their current inventory management system, InFlow Software, wasn’t fit for purpose. It involved a lot of hand-sorting and other kinds of manual work. “With more and more growth, it became almost impossible. There was nothing automated in it.”
They needed something that could deal with the company’s growth, that would give them inventory management options, and support them into the future. Fortunately, four years ago, they zeroed in on DEAR.
Making a complex sales process simple
“We were looking for something a bit more sophisticated, and after a lot of research, we found DEAR,” Florian says. “InFlow Software was just too basic and clumsy.”
At this stage, Luxity was just a three-person, pure ecommerce operation. There were other, similar operations working out of garages and living rooms. To outpace the competition, Luxity needed to improve throughput while putting in place the infrastructure that would allow them to open bricks-and-mortar stores while keeping their ecommerce backstop in play.
The business works by buying luxury goods second-hand. Some sellers are paid cash-in-hand, when the value is clear, but most goods are sold on consignment. The profit share starts at a 50/50 split, with Luxity taking less commission when items are more valuable.
“For some sellers, it’s about running out of space when they go to Louis Vuitton and buy the latest handbag and they come home and they look at their clothes and go like, ‘Okay, where do I put it now?’” Florian says. “Others just want to clear out clutter, which is great for us. Sometimes it’s gifts from ex-husbands, ex-boyfriends, for example, that are now tainted and they just want to get rid of.”
Sellers can choose how they want to sell goods. The first option is the Luxity website where they fill out a basic form — they attach a description and some pictures, and the information goes straight to the buying team. Sellers can also drop off goods via any Luxity store. All goods eventually go to Johannesburg, where a team of experts can assess the products, set prices, and make offers to sellers. Consignment agreements are sent out, then the products are cleaned, photographed, listed online, and shipped to a Luxity store to be ready to sell in-person as well.
It’s a lot of information, and a high-touch process. It could easily be highly inefficient — but Luxity has it all down to a fine art. The entire process is digital, with both product and customer information being fed directly into DEAR. This high level of digital efficiency increases margins dramatically, and allows Luxity to move far more items each day than they’d otherwise be able to.
DEAR makes all the difference
“We use DEAR for everything — from booking an item, to sales, to managing customers and sellers, it’s all there and it’s a fantastic solution,” Florian says.
Thanks to DEAR, Luxity has even been able to build a custom customer dashboard that allows sellers to see the goods they’ve got out on consignment.
“If you have something consigned with us, if you log onto your dashboard, you can see, ‘Oh, this item is currently on quote, it’s on lay-by. Oh, it was shipped so my payment is estimated to be in four days,’” Florian says. “That’s all integrated with DEAR — and without all the information we get out of DEAR it just wouldn’t be possible.”
This high level of automation powers the entire business, from the back office to the front line. Xero plugs into DEAR for accounting, and their tech guru Michael Zahariev has even built a custom POS that integrates with both DEAR and WooCommerce and fits the needs of their sustainable second-hand goods model perfectly. It all means that inventory updates instantly, whether an item is sold in-store or online. It’s also all but impossible to sell something twice.
There’s also an important compliance element. South African law requires that second-hand sellers keep careful customer records, to make sure that they’re not dealing in stolen goods.
“The other day, we had a routine inspection by the police, and they wanted to see where all the stock in that particular store came from,” Florian explains. “And we had built a little script, so two hits on the keyboard and I could give them an Excel spreadsheet with all the stock, all the addresses, names, where everything came from, and they were happy.”
As a small team in charge of a growing business, Luxity chose to implement DEAR mostly on their own. Happily, the service provided by DEAR has meant they’ve been supported every step of the way.
“I have to say, whenever we’ve had a question or something seemed unclear, the DEAR support team is quite amazing,” Florian says. “Every query we’ve ever had was responded to very quickly and professionally and to our full satisfaction, so we could just move on. It’s always been great. The support team definitely needs a round of applause at some point!”
Thanks to Luxity’s all-round excellent experience with DEAR, they say they’d unhesitatingly recommend it to businesses — even those in the early start-up stage.
“Technically, I think DEAR is meant for bigger companies with warehouses and logistics and everything, but it also works brilliantly for a smaller business from the beginning,” Florian says.
“Then as you grow, you use more and more of the functions, like many of the reports. Some of the reports I’ve never used obviously in the first year, but now I use them almost on a daily basis. There’s functionality to do cash ups to make sure the stores run properly, inventory movement, new stock being booked in, stock moving out. It’s all in there.”
“DEAR is a one-size-fits-all solution that can deal with anything”
Luxity says that while DEAR may appear daunting to some small businesses, it’s an absolute must-have for product sellers who have even modest growth ambitions. For those who set their sights higher, DEAR is software your business can grow with indefinitely.
“You get used to DEAR very quickly, and it’s a brilliant product. If there ever is an issue, the support team is there and they’re quick at actually answering our questions,” Florian says.
“DEAR is a one-size-fits-all solution that can deal with everything from stock sourcing, booking in customer relationship management, selling, stock management, inventory management, it’s all in there. It fits both classic brick and mortar as well as online stores or as in our case, multichannel.”
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