Online-only fashion retailer Grana takes aim at mainland China

Hong Kong online fashion retailer Grana has expanded into the mainland Chinese market via an official store on Tmall, eyeing China as one of its major markets next to the United States.

The expansion into the mainland follows its US$10 million series A funding led by the Alibaba Entrepreneurs Fund, a non-profit initiative by e-commerce juggernaut Alibaba, last October. Alibaba is the owner of the Post.

Grana has built a name for itself in the online fashion industry by cutting out the middleman – it manufactures and sells clothes directly to customers via its online-only model. This allows Grana to sell clothing made out of expensive fabrics such as silk or cashmere at an “honest” price to customers, according to chief executive Luke Grana.

Its business model has proven a hit with customers. Grana’s revenue grows at about 15 per cent each month, with 60 per cent of sales coming from its existing customers. The average Grana customer orders from the brand three times a year.

“We’ve been working closely with [Alibaba] over the last year getting ready for this launch,” said Grana, who unveiled the brand in 2014. Grana will launch its online store on Tmall, Alibaba’s retail platform.

“We [expect] that the US and China are going to be two big e-commerce markets that will generate at least 50 per cent of our sales.”

Prior to its China launch, the Hong Kong-based start-up already offered shipping to over 60 countries in Asia, Europe, US and the Middle East.

According to data by Statista, China’s fashion retail e-commerce sales are expected to reach US$159 billion this year, and will top US$285 billion by 2021.

The company’s emphasis on the Chinese market is evident in its marketing efforts – for its Tmall store, the Hong Kong-based company has localised its sizing guide for the Chinese market, and plans to reshoot a lot of its products on Chinese models so consumers have a better idea of how the clothes fit.

“Grana’s [sizing] is based more on a slim fit American sizing, so a medium could be a large [for the Chinese consumer],” Grana said. “[Localising the sizing guide] will make sure that the Chinese customer gets the right fit when ordering.”

He added that once the company has a foothold in the Chinese market, it plans to localise the sizes for its products in China.

Grana’s largest market currently is the US, which accounts for about 30 per cent of its sales. Other big markets include Hong Kong, Singapore and Australia, he said.

The company keeps its costs down by consolidating its inventory, working with shipping partners such as DHL and shipping all of its orders out of a centralised 18,000-square foot warehouse in Wong Chuk Hang.

“We’ll be shipping cross-border from our warehouse in Hong Kong [to China], by working with Cainiao, Alibaba’s logistics partner,” said Grana. “It adds one or two days [to the shipping time] but the big advantage for us is that we don’t have to double the amount of warehousing and staff costs, which is a lot of cost savings for us.”

However, Grana said that the firm does plan to set up a Chinese warehouse ‘”if everything goes well”, and may look towards expanding to other platforms such as JD.com and even launch a Chinese version of its site. A mobile shopping app is also in the pipeline, he said.