Bargain designer gear just a click away
• Duo’s online flash-sale fashion site has grown from being a small business in their flat to a thriving firm of 150
It’s been just more than six years since partners Karl Hammerschmidt and Elmien Smit started RunwaySale. In that time, the entrepreneurial duo has grown the business into SA’s largest privately held online fashion retailer.
“Although the idea wasn’t entirely original, as I worked at a similar company in Australia, I realised there was an opportunity to bring a similar concept to SA,” Hammerschmit says.
“This meant that the execution had to be unique and adapted for the South African market,” he says.
Although the South African internet-user population passed the 20-million mark for the first time in 2017, reaching 21-million people, and is expected to grow to at least 22.5-million users in 2018, online shopping has not yet taken off.
The Internet Access in SA 2017 study by World Wide Worx shows that the internet is mainly used by adults for communication (31%), followed by social networking (24.9%), gathering information (23.7%) and entertainment (22.1%).
Shopping online and finance was cited by only 15% of respondents to the study, confirming the results of previous World Wide Worx studies that showed e-commerce was still not a major element of local retail.
However, having worked with several large online companies that were rapidly overtaking more conservative businesses that refused to adopt online sales as a core strategy, Hammerschmidt considers his experience in Australia to be invaluable to growing online shopping in SA.
It’s the reason why, when they returned to SA in early 2012, the couple started designing RunwaySale’s site with a development agency.
They secured an investor, a mentor and a launch date for May that year. “It all began in the spare room of our Sea Point apartment,” Hammerschmidt recalls. “It then moved to the living room before we found offices after six months, partly because the landlord complained about the delivery vehicles but mostly because we had grown faster than anticipated and needed office space.”
When RunwaySale launched, the South African e-commerce marketplace was still largely untapped. Since then, more online retail sites have been launched and yet the company has doubled in size every year.
It has more than 1-million users, with 60% of shoppers being repeat purchasers. Some have been with the company from the beginning and a few have shopped more than 300 times to date. “We’re a flash-sale retailer that sells fashion and accessories, focusing on the value segment of the market to offer desired items at a price that customers love,” he says.
“We identified designer brands we wanted to work with and showcase on our site, and now work closely with them to source products. We also have a dedicated buying team who co-ordinate and collaborate with brands in terms of availability, pricing and merchandising,” says Hammerschmidt.
“Even though we’re online, our design team’s merchandising of the product is as important as a mannequin in the window or the item being seen on a rail.”
Although it’s easy to appreciate online shopping, Hammerschmidt says the logistics chain has to work to keep customers happy. The consumer experience must be seamless, from the time a client clicks on the website through to the purchase, payment, tracking of the product and delivery.
This “service above all else” philosophy has remained the basis of RunwaySale’s relationship with shoppers and suppliers. “Online customers tend to be tech savvy and our typical customer is someone who is a bargain hunter and enjoys wearing designer brands without having to pay the full price,” Hammerschmidt says.
“Our customers range from millennials through to older customers, a number of whom live outside metropolitan areas, Elmien Smit and Karl Hammerschmidt started RunwaySale in their apartment in Sea Point, Cape Town, and soon moved the business to an office space as the online flash-sale site took off. The idea for this retailer was sparked in Australia.
so shopping online gives them access to designer brands they wouldn’t be able to buy.”
Because the tough economic climate has forced brands to rethink their sales and marketing
approach, Hammerschmidt believes RunwaySale is appealing because it brings designer brands to new, tech-savvy customers who probably wouldn’t have walked into one of the designer-brand label stores. The business model also provides an ideal platform to clear stock using flash sales.
“Everyone loves a bargain and South Africans have become savvy shoppers,” he says. “The fact that they’re able to purchase designer brands and accessories at about 70% off the normal retail price is appealing.
“We make a small margin on every product but it’s massively reduced compared to traditional retail stores (about a 10th of the price of big retail chains). The idea is to move volume to justify the business,” he says.
RunwaySale is one of four big fashion sites in SA.
The others are Zando, Spree and Superbalist.
While it’s been a good year so far, and Hammerschmidt is pleased with where the business is now, he says there’s always room for improvement.
“The other three primarily focus on the full-price segment of the market, so we don’t compete and sometimes we even buy their excess inventory.
“Our pricing is definitely a unique selling proposition, along with our dedicated warehousing, but probably our biggest advantage is that we’re nimble and able to adapt quickly to consumer and brand needs.”
It helps that online has become more mainstream.
Hammerschmidt sees a huge opportunity for more growth ahead. “You have to manage how quickly you chase the online market and how much money you invest pursuing it,” he says. “Online retailers lift each other up: the more innovative and efficient we become, the more the industry will grow.
“Considering the size of the market, we aren’t competitive, but rather boost each other. If anything, our biggest competitors are the offline industry.”
Hammerschmidt’s goal for RunwaySale is to grow the company to rival the uptake and adoption of international private shopping clubs and become the largest on the continent. They created something from nothing, and that keeps him going and makes it worthwhile.
“Considering how much time we spend at work and with each other, the team is like family,” he says. “We’re working hard to continue to be a successful and efficient business.
“However, the people element is as important, and with that comes enormous responsibility. There are 150 jobs now that didn’t exist before; 150 people whose futures rely on our success. From a business that started in our spare bedroom, we have now created jobs.
“Long may we continue,” says the entrepreneur.
OUR TYPICAL CUSTOMER ENJOYS WEARING DESIGNER CLOTHES WITHOUT HAVING TO PAY THE FULL PRICE