Swag Kicks, a preowned clothing and accessories e-commerce startup based in Pakistan, recently announced the successful completion of a $1.2 million seed round.
i2i Ventures of Pakistan led the round, which also included investment from Techstars Toronto, CrossFund HongKong, Rose Lake Ventures, and i5 Capital of the United States. Notable angel investors and the STAK group of Pakistan also participated in this funding round.
Swag Kicks was established in 2019 by Nofal Khan, Mateen Ansari, and Hamza Abid, but the company was forced to temporarily halt its operations due to the spread of the Covid-19 pandemic. High Output Ventures (HOV) invested in its relaunch in the middle of 2021, after the pandemic had died down significantly, and shortly thereafter, Social Impact Ventures (SIV) invested in Swag Kick’s pre-seed round.
The company imports previously owned (preloved) sneakers and streetwear from around the world to cater to the needs of the millennial and Gen Z consumer base, which is constantly on the lookout for high-quality goods at reasonable prices. When they can’t find what they need at the official store, like a cheap pair of Nike sneakers, they turn to flea markets and online thrift shops like Instagram.
The third choice, Swag Kicks, is run by a dedicated group of people, is online, and offers a wider variety of footwear than the other two. Nofal Khan, CEO and co-founder of Swag Kicks, tells Profit, “We wash and disinfect the goods and put then it on our eCommerce platform on an average price of Rs5,000-6000.”
A lot of middle-class Pakistanis can’t afford to buy Nike shoes even if they go to a store to look at them. Shoes made by Bata and Servis get a lot of flak for being poorly made and uncomfortable. Therefore, he opts for and ultimately purchases pre-owned Nike footwear, which, at a price range of Rs3,000–4,000, is still more long-lasting than any other option in Pakistan at this price point.
The startup recognised this as an issue that is made worse by widespread poverty and high inflation. According to the report, the value of secondhand clothing imports increased by 83.43 percent in 2021, reaching $309.56 million on a volume of 732,623 metric tonnes. However, inflation is not the only factor in this increase.
About 60% of Pakistan’s population is under the age of 30, and the vast majority of them are true digital natives who spend all of their time on their phones using apps like Instagram and Tik Tok to keep up with the latest global trends. Due to their exposure, they now desire Jordans by Nike and other Western brands that are unavailable in Pakistan.
Yet, even if they do, their diminishing purchasing power will still be an issue. It becomes prohibitively expensive for the typical consumer to purchase the original products. Swag Kicks fills the void by stocking and selling these shoes at reasonable prices. In our view, clothing is a vehicle for expressing oneself. Nofal says, “An individual expresses him or herself solely through fashion, and these millennials are searching for global brands to pursue that.
The company claims to list around 25,000 products at the moment using a one-of-one inventory model; for example, a pair of shoes on the Swag Kicks platform is the only item on the website and is not available in any other colour or size. This is how secondhand clothing typically functions.
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Both direct imports from around the world and purchases from Pakistani importers engaged in the trade of used fashion goods are part of the startup’s sourcing strategy. The CEO claims that between 30 and 40 percent of the website’s products are imported directly from international aggregators, while the remaining 70 to 80 percent are purchased from regional vendors.
According to Mateen Ansari, the company’s gross margins are so high that they will ensure its long-term viability. Because of this, Swag Kicks has been able to secure funding despite the economic downturn.
To be clear, this does not negate the fact that we are experiencing a cash crunch. Mostly it goes towards marketing, but we do have cash burn,” Mateen says, “though it’s less than what other eCommerce platforms would have).
According to the company’s pitch, their competitive edge is that they have established relationships with reliable importers of pre-owned fashion goods, allowing them to purchase goods at competitive prices. Our ultimate goal is to be able to grade and purchase shoes. When it comes to allocating our resources, we plan to establish a central hub from which we can import shoes from all over the world and have them sorted by quality.
Some of the most well-known clothing companies in the world are making strides towards a more sustainable future by allowing their customers to resell their products on their own websites. However, the Swag Kicks team insists that the online marketplace for previously owned clothing is fundamentally different from the standard online storefront.
Used clothing operates on a one-of-a-kind basis, which is foreign to the methods used by major fashion houses. Swag Kicks recognises this as an opportunity to capitalise on by providing a SaaS-based platform for large brands to sell limited-edition products.
We have put in the time and money into our technology and the infrastructure to be able to sell unique items in large quantities. Money will also be allocated to this aspect of consolidation. Thirdly, we plan to expand into new markets and keep growing. These are the things we’ll be concentrating on most from here on out.