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The Drapers Interview: MySale's Jamie Jackson on monetising fashion time travel

International flash Sale business MySale Group offers retailers a clever way to clear excess stock, and that’s not where the opportunities end.

A bright blue Leicester City scarf hangs on the wall in MySale Group’s distribution centre in Corby, Northamptonshire. It is a reminder that the company’s founder, Jamie Jackson, is a local lad who has firm allegiances to his hometown football club. Yet MySale is not what you would call a local business: established as a members-only flash Sale site in Australia in 2007, it quickly expanded into New Zealand and Asia, and today has ambitions to become a global player.

MySale’s original USP was to mop up excess stock from British brands and sell it at a healthy discount Down Under, taking advantage of the opposite seasons in the two regions. Based in Sydney, the business flew largely under the radar in the UK. But that all changed in May 2014, when it was revealed that Arcadia boss Sir Philip Green had acquired a 25% stake.

MySale had been clearing some of Arcadia’s brands in Australia.

“He was interested in the overseas/seasonal concept – he loved it,” explains Jackson.

Green said of MySale at the time: “The truth is that in clothing there are excess goods, and people will welcome this as an alternative platform to sell them. In a way it’s back to where I started: buying and selling.”

Weeks later, MySale Group hit the headlines again when it acquired defunct British luxury flash Sale site Cocosa from former Harrods owner Mohamed Al Fayed and announced plans to relocate MySale Group’s head office to the UK and list on London’s junior stock market, Aim. Shortly after the flotation, which took place in June, Sports Direct founder Mike Ashley snapped up a 4.8% stake, cementing MySale’s new-found reputation as a serious contender in the UK flash Sale market.

No one was aggressively discounting in the Australian market – I saw an opportunity.

The seed of an idea for a contra-season fashion online platform was first planted in Jackson’s mind back in 1999, when he was on a trip to Australia.

“I thought: ’This is a great country, I could do something here one day,’” he recalls. At the time he was making a living liquidating excess stock for brands in the UK, armed only with an old Nokia 6310. He and his older brother Carl had grown up with fashion, helping out in their parents’ womenswear indie, Just Jackie, in Leicester.

In 2005, Jackson went back to Australia and decided it was time to seriously explore setting up a business there: “By then [French flash Sale site] Vente-Privee had been going for a few years. It wasn’t going gangbusters but the concept was working and I loved it. No one was aggressively discounting in the Australian market – I saw an opportunity.”

In 2006, he signed short-term leases on three small shops in Sydney, which enabled him to obtain a work visa. He bought whatever stock he could from brands in the UK, shipped it to Australia and cleared it through the shops. After a year, the group’s first online flash Sale site, OzSale, was ready to launch. Again, Jackson committed his own money to buying the stock. There was no viral marketing in those days, so his small team distributed flyers, marketing OzSale as a site offering “great brands from the UK” at heavily discounted prices.

It worked. Sales grew from about A$2m (£1.2m) in the first year (2007) to A$10m (£6m) in the second and A$20m (£12) in the third, and it soon branched out into New Zealand with NzSale.

Working with MySale benefits brands, too. CJ Basra, sales director at womenswear label Closet London says: ”Closet have been running multiple sales with MySale for the last two years. The campaigns have generated great brand awareness and sell-through in Australia. MySale has effectively introduced Closet in the private member environment – I would recommend them to any brand that is worried about selling past-season and surplus stock.”  

The business was growing fast, and Jamie needed help. So he turned to Carl, who was working as sales and marketing director at Coffee Nation. It took a few months of persuasion, but eventually, in October 2009, Carl agreed to join MySale Group as chief executive.

“He’s focused on the structure, management, financial and relationships with the City. I’m pure product and trading,” says Jackson.

Less than a year later, MySale secured a significant win: A$14.5m (£8.7m) from US venture capital and private equity firm Insight Venture Partners. The money allowed the Jackson brothers to hire a senior management team, invest in bigger warehousing and buy more product. Geographical expansion quickly followed. In 2011, Jamie moved to Singapore to establish the group’s first Asian site, SingSale. It later expanded under the MySale name to Malaysia, Thailand, the Philippines and Hong Kong.

Mysale screenshot

Mysale screenshot

MySale has spread to Asia

In 2013, with the Australasian operations growing steadily, the brothers began to consider the opportunities back home in the UK, where there was a window into Europe.

“I could see the potential here,” says Jackson. “We had great teams in Australia and New Zealand, now we needed to do exactly the same in the UK market: set up a buying team here and work with brands on their doorstep.”

Yet the acquisition of British site Cocosa happened almost by chance. Al Fayed had bought the luxury flash Sale site in July 2011 for an undisclosed sum, but in late 2013 it was announced that the site would be wound down because, as Cocosa said at the time: “the costs of continuing to build the brand to market leadership were deemed too high”.

MySale Group had been clearing some of Cocosa’s excess stock, says Jamie, and “one thing led to another. We had a meeting with the management and bought the business. It seemed like a good fit.”

At the time of the sale in May 2014, Cocosa had about 65,000 unique users, but this number was dropping rapidly. The Jackson brothers faced two challenges: to re-engage shoppers and rebuild relationships with the brands.

Cocosa relaunched in November 2014 with a more premium offer than the rest of MySale’s portfolio, including brands such as Phase Eight, Moschino and Berghaus. It now has about 25,000 members and this is gradually growing.

“We’ve not got it back [to its former glory] yet,” admits Jamie, although he points out that there will be a bigger brand awareness push this year.

In the midst of the Cocosa relaunch, MySale’s listing took place in London, but an error meant it started trading on 20 June 2014 at £2.26, rather than 226p. Automated trading programs, expecting a price in pence, triggered sell calls. Its shares slumped to a low of 166p, although they recovered to 210p – about 7% lower than the offer price.

“It was a technical blip – it wasn’t anyone’s fault,” said Jamie. “We overcame it and got the share price back up.”

And it did not seem to faze Sports Direct founder Mike Ashley, who acquired a 4.8% stake – worth roughly £15m – shortly after the flotation.

However, more bumps were to follow. The Australian and New Zealand markets contracted and, in December 2014, MySale was forced to issue a profit warning. The following January, MySale reported an EBITDA loss of A$11.4m (£6.9m) for the six months to 31 December 2014. At the same time, it announced it was closing its US and South Korean websites to focus on its key markets.

The US launch had been particularly expensive: MySale had invested in a big distribution centre in Florida, a buying office in New York and a smaller operation in Los Angeles, created a database, set up localised shipping and started aggressively acquiring shoppers.

“We went at it too quickly,” Jamie explains. “We were getting the audience, but the product wasn’t right for them.”

It kept its buying and warehouse operations in LA, allowing it to source products from the US for its other sites – and closed the rest down.

Bruised but by no means defeated, MySale put its head down and focused on building relationships with brands in its existing markets, including the UK, as well as investing in improving its technology. By the end of 2015, profits had begun to recover. The group reported an EBITDA profit of A$1.5m (£900,000) for the six months to 31 December 2015 – and doubled this to A$3m (£1.8m) in the six months to 31 December 2016.

Through us, you can launch and test your brand in Australasia

In September 2016, MySale announced a strategic partnership with Sports Direct to sell some of its sportswear brands in Australia. Karrimor and Slazenger are among the brands now stocked on Deals Direct, an Australian site MySale acquired in 2015. Through the deal, MySale Group has access to more than 150,000 SKUs of Sports Direct stock.

Jackson says the business hopes to encourage more of its “flagship” brands to consider it as a channel, rather than just a way of clearing excess stock: “Through us, you can launch and test your brand in Australasia. We can pinpoint localised areas where your product is selling and you can put a shop there. Or, if you’re a wholesaler, you can use us to see if the Australian or Singaporean or Malaysian consumer likes your brand.”

MySale is also considering developing a stock-holding service. This would be mutually beneficial, Jackson says, providing a storage solution for retailers and bringing down MySale’s delivery times. If MySale does not hold the stock, customers can wait up to 10 or, in some cases, 15 days for delivery once a flash Sale event has finished.

“Now we are saying, give us the excess or old season stock that’s sitting in your warehouse, we’ll liquidate it for you and every month we’ll send you a cheque,” he explains. “We’re not taking a risk because we’re not buying the product, but if it’s in our distribution centre it gets to our customer within three days. If it still doesn’t sell, we’ve got a couple of clearance stores in New Zealand.”

The 60,000 sq ft Corby distribution centre is already heaving at the seams, so Jackson wants to find one double the size to cope with increased storage demands. On top of this, in late 2016 MySale soft launched its first own brand, London Chic. 

Sold via its own website, London Chic is a fast fashion womenswear brand aimed at the local UK market. Most of the sourcing for the initial 50-piece collection was done in Leicester and retail prices range from £6 for a basic T-shirt to £40 for a coat. There will be a bigger marketing push later this month.

London chic

London chic

London Chic sells via its own website

The thinking behind it – as with most of MySale’s ventures – was to take advantage of the group’s existing infrastructure. London Chic can be sold at full price in the UK, and any excess stock cleared free of charge in Australia. It can also be marketed to the group’s UK database.

“I looked at the marketplace and thought, we’ve got access to great product in the UK through our relationships with manufacturers in Leicester, we’ve got the distribution, the technology, the platform and the audience,” says Jackson.

The business will also expand its core flash Sale business in 2017, eyeing new markets in Asia and Europe.

“I would say it has more opportunity to succeed in Asia Pacific than the UK/Europe, partly because the market here is already saturated with discount and flash Sale sites such as Groupon and Sales Gossip,” says Anusha Couttigane, senior analyst at Kantar Retail. “That noted, consumers this side of the world are quite accustomed to shopping around for the best deal and online fashion retail has a higher penetration. Consumers are always on the lookout for a bargain and, given that the global economy is quite volatile at present, it’s a good time to take advantage of this market appetite.”

MySale may have had a rough couple of years in 2014 and 2015, but its model seems fairly foolproof. Retailers and brands will always have excess stock they need to store and want to clear and, at the same time, it is costly and difficult to set up operations in Australia, New Zealand and Asia. If it can keep all of its plates spinning, MySale could become a much bigger player both in the UK and globally.

MySale Group at a glance

  • Global portfolio: OzSale, NzSale, SingSale, BuyInvite, MySale, Cocosa, Deals Direct, OO, TopBuy
  • Buying offices: Sydney, London and LA
  • Distribution centres: Sydney (200,000 sq ft), Corby (60,000 sq ft) and LA (30,000 sq ft)
  • Staff: 700 globally, including about 120 in the UK
  • Annual profit: A$38.4m (£23.5m) in 2016
  • Membership: More than 24 million globally

 

 

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