Pre-loved fashion startup Swag Kicks announces $1.2mn seed raise

Pakistan’s Swag Kicks, an eCommerce startup for preloved fashion goods, has announced closing a $1.2 million seed round as the startup plans expansion in the local market. 

The round was led by Pakistan’s i2i Ventures and saw participation from prominent international VC firms like Techstars Toronto, CrossFund HongKong, Rose Lake Ventures and i5 Capital. Pakistan’s STAK group and notable angels also invested in this round. 

Founded in 2019 by Nofal Khan, Mateen Ansari and Hamza Abid, Swag Kicks was soon hit by the Covid-19 pandemic and had to roll back operations. It was eventually relaunched in the middle of 2021 when the pandemic subsided considerably, with an investment from High Output Ventures (HOV) followed by SOSV also putting in money in Swag Kick’s pre-seed round. 

The startup sources preloved (second hand) branded sneakers and streetwear from across the globe and sells it here to a millennial and Gen Z population that hunts for branded items at affordable prices. Because they are unable to find say a branded Nike shoe at an affordable price at the outlet of the brand, the offline second hand goods markets or the online Instagram thrift stores become their go-to options. 

Swag Kicks is the third option that has a bigger set of options to choose from, is online and is run by a team passionate about what it does. “We wash and disinfect the goods and put then it on our eCommerce platform on an average price of Rs5,000-6000,” Nofal Khan, CEO and co-founder of Swag Kicks tells Profit. 

“In Pakistan, if an average middle class person goes to a Nike store but the shoe is not affordable for many. Bata and Servis take a beating on the design of the footwear and durability. So what he prefers and ends up doing is buying second hand Nike shoes at lets say Rs3,000-4,000 which is still more durable than any other option in Pakistan at this range.” 

This is one problem that the startup identified which is exacerbated because of the prevalence of poverty and high inflation rates. During 2021, imports of secondhand clothes rose by 90 percent to 732,623 metric tons, and were worth $309.56 million, which is a 83.43 percent rise in value as compared to the previous year, according to a report. This rise is not all inflation driven, however. 

The bulk of Pakistan’s population, about 60%, is under the age of 30 most of whom are digital natives per se, and stay on the phone on Instagram and Tik Tok, consuming global trends. This exposure has made them aware about brands and items such as Jordan’s by Nike but they don’t have access to those brands in Pakistan, which hence creates their demand. 

But even if they do have this access, the waning purchasing power comes into play. The original products get very expensive to buy for most of the population. “Swag Kicks is thus bridging the gap by bringing in such shoes and selling them at affordable prices. We believe that fashion is a basic form of self expression. An individual expresses him or herself by fashion only and these millennials are searching for global brands in pursuit of that,” Nofal says. 

The startup says it currently lists about 25,000 products under a one-of-one inventory model, meaning that a pair of shoes on the Swag Kicks platform is the only item available on the website with no other variation in color or shoe size available. This is usually how the second hand fashion works. 

The startup does sourcing under two models: direct imports from various parts of the world and purchases from Pakistani importers involved in trade of second hand fashion goods. According to the CEO, about 30-40% of the products on the website are imported by the startup itself from various aggregators around the world, whereas the remaining is bought from local suppliers. 

Mateen Ansari says that the business is sustainable, with very healthy gross margins. This is one of the reasons why Swag Kicks has been able to raise funding even during these tough times. 

“This is not to say that we don’t have cash burn. We have cash burn, going towards marketing mostly, but it is less than what other eCommerce platforms would have,” Mateen explains.

The startup says that their strategic advantage is the ability to procure products at good rates because of strategic connections with importers of second hand fashion products. “What we want to do is be able to procure shoes and grade them. From the funding utilization perspective, our focus is going to go towards building an inbound center for procuring shoes all around the world and then be able to grade them.” 

In pursuit of sustainability, some of the big global fashion brands have taken initiatives to move towards allowing their customers to resell on their own platform. But second hand fashion eCommerce is not similar to traditional eCommerce, according to the team at Swag Kicks. 

The second hand fashion works on a one-of-one model which the big brands are not used to of. This is an opportunity that Swag Kicks sees for itself; that is enabling big brands to sell one-of-one items through a SaaS-based platform developed by Swag Kicks. 

“We have invested in our technology and built systems that allow us to sell one-of-one inventory at scale. A certain portion of the money will go towards consolidating that as well. And thirdly, we will continue scaling across markets. These are our prime focus points as we move along.”