What went wrong at Kent & Lime
Online men’s clothing retailer Kent & Lime shut its doors for good last month, four years after launching in Australia.
The Sydney-based startup was modelled after personalised fashion companies Trunk Club in the US and Outfittery in Europe, which hand-pick clothes from a curated selection of brands based on customers’ individual preferences and style.
Speaking to Internet Retailing, Will Rogers, CEO and co-founder of Kent & Lime, attributed the company’s demise to a lack of in-house marketing savvy, rather than the business model itself.
“It’s very expensive to acquire customers in Australia, and while we had a certain level of expertise in the business to facilitate paid advertising, we didn’t have the know-how to drive organic growth.
“We learned very quickly that we couldn’t keep spending to acquire customers. It’s too expensive and doesn’t give you the backbone you need in a business. We were trying to get out of that as quickly as possible and looking for talent to achieve it, but time was against us,” he said.
If he could do it again, Rogers said he would have focused on forming and leveraging partnerships with fashion brands to reach customers, but an early misstep cost the company both time and financial resources.
Kent & Lime operated an inventory holding model during its first two years, which proved to be too costly in a “try before you buy” business.
“Because you’re sending stock out to the customer and waiting for him to send back the items he doesn’t want, it can take up to 14 days to capture a sale.
“That puts a huge amount of pressure on working capital. If you’re not well funded, that can cause a lot of problems,” he said.
Kent & Lime raised $750,000 from an undisclosed venture capital firm in an initial seed round in 2015, completed a second seed round in 2016 and was in the process of raising more funds, but was ultimately unsuccessful.
“You end up spending time pitching investors when you should be working on the business. But you need the capital to grow. It’s a chicken or the egg,” said Rogers, who invested his own money in the company.
Rogers remains convinced of the Kent & Lime business model, citing the fact that the average sell-through-rate for first time customers was over 30 per cent and higher for repeat customers, in line with Trunk Club.
He said the sell-through rate was even better after Kent & Lime switched to a drop-ship model in mid-2016, because the startup was able to carry more brands.
“There is so much noise today and we lead such busy lives, people don’t want to go to the hassle and time of shopping. I still think personalisation is the way forward,” he said.
Accounting firm HLB Mann Judd is heading up the liquidation of Kent & Lime’s assets, and the startup informed its customers personally about the closure as soon as it happened.
“I truly believe we built something really cool that offered a great service to customers. It came down to cash, it didn’t happen for any other reason. So I can hold my head up,” Rogers said.
A version of this story first appeared in Inside Retail Weekly issue 2138. To subscribe, click here.