When it comes to recognising innovative startups from the past five years, there’s an endless number of brands that have catapulted themselves from a pipe dream to a successful global business, but today, I specifically want to talk about HEAT.
Founded by Yorkshire entrepreneur Joe Wilkinson (managing director) alongside Mario Maher (buying and merchandising director) in 2019, HEAT is an ecommerce provider of luxury fashion mystery boxes, whereby customers pay to receive a box of designer label fashion items – but the catch? They only know their size. The rest of the contents of the box is a mystery, and will only be discovered upon receival.
Since its humble beginning in 2019, HEAT has now recently received a £3.6m investment, as well as topping £10m in revenue in B2C sales, demonstrating how sheer entrepreneurial spirit can produce a highly profitable business in such a short period of time, and for that reason, I doff my cap...
Selling a mystery
The concept of mystery boxes has experienced a boom in popularity as of late, and HEAT has now grown to an active audience of 600k+ customers, specifically centred in the Gen-Z community.
Selling more than 10,000 units of stock and over 20,000 luxury mystery boxes, the team behind HEAT is ambitious and hungry for success, and has found a way to capitalise on the desire for mystery and excitement.
But how can a business sell the unknown?
Unboxing
The unboxing experience is just as much a part of online shopping as receiving the final product, and with the added element of suspense, HEAT is able to provide a truly unique unboxing experience like never before.
A client of ours, Delta Global, has long since been a supplier to HEAT for its unboxing experience providers, delivering all of its luxury branded packaging needs.
Delta specialises in providing luxury, sustainable and innovative packaging solutions, allowing businesses to connect with their audiences with emotional and memorable unboxing experiences. This is especially important in the digital world, as ecommerce businesses often don’t have flagship stores where consumers can interact with the brand, and so packaging provides a tangible way for customers to interact with, and experience, certain brands.
Streetwear and sneaker craze
There's been a drastic shift in different fashion trends. For example, there’s now conventions for trainers, as well as trainer stock markets such as Stock X, as well as an entire resale industry, all of which have huge social media followings.
Gambling
It can almost be seen as a form of ‘gambling’, as you are unsure what you are getting in return for your purchase, and you hope for something worth exponentially more than the purchase price.
Early adopter
HEAT is an early adopter by nature, and as such, understands the mindset of early adopters looking to be ‘first’ and ‘stand out from the crowd’.
Community
HEAT had the idea that this is more than just a buying group, but more so a tribe, and has built an offering specifically for this audience.
Understanding consumer audience(s)
As mentioned above, HEAT knows its audience inside out (as the founders literally started out as their own audience) and delivers product offerings that are exactly what the audience is looking for at each launch.
Scarcity and the power of ‘limited’
Each launch is promoted in advance and has a limited edition. Lending from the sneaker, tech and fashion industries, HEAT understands the drivers that ‘limited’ offerings have on consumer habits.
Discount
HEAT understands the compelling power of discount - more for less. But here lies the GENIUS of the business plan - in doing so, HEAT has not only serviced its customers who wish to purchase top brands at discounted rates, but it has also serviced the brands themselves. Top fashion brands cannot be seen to discount, however, in fashion, some lines sell through better than others. So how do brands trade out their entire stock levels without causing harm? Unboxing mystery boxes delivers them the answer - the ability for consumers to buy on the power of their brands alone and get more for less without it being a discount.
Digital
Each box from HEAT is sold virtually, vastly increasing reach, and decreasing costs. One of the major barriers to entry in the fashion industry is the cost of ‘brand’ and merchandising, with flagship stores in top locations costing millions per unit in sunk costs, often with high gearing (levels of borrowing) from banks and other mortgage providers. HEAT has done all of this via the internet and packaging.
Unprecedented growth in an unpredictable market
Most start ups don’t make it, so to survive as a start up is an achievement, meaning the stellar growth HEAT has achieved is cause for celebration. However, I’m not surprised... I’ve known Joe’s father for many years, and entrepreneurialism clearly runs in the blood. I remember meeting Joe in our board room as HEAT was just getting off the ground, and it’s incredible to see what he has achieved in such a short time.
As with many start ups, they have required investment along the way, and their list of investors are a who’s who in fashion and investment, involving major names such as Spotify's Sven Ahrens, French luxury design house the Hermès family, Stefano Rosso of OTB Group, the parent company of the fashion brands Diesel, Maison Margiela, Marni, Viktor & Rolf, Staff International and Brave Kid, along with Michael Mitterlehner (L Catterton) and Oliver Merkel (Flink).
In addition to this, the concept behind the business and a fantastic business model has contributed to HEAT’s success.
There are some other notable contributions to the brand’s success, such as:
1) Association
Working with many of the biggest brands in the world immediately elevated the HEAT brand to that of its suppliers - the “power of association”. This is continued with the celebrities and investors they have onboarded, with HEAT strongly understanding, and utilising, the power and reach of brand.
2) Latest techniques
HEAT has been quick to adopt the very latest digital marketing techniques, using influencer marketing as a way of promoting its products and services to a highly engaged target audience. In particular, influencer marketing is a highly successful way of promoting fashion items, and HEAT knew exactly how to utilise this in its marketing efforts.
3) Application of insights
HEAT has applied new trends and fashions from existing industries to the fashion world, revolutionising the industry and providing a never-seen-before offering. For example, HEAT saw the success of mystery boxes within the gaming industry, and applied this insight to its own business model.
The five core values behind HEAT
When I think of HEAT, there’s five words that come to mind: ingenious, innovative, targeted, digital, and, of course, ambitious.
Applying an entrepreneurial mindset with an awareness of the digitised world, alongside addressing a craving for something different in the fashion industry, HEAT was born into an almost guaranteed success.
Having partnered with more than 60 of the world’s leading luxury brands, all of which share the same passion for sustainability, innovation and an eco-friendly future, HEAT is now recognised as the disruptive model in the industry.
HEAT has big plans, and I’m sure it is going to achieve them – it's a great business model run by great people. I wish Joe and team all the best into the future, and I look forward to seeing where the journey takes them.
#IDoffMyCap