The Luxury Closet, a Dubai-based online marketplace that buys, sells, and consigns personal luxury goods, mostly pre-owned and at a discounted price, has closed a $7.8 million Series B round of funding.
According to a statement, the financing was led by Wamda Capital, and Middle East Venture Partners (MEVP), which has previously seeded and reinvested in The Luxury Closet since 2012.
Equitrust, Saned Partners, Arzan Venture Capital and a few other regional investors are also joining this round, it said.
The firm said that it plans to use the fresh funds to expand into Saudi Arabia, and make further investments in marketing and technology, as well as launch an app in an effort to reach more customers.
Explaining the rationale behind the investment, Fares Ghandour, partner, Wamda Capital said that The Luxury Closet has all the ingredients required to cut it in the growing regional e-commerce market—business model, a sharp focus on individualized customer experience and, most importantly, a strong team.
He pointed out that the startup has zeroed in on the next generation of online luxury retail, which is part of a new sharing economy where individuals are able to monetize personal assets.
According to the statement, The Luxury Closet offers digitally savvy customers a customized online market to sell and buy authentic, pre-owned personal luxury products on a large scale.
Founded in 2011 by Kunal Kapoor, a former regional executive with fashion brand Louis Vuitton, it has claimed to have acquired over 300,000 members, and nearly half million of monthly visitors from around 60 countries.
Inc. Arabia has reached out to the startup for more details on users and transactions, and responses are expected.
Even with the oil price-related slowdown, luxury retail is still holding somewhat strong in the Middle East, especially the Gulf markets.
A regional survey commissioned by AmEx, for example, found that residents and citizens in Qatar spent an average of $4,000 (Dhs14,691) per month on luxury goods and services in 2015, up from $2,500 a year earlier.
It could be argued that the overall slowdown would be beneficial for a startup like The Luxury Closet, as it would force on-the-fence buyers of luxury goods to consider tapping into the sharing economy before actually purchasing one. On the other hand, the slowdown could also result in owners of luxury goods pawning off their assets.