Melbourne-based bag and wallet brand Bellroy has said it will use an US$8 million ($11.4 million) capital injection to expand into new categories and continue to grow its global presence.
The funding from US and Australian investors, including Silas Capital, an early investor in online mattress pioneer Casper Mattresses, is the first time Bellroy has taken on external capital in its nine-year history.
In a statement released last week, the brand said it felt like “the right time” to bring on “value-aligned” investment partners to provide the funding and expertise necessary to take the business to the next level.
Keeping up with growth
Bellroy started in 2010 with a range of five wallets and a larger vision to improve the “carry” category, a term it uses to refer to wallets, phone cases, work accessories, bags and other items that are used to carry things.
“We started with wallets because they were the carry category most obviously broken,” Andy Fallshaw, Bellory founding designer and CEO, told Inside Retail.
The initial range debuted the brand’s now-signature ‘slim wallets’, which featured a functional, pared-back design that proved to be a hit with consumers.
“We didn’t anticipate how long we’d stayed focused on just wallets. We were growing at many hundreds of percent a year, and it took our full attention just to keep up with that growth,” Fallshaw said.
In 2015, Bellroy expanded into phone cases, followed by work accessories and key chains in 2016 and bags in late 2017.
“We task ourselves with bringing genuine insights to each new category we enter, and so our product expansion is slower than many other brands,” he said.
Quality over size
The company said in its statement last week that it has sold more than two million products, worth more than US$150 million in revenue, since launching in 2010.
Most of its sales are direct-to-consumer (D2C) through its website and online marketplaces, but the brand is also stocked in major bricks-and-mortar retailers, such as David Jones, Nordstrom, Barneys, John Lewis, Patagonia, Incu, United Arrows, Toyko Hands, De Bijenkorf and DOE.
Fallshaw described Bellroy’s wholesale approach as “quality over size”.
“These are great retailers, that know how to stoke customers, and we feel privileged to work with them,” he said about Bellroy’s stockists.
And while many D2C brands have started opening their own bricks-and-mortar stores in recent years – such as pioneers of the D2C movement like Casper and Warby Parker – Fallshaw said that isn’t a priority for Bellroy right now.
“Our first step is to present as best we can in the doorways we’re already in. We’re well known for our compelling online experience, and we want to bring that same level of execution to the physical world,” he said.
Focus on profitability
One other way Bellroy differs from many of the D2C brands making headlines lately is its focus on profitability.
“Profitability is a wonderful check on how accurate our theories are. It’s hard to be profitable when you’re deluding yourself. It’s hard to be profitable when you don’t understand your customers,” Fallshaw said.
“There are some amazing online retailers who have pursued a similar philosophy, like Rushfaster in Australia and Huckberry in the US. And then yes, there are many hoping that if they can achieve scale, they’ll be able to pivot to profitability.
“Sometimes that works, but often it doesn’t.”
As evidenced by its stockists, Bellroy has a strong overseas presence – 85 per cent of sales occur outside Australia – and Fallshaw said the move to accept funding will help to accelerate this global growth.
“We now have several categories all growing at very high rates, and so we’re delighted to partner with some amazing folks who have done that before,” Fallshaw said.
“The funds will help, but the expertise will be even more important.”