EP093 – ShopWorn: Larry Birnbaum, Co-Founder & CEO
Larry Birnbaum is the Co-Founder and CEO of ShopWorn, the e-commerce platform for customers who want to be the first to own authentic, unused luxury products while doing good for the environment.
This a fascinating proposition, one that challenges luxury brands as well as consumers to do something they used to be reluctant to do: Put trust in a discount reseller. It is also a two-sided marketplace which is always fascinating from a brand perspective as there are suddenly two stakeholders that the brand voice and image need to attract and engage. Needless to say, an episode well worth your time!
Fabian Geyrhalter:
Welcome to the show, Larry.
Larry Birnbaum:
Thank you so much for having me. Excited to be here.
Fabian Geyrhalter:
Oh, it’s so great to have you. Back in, I believe it must have been 2016, you and your brother started selling ShopWorn store display. There’s a luxury brand goods like Gucci. Picture a high end watch, for instance, at a huge discount, helping brands move their unsold inventory while giving customers a huge discount, and sometimes the ability to get something that they otherwise wouldn’t be able to obtain. I hope that’s a good synopsis. Tell us…
Larry Birnbaum:
It’s a good synopsis. A little concise, but…
Fabian Geyrhalter:
Well, we’ll get more into it.
Larry Birnbaum:
We’ll explore it. Of course, of course.
Fabian Geyrhalter:
Well, tell us a little bit about how the idea came about and how the venture started.
Larry Birnbaum:
What’s interesting is, I didn’t think of this until many, many years after we started ShopWorn, but when I first started my career as an entrepreneur, as a partner with my brother, we were in the clothing business, in the fashion clothing business. This was really at the start of the internet. There weren’t price comparison apps and things of that nature. We used to drive around, other than our main suppliers, which may have been Ralph Lauren Closeouts, Tommy Hilfiger, things of that nature, we used to drive around to major department stores all along the eastern seaboard. We would travel other places.
When they had their end of year clearance sale, we would actually get a call from the manager of the store. “Hey Larry, hey Rich. Our clearance starts tomorrow. If you want to be here at 10, the store opens at 11. You can take whatever you want.” Now you see people going to Marshalls and here and there and they’re scanning with their app and saying, “Oh, I can sell this on Amazon and make 10 bucks a piece.” Before the concept ever really existed, I was doing it, I just didn’t know it.
Fast forwarding to October, 2015, which is when ShopWorn was born, we just realized that due to varying things that can go on in the world, political uncertainty, war, Zika, now we have of course, COVID, that lots of regions, lots of stores placed orders, and then didn’t have, for whatever the reason was, the tourists, people didn’t come in and buy that item. The stores really needed a place, a way to move that merchandise to make room for the following season’s goods, as well as we felt that the luxury industry was really missing a platform and avenue to move goods where they’re sold for what they are, which truly is ShopWorn.
Those goods have been in a store at the retail level and didn’t sell for whatever the reason, whether the style just wasn’t a hit, or people just didn’t travel for whatever the reason is. We really thought that the luxury space needed someone to fill that gap. The years the goods were taken back by the manufacturers, and then dumped into the market, and sold as brand new, which they’re not one. Something is at a retail level store, it’s really not brand new anymore.
Fabian Geyrhalter:
Yeah.
Larry Birnbaum:
That was the impetus to the existence of ShopWorn and selling this idea to the brands, to the luxury industry. It wasn’t an easy sell, but as we kept pushing it and they saw how we handled things and that we were true to our word, it kept gaining traction. Here we are today, seven years later, and the way the world is going today and the way these luxury markets today and the brands are now accepting the internet, because they never did in the early years, it just makes 2023 a great opportunity for ShopWorn to spend brand partnerships and working with our partners as well as gain new ones.
Fabian Geyrhalter:
How do you not compete with the brands you’re reselling at a steep discount?
Larry Birnbaum:
We never sell in line product. We are not a brand, a damager. We are someone who wants to work with the brand. We only sell items from previous seasons. There’s a reason that the consumer is getting this item at a more aggressive price than regular retail. That’s because it’s from a past season.
That’s the message that we need to and do convey to all our consumers. There’s a reason for it. It’s not just, “Oh, I’m buying this and it was at the store for 20 off, but I can get it here online for 50 or 60 off.”
Fabian Geyrhalter:
Right.
Larry Birnbaum:
Why? Let’s ask ourselves why. There is a reason behind that. That is the ShopWorn concept.
Fabian Geyrhalter:
Yeah, yeah, yeah. If a luxury brand does not want to resell through you or services like yours, does their merchandise end up in a landfill? Is it still brand over environment, or has that been slowly changing?
Larry Birnbaum:
Some brands still claim that they destroy merchandise, damage it. Some brands have been caught doing it. I’m sure as you brought it up, you’ve read the articles over the years that so and so company was caught slashing, destroying. Some do it, some don’t. Today, it’s a new world we live in. Sustainability is such an important message and something that everybody is concerned about. Why should something be sent to a graveyard because it’s a season or two old? Someone will enjoy it.
There is an aspiring consumer who may not have the means today to buy something that’s the latest, newest, greatest thing out, but they’re okay with owning something that is two years old by season, by design. Why should it go to a landfill? Why not, from a brand perspective, build a consumer’s allegiance, and then as they progress in life and maybe have more disposable income, they then become a full price purchaser of that brand? That’s what we encourage. As I said, we like to work with the brands, not against them.
Fabian Geyrhalter:
I absolutely agree with everything you just said. Are there still brands out there, they used to be called no discount brands, like brands that just a hundred percent never, ever give any discount on anything they sell? How do they get out of this? Are they warming up slowly to that idea that there should be a place like yours?
Larry Birnbaum:
I think they are. I don’t think they’re there yet. There are certainly brands, if you’re taking watch brands, certainly a brand like Rolex, they’re blessed. They sell through all or most of their import, at least we think they do. I think every brand, as every brand is warming up to the new reality, and I think COVID really pushed that up by a couple of years. I think all brands will warm up to it eventually.
Some will have more, some will have less. I think the fact that we sell the goods for what they are, don’t sell them for what they’re not, which is “brand new,” I feel that there’s an enormous opportunity for both ShopWorn as well as the brands to control their inventory, and have a reason why certain things are selling at a bigger discount.
Fabian Geyrhalter:
Yeah, yeah. Makes tons of sense. We talked a little bit about the environmental angle and how important it is for today’s customer. It starts being important for even today’s luxury goods consumer. Do you as a brand, talk about the environmental angle a lot? Do you bring that into your messaging?
Larry Birnbaum:
Absolutely. We have two things that are very important on the consumer facing side, and some of that even rolls over to the brand facing side in our messaging: authenticity and sustainability, two very large platforms that are very important to the consumer now. There are many sites out there today that have hundred, a hundred more authenticators. Those authenticators can do the best job they can do, but they can never be 100% certain. Only a brand can really 100% authenticate their problem.
ShopWorn doesn’t need any authenticators, never had one, never will. Our merchandise only comes from two places: either the brand themselves or their authorized retail network. I don’t have to have any authenticators, which in today’s world, again, it’s a big plus. Our consumers love it because they don’t have to worry, did this fall off a truck, were parts change that are not factory parts? The item still works, but is it 100% authentic?
Fabian Geyrhalter:
Trust is one of the most important ingredients of any brand. Then your brand, that’s even 10X as important, right?
Larry Birnbaum:
Absolutely.
Fabian Geyrhalter:
You’re immediately wondering why? Why is this 40% off? Then your mind goes to all kinds of places.
Larry Birnbaum:
Yeah, absolutely. It’s always important for us to continue. It’s seven years old. I think even if we’re 20 years old, as you get new consumers, which of course, we try to grow every day, we have to continue banging home that message so they understand why and who we are.
Fabian Geyrhalter:
This is a big, big question that so many listening to the show are interested in when I have a guest like yourself on. I don’t believe I ever got to ask anyone this on air, but I think it’s so important for so many entrepreneurs who are in a similar position like yours, the burning question is, how do you launch and market a two-sided marketplace?
Basically, you have to ensure you have both the brands as well as the customers on board to launch successfully. The question is, who came first, the brands or the consumers? How does that play out from a messaging perspective, constantly having to make sure that both of your audiences, so to speak, are engaged and excited?
Larry Birnbaum:
The answer as to when we started is neither came first. I’ll tell you who came first. When we conceived this idea and went to the watch show in Basel, Switzerland that used to happen, I’m sure as it was canceled as of a year ago, and may or may not be relaunched as a new venture, 90% or so of all merchandise actually came from brand retail network stores who, again, because of war, of unrest in the world, had to move out those items. 90%.
Fabian Geyrhalter:
The retailers were and maybe still are one of your biggest stakeholders?
Larry Birnbaum:
Were, but it was always done with the knowledge of the brands. As we continued to grow as the years went on, we were able and brands saw that we kept our word. We sold it as ShopWorn on ShopWorn, and sold it for what it was. More and more brands came to us direct, where today, 85% of our goods come directly from the brands.
We are in the secondary market as you know. Brands, in my opinion, for the first time ever, gave us endorsements. We got endorsements from the brands. It’s something to my knowledge that has never happened before in the secondary market world.
Fabian Geyrhalter:
That’s amazing.
Larry Birnbaum:
That to us was, beyond the shadow of a doubt, proof of concept. We knew we had something special that was going to really disrupt the luxury world.
Fabian Geyrhalter:
You got the retailers on board in the beginning, and then obviously with your steep discounts, the consumers were in too far from it, because they saw it. That was of course something for them to get excited about it.
Larry Birnbaum:
It was, but we don’t focus on the discount. The discount is not really where the focus is. Yes, the consumer is definitely getting an item at an advantageous price, but the more focus is on authenticity and sustainability. Once they understand why they’re getting it at a discounted price, everybody once did a great deal, but then that’s off the table. The focus really is on they’re getting something real that they wanted. Just so happens they’re getting it at a fabulous price because of our concept.
Fabian Geyrhalter:
It becomes more meaningful. It’s not just about the price, it is about something deeper and something more.
Larry Birnbaum:
Yeah.
Fabian Geyrhalter:
How does it play out from a messaging perspective? Do you mainly message to consumers because everything else happens in the back end?
Larry Birnbaum:
Exactly. We try to present our website as well as the brands on par with the way the brand first presented that item when it was brand new and in season. We feel that it’s very important to walk hand in hand and stand on that line with the brands, and not just be opportunistic. We are here to protect the brand’s integrity, and to present this past season item with the same luxury seal as it was when it was a brand new in-season item.
We feel it’s very important. We feel our customers should always be treated with white glove service, from personal notes going out to them on a purchase, to a follow up call to say thank you, it’s who we are as a company that came from who I am as a leader.
Fabian Geyrhalter:
Yeah, yeah. Makes perfect sense. It always comes from whoever is directing it, so to speak. When people shop with you, how do you keep them engaged with the brand so that they have awareness and turn into repeat customers? Someone buys something once, how do you keep them in your universe? How do you get them excited to be a repeat customer?
Larry Birnbaum:
We have retention marketing. We are using various different softwares to go out to those people. We segment based on their purchase. We don’t like to bombard people. If we know someone is not interested in a watch, but only in writing instruments or in jewelry, we like to segment to them and not bombard them with emails that they’re not going to be interested in, or text messages that they’re not going to be interested in.
Fabian Geyrhalter:
Makes sense.
Larry Birnbaum:
We have so many people that over the past seven years buy from us, really monthly. It’s truly amazing. We, back in December, myself included, as well as our sales team and customer service team, we just called customers just to say thank you, which in and of itself, many customers were shocked. They almost fell off their seat. Who today in today’s world calls to say thank you? I wasn’t calling to try to sell them something just called to say thank you.
The response we got for many of them was, “You don’t need to sell me. I come. ShopWorn is a place of discovery. I know you are always getting new items and we are updating the site three, four, five days a week with new product.” Most of what we sell or much of what we sell are singles, ones and twos. Makes sense. It comes from a store. A store doesn’t have 300 of something. It’s really a place of discovery, and it’s a place of introduction, of brands that they never heard of.
A lot of the brands we carry are, especially from a jewelry standpoint, are very, very exclusive brands in Europe, in Italy, and they have a very small market share in the US. Not only do shoppers get to discover new brands that they normally wouldn’t see unless they were traveling, but we’re a brand ambassador. We’re helping these brands build up their foothold in the United States as well as other places where it may not be carried.
Fabian Geyrhalter:
Because your items, there’s only one or two of the same, most often just one, there must be that excitement and that thrill of the hunt.
Larry Birnbaum:
Exactly.
Fabian Geyrhalter:
For collectors of watches, right? They must refresh the page every other day and be like …
Larry Birnbaum:
Exactly. I can’t tell you mean from my old days when we were a mom and pop company as opposed to now, a larger growing company, how many texts I used to get from customers. They would say, “Oh, I see you just added such and such.” I was like, “Yeah, how did you see it? It literally went up 30 seconds ago.” It’s a good problem. It’s a good problem to have. A lot of that, again, comes from who we are as a company and how we treat our consumers.
Fabian Geyrhalter:
Yeah, that’s fantastic. You and I chatted about this just for a split minute before we went on air, but the name ShopWorn is a very descriptive name. You can actually find it in the dictionary. Not everyone is familiar with it. In hindsight, did it help or did it hinder you as a brand?
Larry Birnbaum:
First of all, don’t believe what you read in the dictionary. We’re still trying to figure out how to get …
Fabian Geyrhalter:
Only believe Twitter, right?
Larry Birnbaum:
… How to get Webster to change that definition, because it’s really not true. ShopWorn is very descriptive. What it really means, it’s an item that was in a retail store that was never consumer sold, consumer owned during its original introduction of a season, or even two seasons, if the brand didn’t change that particular line or particular product on a seasonal basis.
Fabian Geyrhalter:
How is that different from the dictionary?
Larry Birnbaum:
The dictionary calls ShopWorn, dirty, torn, ripped.
Fabian Geyrhalter:
Oh, like used, basically.
Larry Birnbaum:
The term back in the 1920s, like used. ShopWorn is not used. We created a new category that never existed before. There was always brand new, and there was always pre-owned. We know how hot today pre-owned secondhand is from clothing to jewel. In pre-owned, there is no way, unless the brands are selling it, no way to prove authenticity.
ShopWorn created this new category, and we are still what we believe we are leaders in this category, which is fantastic, of an item that’s not brand new, it’s shop worn, but it’s not pre-owned either. Who wouldn’t want to own something that has never been consumer owned at the same price, the same value that you would buy something that was pre-owned? It’s a no-brainer.
Fabian Geyrhalter:
Now coming back to using the term ShopWorn as a brand name, it sounds like it describes it outside of the misleading dictionary term, right? It describes what you get, so it kind of lures people in. Did you feel like that’s actually a strength of the name?
Larry Birnbaum:
I think if you look at it, just taking the word, removing it from our business, it’s a hindrance. That being said, it’s a word that, and myself and my partners have debated many, many times, as I’m sure you can imagine.
Fabian Geyrhalter:
Sure, yeah.
Larry Birnbaum:
Should we change it, shouldn’t we change it? In the end, the answer is always no. It’s just about getting out the right messaging, the right branding, cause that really is who we are. Even though it’s an industry term over the last seven years, we feel we’ve done a very good job in explaining who we are and what a ShopWorn item actually is. We are certainly always open to grow and do more. Certainly, Fabian, if you have any thoughts or ideas, throw them at me. I am ready, willing, and able to accept them and chat about it.
Fabian Geyrhalter:
There’s always change, there’s always growth, but I very much appreciate your answer to that. Yeah.
Larry Birnbaum:
I like to say all the time, be confident in your vision but be flexible in your approach.
Fabian Geyrhalter:
Yeah, I like that. I like that a lot. You deal with some highly established, very well respected brands, day in, day out, as well as many retail brands. You yourself created a brand, which we obviously just spent 25 minutes talking about. What does branding, that very misleading and misunderstood and often hated for the wrong reasons term, what does that term, what does branding mean to you personally after going through all of this?
Larry Birnbaum:
It’s really, to me, it’s about communication. I think communication obviously is important in everything we do, from within our company to conversations internally, as well as with consumers. It’s really all about the proper communication and getting that message out there, and making the consumer, as we are a consumer brand, feel comfortable in what they’re doing.
It’s a continuing, I don’t think you can ever say, “Okay, we’ve done it, we’ve accomplished what we wanted to.” I think it’s a continual process that we’ll be doing for the next 25 years.
Fabian Geyrhalter:
Yeah.
Larry Birnbaum:
I think it’s very, very important to always continue and always change. When we first started out, we made a minute and a half video which explained what ShopWorn is. We still have it, but as we’ve evolved, we’re now in the process of making a new updated video. A lot of things have changed in seven years.
Fabian Geyrhalter:
Sure.
Larry Birnbaum:
We’re going to improve on the messaging. The video, it was very well done and with “cartoon characters.” We’re not sure how to proceed yet to make the new one, maybe having live actors but really enhancing it, because the world has changed so much, as have we as a company.
Fabian Geyrhalter:
I think that the question, will it be cartoon characters again? Will it be real actors? I think a lot of the answers lie in who you are as a brand and how you want to be perceived. That’s a nice little segue into, oh, go ahead.
Larry Birnbaum:
No, it is. I just wanted to add one more thing just in that, because I think it’s very important. We’ve started to invite customers randomly into focus groups that we run, just to get their feedback, where they want to see improvements, what they’re happy with. We ask them these branding questions and messaging questions as well, so we can continually evolve in our messaging and how we present ourselves.
Fabian Geyrhalter:
Very often, and thank you for sharing this, because very often, it is the customers who can describe your brand better than you can yourself because you’re too close to it. You can’t read the label when you’re inside of the bottle. It’s the old saying. It is so true.
That’s how I make my living because I can look at things from the outside. To me, it’s so much easier and if I work on my own brand, I get stuck because that’s just how it works.
Larry Birnbaum:
It’s how it works. I feel very blessed myself to have the ability to sometimes be able to remove myself from the closeness of the situation and look at it as an outsider. It’s not something that many people have, but I feel that I have that ability. Some of my partners don’t have it, but I do, and it’s been very helpful for myself in assessing situations, both positive and negatives.
Fabian Geyrhalter:
It takes quite some focus to be able to do that, but it’s a great gift. I’m glad you have that.
Larry Birnbaum:
It’s a great gift and I didn’t always have it, but over the past three years as we’ve started to grow, I found it was essential in being able to be successful in what I’m doing.
Fabian Geyrhalter:
Yeah, to keep pivoting, to keep changing, to allow it. If we could put the entire brand through a funnel, and my listeners know this question is coming up as usual, could you describe your brand in one or two words, basically that really describe the brand from the inside out, from the retailers and the brands that you use, and the customers and everyone, really, where you feel like this is a word or two that you can put out there that really signifies what your brand stands for?
Larry Birnbaum:
The answer is yes, but as the old game show used to go, I can name that tune in three notes. I’m going to give you three words. We like to call it the CTT, which is controlled, trusted, and transparent. That is the three pillars. Those are the pillars of our company.
Controlled from the brand aspect, trusted from the brand and the consumer aspect, and transparent from the brand and the consumer aspect. Who would want anything more of a partner, whether you’re a consumer or a brand, if you have those three things? That is who we are.
Fabian Geyrhalter:
Fantastic. How do consumers experience that transparency when they go through the shopping funnel? How do you gain their trust?
Larry Birnbaum:
They experience it from pricing, as to they know why they’re getting something at such an advantageous price. That will be transparency and trust. They appreciate it from if they bought something and they call up three weeks later, and that item was reduced a little bit, many companies would say, “Sorry, return it if you don’t like it.” We make the adjustment. It’s that white glove service from a consumer standpoint that makes them believe.
Now, did they believe from day one? No, but we’ve built up a reputation. We have fantastic reviews, we under-promise and over-deliver. When you read customer comments, it has to eventually, as you get more and more of them, it has to mean something.
Fabian Geyrhalter:
Yeah.
Larry Birnbaum:
We’re certainly transparent with our brand, from giving them quarterly sell through reports. They see, oh, look at this. I look how good ShopWorn did with this thing. I think I have three stores in the Midwest that didn’t do well with this. Let me see if we can do a stock balance with them. We give them information that helps them as well as helps us.
Fabian Geyrhalter:
Fantastic. Very good. To close things off slowly here, any advice for new founders? Any brand advice or business advice as a takeaway from your end that you’d like to share?
Larry Birnbaum:
Yeah. I think I shared it a little while ago, which shame on me. I guess I didn’t know this question was coming, but I guess I should have anticipated it. If you have a vision and you truly believe in what you’re doing, then as an entrepreneur, as an idea person, you need to carry that forward. You can’t play scared, but you really have to be, as I said, flexible in your approach.
Listen to others, get advice, don’t think you know everything, and surround yourself with a fantastic team. We have surrounded ourselves with a team that we consider to be a dream team, and it’s very important. Have trusted people around you that also believe in your philosophy.
Fabian Geyrhalter:
Absolutely. It’s everything. I totally agree with you. If you’re not able to hire them yet, then get an advisory board and just have people that way. That can be a sounding board.
Larry Birnbaum:
Absolutely. This is not an overnight success. You need to go through, go through the paces and build slowly. This has been a seven year process to get to this point.
Fabian Geyrhalter:
Amazing.
Larry Birnbaum:
We’ve proven concept and it’s very important and we’ve done it on our own blood, sweat and tears, not others.
Fabian Geyrhalter:
Yeah, yeah. There’s many of those blood, sweat and tears along the way. Now, let’s not look into the past but into the future. What’s next for the ShopWorn brand? What are you excited about in the next couple of months or the next half year?
Larry Birnbaum:
I think as we discussed earlier, as the more and more luxury brands are accepting the internet and accepting the secondary market, I think 2023 is going to be an incredible year for ShopWorn from a revenue standpoint, from getting more brand partners on board. As we all know, the world itself is going through inflation, and struggles, and war. We truly believe that there are going to be lots of opportunities that the brands are going to need help with moving past season merchandise.
We just think 2023 is going to be such a year of growth and new partnership. It’s such a big impact for the brands to now trust the internet more, and trust ShopWorn that we see huge growth and we’re so excited for 2023 to move on. January blew by, and we expect the rest of the year to blow by as well. Just very, very, very exciting about the opportunities that lie ahead for us this year, and certainly well into the future.
Fabian Geyrhalter:
Very, very happy for you and excited to see how things progress. I might not update my browser every day, but I sure will check in quite a bit.
Larry Birnbaum:
Oh, thank you.
Fabian Geyrhalter:
How can people follow ShopWorn, and maybe on social? What is the best place to get to know the brand?
Larry Birnbaum:
We have Twitter, Instagram is out there, as well as certainly on our website, sign up for our newsletters. We’re going to start expanding our blog posts and have that done on a weekly basis. Brand introductions, it’s not all about selling. If you want to learn about brands, certainly sign up to our mailing list, and you’ll get hopefully useful information every week.
Fabian Geyrhalter:
Fantastic. Larry, you jumped onto this pretty last minute, and I want to thank you again on air for that. Really, really great that we made this happen. Thank you for all the insights and the knowledge, and for sharing your brand journey.
Larry Birnbaum:
My pleasure. I’m going to ask you a question and please answer honestly. I’d like to offer for your listeners a code, if you’d like, that they can get 30% off on a purchase.
Fabian Geyrhalter:
Absolutely, yes.
Larry Birnbaum:
I don’t have that code yet, but if you give me what that code wants to be when we hang up with this call, I will have it set up and we can certainly offer that.
Fabian Geyrhalter:
Absolutely. The code, Larry, and to all my listeners is hittingthemark. With the code hittingthemark, you will get some sort of extra discount under already discounted prices.
Larry Birnbaum:
Correct. With the code of hittingthemark, you will get an extra 30% off of our already discounted prices on any item that is not already on a flash sale or something like that, which is very few. It’ll be applicable to 99% of the things on our site, unless it’s currently on a blowout sale where we’re already giving it away.
Fabian Geyrhalter:
Well, 30% on top of all of that is pretty amazing.
Larry Birnbaum:
Yeah.
Fabian Geyrhalter:
Yeah. I’m glad that I’m not charging for this podcast, because I’m going to lose all my listeners because after this, they’re all going to be broke. Thank you, Larry again, and good luck with everything in the future.
Larry Birnbaum:
Great. Thank you so much, Fabian. Thank you for having me.
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