Why This Ecommerce Startup Is Chasing a Different Kind of Growth

What's This?

By Dani Fankhauser2013-08-10 03:00:09 UTC

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Name: Lollipuff

One-Liner Pitch: Buy deeply discounted, pre-owned designer products that are guaranteed to be authentic.

Why It's Taking Off: Most of us were once ripped off by someone selling something on the Internet that didn't turn out to be quite what it seemed. Finally, an antidote.

When it comes to ecommerce, the recipe for success includes setting up a great digital experience that matches buyers and sellers, then letting network effects take charge to accelerate the number of transactions. Etsy and Ebay, with their massive userbases, did this right.

See also: These 11 Apps Will Supercharge Your Personal Life

But one startup just out of Y Combinator, Lollipuff, is taking a different route. In fact, the site is limited to one shoe brand (Christian Louboutin), one bag brand (Chanel), on dress brand (Herve Leger) and a fourth brand (Balenciaga) that founder Fei Deyle says is just an experiment.

Scarcity itself isn't the justification. Lollipuff's differentiator is that the company verifies the authenticity of top designer products that are sold on its site (keep in mind, one downside of used designer goods is that they're worthwhile to fake for those tricksters on the Internet). And instead of growth as a generic metric, Lollipuff is looking for depth, or density — they currently sell 25% of secondhand authentic Herve Leger online. (Deyle says the vast majority of secondhand Herve Leger dresses that are sold online are actually counterfeit.)

Image: Lollipuff

The site doesn't have advanced search tools and doesn't need it, because you can scroll through all the available merchandise in one sitting. If you wear anything larger than a medium, you'll probably have to stick to shoe and purse shopping, as the dresses are overwhelmingly XS or S. Sometimes alongside images of the actual dress are photos of celebrities wearing the same style, perhaps just in a different color. And instead of talking up their merchandise, sellers are dead honest: the care label is missing, it runs a size big or some of the gems are loose.

Why did Lollipuff decide to break all the ecommerce norms?

The site is going for market penetration, not reach. Perhaps it seems too exclusive, too honed in on one type of customer. But the goods being sold are high price tag, even at resale. And they hold value.

"Designer items really don't depreciate in value," Deyle says. "We have one dress that's been sold four times on the site for about $300."

And unlike Rent the Runway, which allows users to borrow designer clothes for a fee, with Lollipuff, you can wear the item a few times at your convenience, then resell.

The trust developed between buyers and sellers on the site is unique. Rather than being a collection of stores a la Etsy, where some users dedicate themselves to making products while others just browse, Lollipuff sees many of its users playing both sides. Of course, some will never buy a designer item at full price and then resell it, but since the items hold value, they don't need to, and can still participate in the "Herve cycle."

While market penetration is the first goal, Lollipuff will eventually expand beyond these brands. Deyle has documents on how to verify authenticity of more than 50 brands from her days blogging about how to spot fakes online (which is what got her started on the idea of an ecommerce site).

"By breaking into the hottest brands [first] we will break into all," she says.

Image: David Livingston/Getty Images

Topics: Business, e-commerce, lollipuff, Startups, The Launchpad, y combinator