Houston dressed for success as used clothing capital of the world

Nobody can fault Topper Luciani for the size of his dreams.

In a pair of warehouses on Houston’s northeast side, Luciani is building what he hopes will become the Amazon.com of thrift shopping. In one of the buildings, which are about a block apart, workers unpack massive bales of donated, used clothing, size and sort each piece, then move them to the other location, where online orders are fulfilled.

This is Goodfair, which Luciani started four years ago and has been tripling in revenues annually for past two years. Its mission is to give “pre-loved” shirts, pants, hoodies, jeans, jackets, hats and shoes new homes, and in the process reduce the natural resources required to make new threads.

“We are really targeting Gen Z, and they’re interested in sustainability,” Luciani said, adding that most of his customers are in their late teens and early-to-mid 20s.

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It requires a lot of water, energy, natural and synthetic materials to make clothing, which has exploded in recent years because of so-called “Fast Fashion,” which trendy clothes are rushed to market, only to end up on the remnant rack — and then at a thrift store – a few months later. When he came upon the idea to sell used clothing online, he moved to Houston in 2015 because, it turns out, Houston is the used clothing capital of the world. There are as many as 50 export operations that buy overstock donations and unsold clothes and then ship them around the world.

Luciani got interested in the clothing business after launching a men’s shirt line called Sir Drake while he was still in college. His first foray into used clothing was called TieLand, a venture that sold used ties on eBay.

Although he wouldn’t offer revenue numbers, Luciani told Silicon Valley investor Jason Calacanis during a public session at a Houston tech event in March – and before the pandemic lockdown – that Goodfair generated $1.6 million in revenue in 2019, and was on track at that time to bring in $5 million in 2020.

Investors are taking notice. Goodfair earlier this year raised $3.6 million in venture capital, which Luciani is using to scale the business with more employees and more efficient processes.

Bundled approach

Goodfair works differently than most other online thrift stores.

Customers can’t simply buy individual items. Instead, they’re sold in bundles. For example, you can purchase two men’s denim jackets for $50; three women’s tank tops for $15 (on sale from $20); a set of three polo shirts ($9, on sale from $30), and so on. There are also themed bundles, such as the Treehugger, which comes with “2 tees, 2 flannels, 2 windbreakers, and 2 crewnecks or hoodies” for $65.

Depending on who’s talking, there are between 20 and 50 distributors of used clothing in the Houston area, and between 20 to 30 warehouses in operation. Luciani said there are six other warehouses on the same street as Goodfair’s locations. The presence of the Port of Houston is one big reason, as well as the low cost of labor and overhead.

Many of the distributors are family owned businesses, and many are immigrants. It’s a classic American story: Someone comes here from another land, sets up a business and family members immigrate to join him or her. Eventually, family members spin off to start their own operations.

That’s the case with Salim Muhammad, owner of Lone Star Rags as well as Goodfair’s landlord. Muhammad came to the United States from Pakistan 30 years ago and got into the used clothing business with his father. Houston had already become a primary exporter of used clothes, and it was growing fast.

Eventually, he left to start his own company, and his children are now involved.

“I am the third generation (in the business), and now my son is the fourth generation,” Muhammad said.

Lone Star Rags is primarily an exporter, buying clothes from nonprofits from all over the United States. They’re graded, sorted and shipped back out through the port. Much of his goods end up in Africa, Muhammad said.

Most used clothing is donated to familiar names – Goodwill, the Salvation Army, Dress for Success, as well as churches, local charities and neighborhood thrift stores. But all those entities receive far more than they can sell or distribute.

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Most of these leftovers end up in Houston. They arrive in 100-pound bales wrapped in plastic, sometimes sorted, sometimes not, into different grades. There are two quality levels: Credentialed clothing, which is in very good shape and in some cases may even be new, with tags still on them; and “mixed rags,” clothing that is obviously worn, and may even be stained or torn.

Most of the Houston distributors export these overseas, much of it going to the developing world, said Awra Hussain, a co-owner of Houston Rags. Her company exports used clothing globally, but also sells vintage and higher-quality goods to area used-clothing stores.

“All the boutiques you see around Montrose, flea markets and whatnot,” she said. “We sell to them.”

Hussain’s father came to Houston 30 years ago and was asked to invest in a used clothing operation. That didn’t work out, she said, but her father was so intrigued he started his own business. He’s still involved in the day-to-day business, but his children now run it.

And it was one of his sons, Tahaa – who initially earned a medical degree but quit during his residency to get back into the family business – who helped Luciani launch Goodfair.

Internet impact

As with most retail operations, the internet is having its impact on the used clothing business, though not always in conventional ways. But both Muhammad and Hussain said the impact on them as distributors is minimal, though Muhammad said it makes it easier to find customers for his exports.

Goodfair is one of the few that doesn’t let you pick out exactly what you want, giving it a “Mystery Box” vibe that’s translates easily to online videos.

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The company has had recent success on TikTok, the hot social network known for its short, viral videos. Goodfair now has 148,000 TikTok followers and 2.6 million likes on its own @Goodfair channel, and unboxing videos can be found on Facebook, Instagram and YouTube as well. But not all of them are flattering.

On TikTok, YouTube and Reddit, some customers complain of clothes arriving soiled or smelling bad. One YouTuber who goes by AlexaSushine83 and who makes videos about buying from thrift outlets opened a March video about unboxing a Goodfair purchase with a quick scene of her sniffing a denim jacket. “That smells … interesting,” she said.

She later washed the clothes and announced that she liked most of them, and that the smell was gone.

Goodfair has a no-return policy, but will send replacement clothes at no extra cost. Luciani said not all customers understand that these are thrift clothes, not vintage, and some may be heavily worn.

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Goodfair’s clothes come with a tag in the box telling customers to watch before wearing.

“We are an online thrift retailer, so while we do sort through all items we ship out to ensure the product lives up to the Goodfair standard, it’s not sustainable for thrift retailers to wash and dry every piece of clothing prior to selling given the immense number of items received and sold weekly,” Luciani said.

Eventually, Luciani wants to expand beyond clothing. Goodfair recently added jeans and last week started selling shoes. It was a category that Luciani really wanted to enter.

“Every year, 300 million pairs of shoes are thrown away,” he said. “They take a lot more time to decompose in the landfill.”

While Goodfair’s business has increased in the pandemic – sweatpants were all the rage as people started to work from home, Luciani said – the coronavirus has had an impact on operations. Muhammad and Hussain said they have had to reduce the number of people in their warehouses.

And Muhammad said that the presence of Amazon.com’s fulfillment centers have created competition for warehouse workers, and that wages have gone up as a result.

None of this is stopping Luciani, though. He ultimately wants to expand into other goods, including household items and books. He does not shy away from the Amazon comparison.

“My vision is for Goodfair to grow way beyond apparel,” he said.

Muhammad, his landlord, thinks Luciani – whom he calls “the best kind of person” – can do it, too.

“And I’ll do whatever I can to help him,” he said.

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