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Growth 2000 interview: Meli Melo rethinks wholesale to drive brand value

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Smaller brands looking to build their market presence are faced with a wide choice of channels to get their products in front of consumers, whether through wholesale or direct to consumer.

Luxury handbag brand Meli Melo has been reassessing its use of the wholesale channel, according to CEO Douglas Ker.

“We’ve been closing reseller doors,” says Ker. “When we researched this we found resellers, including big US department stores were bidding aggressively, driving lower prices.

“That’s not doing our brand any favours in the long run.”

Meli Melo has accordingly been reducing the number of these channels in a bid to drive up the brand’s value, says Ker. This has come alongside shutting down its Notting Hill flagship store.

While moving away from heavily discounting resellers has cut down the brand’s exposure to some extent, the brand has focused on acquiring customers through social media, particularly through gifting the products to celebrity influencers on Instagram.

It has also used Rakuten Marketing to acquire customers through affiliate channels such as Ebates, Dealmoon, through reward style programmes.

Smaller brands don’t have the same luxuries as some larger competitors however, with a year-on-year spike in Meli Melo’s returns rate in February sparking a “tightening” of its policy. The company no longer offers free returns on sale items.

Ker thinks the industry has been overly generous; next month Meli Melo will look more at paid models for shipping and returns.

“The customer has been taught to expect that, but we can compete on product, less on price, less on discounts.”

From a post-purchase perspective, Ker attributes the brand’s high repeat purchase rate (around 22% compared to Louis Vuitton’s 16%) to the high quality of the product.

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