A look in to the in-demand mystery box business, with founders Joe and Mario, which is gaining mass attention across the globe
(This interview was conducted a couple days before their 13th August drop)
What was the spark point in launching HEAT, where the idea come from? What happened next after that?
Joe: A group of friends got together so myself, Mario and Steven (who were based in London), we got together because we thought Mario has a long-standing background in fashion, working with a lot of retailers in Europe. Steven has access to a lot of marketing angles and influencers, such a celebrity networks, and myself having previously started up businesses. We thought coming together to do something would make something really special, we got our ideas together and at the time it was quite a growing interest in mystery boxes on the YouTube scene, so we got a group of people who we know could pull something together with, and we came up with the idea of doing a guaranteed value luxury mystery box. Mario had the connection to get the stock, we had the connection with the influencers to sell the product and the ability to hold up the business. We launched on black Friday and within twenty minutes we sold over a thousand boxes, starting at £250 for the cheapest one and £500 for the higher ticket box. Leading on from that, what came as a pleasant surprise, myself and Mario flew out to Italy to meet Simone who is also one of the founders, and we were packing there until Christmas Eve. For over three weeks we were packing boxes to make sure the orders went out on the 23rd so that everyone got them for Christmas.
Fast forward a month or so, we had a sit down with some investors who really liked the concept pre-launch, and they got behind the business. The next three months we spent rebuilding the infrastructure and we went to launch again on the 19th March, with the build up being crazy due to everything going on (COVID-19), but we were still fulfilling the orders out in Italy. A week before the drop, we couldn’t risk fulfilling the orders that kept coming in whilst being situated in Italy, and so we needed to bring the stock from Italy to the UK. We were having a look for any temporary properties in the UK, but at the time everyone was very paranoid with the lockdown that was potentially about to happen. I’m originally from Sheffield, and I said to my parents that we had to borrow one of the rooms in the house for a few weeks to pack some boxes. We turned up in Sheffield, a couple of wagons turned up filled with all of the products for the drop, and so we launched on the same day the lockdown was announced. We looked at each other saying “wow, all this craziness just to get all these orders out”. At 8pm when we launched, it went even better than the first time, which I thought just proved how sustainable the business is; we can drop and no matter the situation there would be people who would want to spend on our product. Fast forward two months, we then fulfilled another 4000 orders with the boxes put together on a snooker table in a house in lockdown which is pretty crazy.
What do you think attracts people the most towards the HEAT mystery box?
Joe: I think it’s a lot to do with our great influencer network, mainly a party of three. Frasier, who is known online by the name of FaZe Kay, is a member of the online gaming group named FaZe Clan. This gets us access to a lot of people in that industry, where we have a huge audience in North America, which makes up 40% of our sales – this is a growing market for us. After we did a few more drops, we felt the need to rebrand and relaunch, which myself and Mario felt really strongly about. When we first set off, we knew our small audience was very male, streetwear orientated, the type of person who would watch a lot of gaming videos on YouTube and are in to Supreme etc. As the concept got out there through our big campaigns and popular influencers, we got so much interest from females and people who aren’t necessarily in to streetwear but are in to fashion and love the concept. So we knew we had to broaden the offer and rebrand a brand which alienates people less, which the old one used to. We are now two days away from the relaunch; we are in our new fulfilment facility in Sheffield, fifteen-thousand square foot just to fulfil the boxes and provide the best customer service.
What’s the relationship like with the brands you pick to go in to the HEAT box and what do you specifically look for from them when deciding whether or not they make the cut?
Joe: The story with the brands is what we love. At the beginning we originally started working with retailers who had surplus stocks, and as we carried on going, gaining more attraction, we had a lot of brands contacting us to take their stock directly. We currently work directly with over 40 brands now, taking all their surplus stock, and that relationship is growing really well. One of the things we’re doing with the brands going forward is giving them the directed consumer feedback post purchase, which is something they don’t get with the stockists (retail stores). For example, 95% of a brands stock goes to a stockist, such as Selfridges, Harrods etc., and they don’t get any customer feedback or any data to help them expand their offering. This is something which we’re working on really well with them; the product being in the box is better for the brand value. We’re not slashing price tags, we’re not saying this Burberry trench coat was £800 and is now worth £80 because it says it on the tag, we’re saying that this is an £800 retail product and you can find it in the HEAT box. We’re never giving items a direct markdown value, which is something the brands love, and it’s working really well as we’re getting new brands on board every week, including some huge brands also.
Mario: Just to add on to that, we take the surplus stock which the brands have from their previous season but what we’ve tried to start to do is that we don’t want the box to be in the, customer’s image, old season stock, so we’re working with a few brands now to make exclusive collaborations. These exclusive capsules will bring back old pieces, it’s almost a “re-issue”, say we look at Haider Ackermann for example back in 2015, the era when Kanye and ASAP Rocky were wearing the brand a lot; the brand was at its peak. There were a few very distinct pieces and silhouettes, but the brand didn’t bring it back for a while, and now those items are going for ten times the retail value on the secondary market now. We have been working with Haider closely in getting the pieces back in an exclusive colourway just for HEAT. This keeps the mystery element and we want to provide more than just the “surplus stock” which the brands are sitting on.
This reminds me a lot of Sean Wotherspoon and how he has collaborated with big brands to put his own spin on their products, so you’re saying this is something HEAT are planning to do more so in the forthcoming future then?
Joe: Like he did with the Nikes, definitely, I think that’s what we want to do. When we first started it was a lot of old-season product that had been going in to the boxes, but since we’ve been working with the brands and giving them the directed consumer feedback, the brands are wanting to do an exclusive capsule with HEAT to go in to the boxes. These brands don’t want people’s first perception of their brand to be an old season piece which they can’t even buy in their store anymore. They want it to be current season, soon to be released, or an exclusive so that people know they should shop with that brand. This has worked really well in our favour; it’s great for the company, great for the customers, great for the brand and our image. Being more specific, the FaZe Clan collaboration is coming in mid-September, which is made up of archived FaZe merchandise and designer clothing. Building this capitalises on the designer-fashion and gaming industry together, which is really cool and massive nowadays with all of the YouTubers wearing over the top heavily-branded clothing, which is great. We’ve also got the Luka Sabbat collaboration, who is obviously a huge name in the fashion industry, coming at the end of October. Like mentioned previously, the re-edition campaign with Haider Ackermann launching on the 11th November. It’s all gone from what was an idea to make something really cool for Black Friday, in to a huge business potential in eight months, it’s quite crazy.
It seems like you guys must have learnt a lot of things over the past eight months then, is there something you wish you could have done differently?
Joe: I think with myself and Mario in particular, we’ve been through having our own businesses multiple times before this, and if you let things get you down rather than looking at it like a lesson, it will put you off and make you feel negative about things. Now, we don’t look at anything as a mistake, it’s just a lesson for the next thing we do, and there’s all sorts for this business. The correct shipping costs, the box sizes we order, how long the boxes take to get here – that determines how long we can have in-between the drops. Will the customers stick around for the next drop if it’s four weeks away? It’s all these questions that come to the table, but it’s really just a lesson and it’s us getting the processes in place to make it fluid going forward, which we have done now.
Mario: I was just speaking to Joe about this earlier this week, we were reminiscing on how the business started, and one mistake we think we made (which is very natural) is you want to do everything. You want to oversee all of the business as it kind of becomes your baby, and at a certain point we took a lot of responsibility on, which we realised can slow us down. What we did was with the investments we got we have been expanding the team, putting the commercial team in place and having people so we can delegate the work out. It becomes a lot more efficient this way, and so myself, Joe and the other founders can focus on the expansion of the business in the network and finding those new relationships with these brands. We’ve learnt a lot from it and the team is expanding which is really good.
Did you ever expect that you’d get this big of a reaction from the re-release and of course the first release also?
Joe: I think we were always super optimistic, “we’re going to do this”, “we love the idea”, “it’s going to go really well”, but like we said we had done things before and we thought the same, it comes to launch day and then we’re wondering if everyone’s internet connection is down. On this particular thing I think we’ve really struck on to something super interesting, and the fact we offer a guaranteed value product, our biggest step is to get past the “how is this real?” question. This is what we’re asked more than anything, but as soon as someone buys the box, they know it’s real. Our returning customer rate is pretty huge, and the return rate of the box is pretty small, it’s about a quarter of the industry average on purchases where people know what they’re actually ordering, so it doesn’t really make a lot of sense! It’s a great product, I think everyone is quite behind the brand, we work with a lot of our influencers in a natural way; it’s very selective on who we work with, and the same with the brands also. We want the customer to be happy with what they receive, so we hand pick all the products that go in to the boxes. The offerings are just getting greater, and so the next step is how do we personalise the boxes to each individual person. That’s where we want to take it – a personal styling tool for someone.
Ultimately HEAT provide expensive pieces of clothing, and we’re talking about a younger generation as a target market, FaZe Clan fans, YouTube fans etc., how does HEAT make designer brands accessible to that younger generation?
Joe: The thing is with the younger generation is that they look to a lot of the influencers to follow for style validation, for inspiration on what to buy and what to wear. This is making fashion accessible to them by saying “well this is the stuff you’re seeing on the influencers” and then, “you can get that same stuff in the box, here’s a great deal if you shop with HEAT”. That’s what we’re delivering, and in that sense that’s how we’re making the fashion which they want to attain very accessible. In America, for example, a lot of the stuff from the European brands that they see on a lot of these influencers are so expensive to get from A to B, and we’re the conduit in-between.
Streetwear brands that are massively “hyped” like Supreme and Palace use gamification to create the feeling for the audience that if they don’t buy now then they’ll miss out, how does HEAT use this method and do you feel like this is the future way of releasing things within the fashion industry?
Joe: It’s all about creating excitement. For us so far, people have been rushing to get the box as it’s selling out quickly – the box isn’t always available. We’ve not got shedloads of this really good, hand-selected product, it’s an exclusive product. We do like that feeling of people having to be on the site at bang-on 8pm to be able to get the box as it builds to the excitement of the mystery box. You don’t only just have the mystery aspect; you have to rush to get it. We’re trying to build an experience as well as a good product.
With the future of the fashion industry, I think there’s a few brands that can do that and it’s all about how it’s marketed, it depends on how quick the product sells and everyone running on a drop schedule. To be honest, I’m not too sure how the future of fashion will pan out in terms of release models but I think it’s definitely a good one.
Mario: On that point with the future of fashion I think it’s quite evident now that a lot of brands are focusing on that Gen Z market as they’re the audience who are very influential in themselves and are easily quite influenced by a lot of things, such as a rapper mentioning one brand in a song, it blows up instantly. The Gen Z’s really are the future of the fashion industry. Take Dior collaborating with Stüssy for example, which was the first streetwear brand in the world, before Supreme. It’s stuff like that where you can see the brands that have already picked up on it, that’s why a lot of brands are working with HEAT and are very interested in working with HEAT because from a business standpoint it is customer acquisition. They’re able to put their products in front of that Gen Z market and hopefully, after seeing that item in the HEAT box, the consumer goes and explores the brand further in their own time. Word of mouth, they get influenced by their friends- you’ll see a lot more brands start to target the Gen Z.
Winnie Harlow has worn pieces from you guys, leading designers from the fashion world such as Virgil Abloh follow HEAT on Instagram, is HEAT planning on working with these big names help further the brand?
Joe: There is always something in the works, but how far away we are from that materialising we’re not sure. You’ll start to see a lot of other celebs as we’re starting to get more in to the styling for events to show that we have a great styling team in house, and these are the people that are putting the boxes together also. We’re dressing Maya Jama for her birthday party this weekend; this just shows that we do have the capability and the stylists in house to deliver the product in which we’re promising. In terms of the other people and big brands, we have talks very much underway with all the big names which you could think of.
Mario: You’ll probably hear this first, we did hint at it on our Instagram, but we’re working with the likes of Amiri and other L.A. based streetwear brands which are massive now, with Amiri hitting its peak at the moment with the rap scene and footballers. It’s really hot right now. We’re trying to forward think what the next big brands will be as well, getting them in early, such as Casablanca, we were in their show room a couple weeks ago buying for the new collection. We had a call with Stella McCartney, who are known to use vegan leather, so we’re really trying to broaden not only the brands we select but we are being very selective on the ones we choose. We don’t want to say yes to every single brand, to be transparent but without naming names, we’ve said to certain brands that their product isn’t the perfect for the box at the moment, and I’m sure in the future when we do launch a more niche product I’m sure we can put those in the box. At the moment, like Joe said, it’s now making sure we give the customer the best product and selling them what we’re telling them. It’s a very honest and open business in that sense.
Talking about these different brands which are chosen for certain reasons, does sustainability come in to consideration? How does HEAT contribute towards that?
Joe: When brands don’t want their products to go on sale, and it’s out of season, there is nowhere for it to go other than disposal. That is a very bad problem in terms of sustainability. We have the product come to us and we mark down the price; we’ve delt with a lot of product to stop it from going down the process. We take as many precautions as we can with the packaging, we’ve got removable magnets in the lids of our boxes as we do want to keep that really high-quality packaging, but it is super easy to remove the magnets. We are working with a company called Delta Global to make sure every little thing we can do, we’re going to do it. It doesn’t make sense to do it any other way.
The relaunch is extremely soon. You guys have put so much time and effort in to it, how are you both feeling right now?
Joe: It’s always one of those things before the launch, we’re steaming towards it. Two days beforehand you start to get a little bit nervous; it may not work, one of the packers might drop out and we need to find somebody else. It’s all kind of things and there can be lots of spanners in the works, but we’re very looking forward to it. We’re very interested in seeing how well the contemporary boxes are received, how well the new website is received etc. It’s just a few new things and a lot more pressure on this one, but we’re looking forward to it.
Lastly, is there anything in the future in which we need to look out for?
Joe: We do have a subscription model launching in Q1 of early next year. This is a buy-monthly basis where people get a package of designer goods for a low purchase amount. We also have a kids box launching at the end of this year just in time for Christmas, with all the baby boomers coming out of quarantine! Kids designer clothes are super expensive when the kids are growing out of them within a month, and so a helping hand in terms of discount on that kind of thing is huge for people. We didn’t know we’d be here eight months ago, so we don’t know where we’re going to be in three months!
A massive thank you to Joe and Mario of HEAT for this in-depth interview regarding their product. The HEAT x FaZe Clan collaboration is being released on 25th September at 8pm, filled with exclusive unreleased merchandise all inspired by the FaZe members themselves.
Written by Matthew Nicoll for #TheStreetScene
All images are from HEAT’s official website, Instagram and Twitter accounts.