At the start of 2022, luxury mystery box start-up, HEAT, announced a mind-blowing $5-million seed round from Antler and LVMH Ventures. The company, which was launched in 2019, also gained the attention of the fashion industry when they disclosed that other investors backing their expansion included the Hermes family, Sven Aherns (of Spotify), Stefano Ross (of OTB), just to name a few.
That the big players are paying attention says a lot about the remarkable success and potential of the mystery box concept. It also indicates that perhaps, this new disruptive model could also be the answer to many of the industry’s current challenges. The communications team of HEAT writes: “The model was created as a solution to within the fashion eco-system to protect brand values and act as intermediary within the market, allowing brand to re-allocate stock to Gen-Z consumers through a mystery box model. HEAT was founded on an understanding that the fashion industry needs sustainable innovation.”
Defining The Gen-Z Mindset.
Consumers from the Gen-Z demographic are the prime drivers of sales for HEAT. As a brand created, developed and built by 20-something founders Joe Wilkinson and Mario Maher, HEAT understands what makes the young consumer tick. Joe, who is the company’s CEO, explains: “Our audience is predominantly Gen-Z and so is the team that built HEAT.” He notes that those who are between the ages of 18 to 24 are typically more open to trying out different shopping models. “It’s about experiences as much as transactions now—and the mystery box provides that. The excitement of opening it, the social share-ability of unboxing content and item reviews. It’s about being part of the community and the interaction between that community as much as it’s about the product.”
Curating for Gen-Z Market.
As far as mystery boxes go, there’s really no telling what you’ll get. From the point of view of someone who actually know who Forrest Gump is, it’s like a box of chocolates. Decoding and deciphering flavors fit for a young market can be quite the balancing act. Joe expounds: “When we partnered only with retailers, we worked with them to handpick stock, which we thought was cool. Now we work with brand directly, curating our boxes around the trends in the market.” Luxury brands that have filled the much-coveted HEAT Luxury Mystery Boxes include: Alexander McQueen, Off-White, JW Anderson, Maison Kitsune, Maisie Wilen, Nanushka, MMissoni, By Far, just to name a few.
Every mystery box from HEAT comes with a return and exchange policy. And while tastes and preferences may vary widely, the company has only had a return rate of below 15%. Most online retailers have to deal with at return rate of least 40% “We’re very selective with the product we put in the boxes, and make sure that every box we send, we’d be happy to receive ourselves. We also make sure that our brand partners understand that our boxes are a premium service and not a channel to offload stock.” The HEAT promise, which the company has thus far upheld is that each box will contain luxury items “way beyond the value of what their paying for.
The Future Of Fashion Retail And Mystery Boxes
Since it launched two years ago, HEAT has grown its community to 600,000. The company has sold over 20,000 luxury boxes and more than 100,000 individual units of stock. Its performance, apart from drawing in substantial funding from key players, is telling of the future of retail. Joe affirms, “We are here to disrupt the traditional approach to luxury fashion. We’ll be using this investment to create innovative and immersive e-commerce experiences—implementing gamification, AI-driven personalization, and interactive drops—all whilst driving sustainability.”