Reinventing the wheel: Luggage startup July closes $10.5 million round just nine months after launching

Luggage startup July has secured $10.5 million in funding, as it prepares to expand its presence in an industry ripe for disruption.

The startup was unofficially founded in April last year by Athan Didaskalou and Richard Li, who met, totally by chance, and instantly clicked.

The funding round was led by Strandbags, which contributed $8 million, with the rest of the funding coming from high-net-worth individuals.

July wants to overcome the pain points and general frustration most travellers experience, by redesigning suitcases from the ground up.

This round will see July expand into the global market, with Singapore and Shanghai as primary focuses.

When Didaskalou met Li

At the start of last year, Didaskalou and Li were strangers working on their respective startups out of a coffee shop in Collingwood — and looking for a new challenge.

Didaskalou was in the coffee business, which is why he patronised the same cafe regularly, saying “when you work in coffee, you know good coffee”.

On the other hand, Li chose to run his online furniture startup out of the cafe because of its “Apple store-like” aesthetics.

These two sensibilities, quality and aesthetics, came together when the pair co-founded luggage startup July.

Although neither can remember who made the first move, Didaskalou says they started chatting when they needed advice or, he admits, to procrastinate from work.

It was a “very Harry met Sally kind of situation,” Didaskalou laughs.

“Richard’s quite a smart, analytical, supply-chain business guy and my background is a lot more marketing, brand-related expertise.

“We’d always have these differing views and perspectives. I’d always pick his brain on how we could be a lot more efficient and how we could be doing things better, and vice versa,” Didaskalou says.

The chats evolved into discussions about the Australian startup landscape, where they found one thing they saw eye-to-eye on: the need for better luggage and the business opportunity it presented.

“It seems to be one of those industries propped up on legacy, brands and systems for so long that we thought it was ripe for doing something a bit different and bringing in a new business model,” Didaskalou says.

Planning from pain points

Once Didaskalou and Li began discussing the product in earnest — in about April of last year — they moved out of their surrogate office and into a local co-working space to conduct “whiteboard sessions”.

Already aware of the saturation of established brands in the luggage industry, Didaskalou says these sessions were about brainstorming their point of difference, starting with existing consumer pain points.

“If you’ve ever had a luggage problem in your life, typically the first thing you do when you talk to someone about luggage is talk about that thing,” Didaskalou says.

“It was basically asking as many travellers as we could — physically asking them,” he adds.

“Basically friends and family, connections in the co-working space, and all the people at the coffee shop. Anyone we saw with a suitcase, in fact, we’d pull them over.

“The volume came from reading reviews. All you have to do is go: ‘Well, why are they having those problems and how can we fix that?’”

By mid-June, they had self-drawn initial sketches, ready-to-go production logistics and a business name — ‘July’, after what they consider “the best time of the year to travel … for Aussies and Kiwis”.

Unusually, however, it was the pragmatic Li who suggested “pressing pause” until the next calendar month ticked over to register the business name — for poetic reasons.

“Not just the month — we registered on the 7th of July, 2018. I remember very clearly,” Li says.

July officially launched in February 2019, and closed its $10.5 million funding round this week.

July carry-on luggage. Source: supplied.

A point of difference

Bringing the conversation back to how July is a gamechanger for the industry, Didaskalou points out they had to meet customer buying trends.

Topping the list for how consumers choose luggage is design and aesthetics, which became the framework for how they built more practical solutions.

From the pain points identified in their research phase, Didaskalou and Li considered the situations leading up to the overall need for sturdier luggage.

“If the first thing you ask about is ‘what are the wheels like’, I can almost guarantee you’ve been in Venice, and on those cobblestones, the last suitcase you had, the wheels broke off,” Didaskalou says.

It is also common for the corners of luggage to get pressed in as a result of the conditions luggage handlers typically work in — namely, outside planes where it’s cold, with a large number of very full suitcases, to a time limit.

“You needed to make the case a lot curvier in order to have a lot more bounceback when it lands,” Didaskalou explains.

By creating a custom curvier shape, July suitcases solved much of these issues and bucked traditional manufacturing trends.

According to their research, luggage shapes are dictated by wheel casings, which are usually pulled off the shelves to reduce production costs at the detriment of durability while creating a boxier profile.

Li also points out July doesn’t rely on the common high-low retail pricing strategy, where sellers up the margin from the production cost in their normal pricing and hold sales throughout the year.

Instead, July is aiming for more manageable and stable margins, offering the same day-to-day price — “everyday lows” — but never offering promotions or discounts.

Lessons learnt, lessons shared

Despite their former startups having minimal crossover, both co-founders found their past business experiences indispensable to making a well-received product.

“Making things and gettings things produced and building narrative and shipping things — they’re sort of the collective history and the collective legacy that Richard and I have brought to July,” Didaskalou says.

Li’s manufacturing know-how allowed the pair to reach the level of quality they aspired to in their initial sketches, and to stick to the timeline set out on the whiteboards. Didaskalou’s time as a brand narrative expert can be seen in their sleek marketing campaigns.

Moving forward, Li suggests other product-based startup founders pay just as much attention to the logistical points of running a business as they do to the sales and marketing aspects.

“The biggest challenge of a product-based business is to make sure you have a handle on your supply chains and make sure you have the best relationship with your manufacturing partners,” Li says.

According to Li, spending enough time with manufacturing partners is often overlooked, which runs the risk products will be made with less care and quality.

It can also affect the production time and production slots around busy periods such as Christmas, he says.

Li also suggests businesses prioritise margins over competition to support their business and allow it to grow long term.

“I usually use 50-60% as my benchmark,” Li says.

“We’re still at early stages and we’re trying to innovate and create new things,” Didaskalou adds.

The next adventure

Didaskalou and Li plan to use the $10.5 million to expand — both their product range and in the geographical sense.

Having solved the problem of sturdiness, they’re now working on a lightweight range to release early next year to compete on different levels against heritage brands.

In the meantime, they are working on setting up shop in cities across Asia.

“We’re geographically located in the Asia Pacific. It makes the most sense for us to be able to expand out into that region.

“It’s a great geographic starting point for us,” Didaskalou says.

Not only do the pair see the Asia Pacific region as an ideal entry into the global market, but they also have personal ties to the area.

“I’m there in Singapore quite frequently with my wife and her family. Richard has a Chinese background and we go regularly,” Didaskalou adds.

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