Six-month-old online retailer Little Black Bag has raised $8 million in a Series B funding round led by GRP Partners. The retailer says it will use the funds to hire about 10 staff members to its marketing, merchandising and engineering teams, as well as add new brand partners.
Little Black Bag’s business model is a twist on a New Year’s Day event called fukubukuro hosted by Japanese department stores that put various items into bags, seal them and sell them to consumers. Those shoppers then open the bags and trade with each other to get the products they want.
Little Black Bag takes that concept online with a slight tweak. Consumers can sign up at LittleBlackBag.com to get a virtual bagful of cosmetics and fashion items. They then have a week to trade with other shoppers online, after which the products are shipped. Customers can purchase one bag for $59.95 or sign up for a monthly subscription at $49.95 per bag. And, just as Japanese retailers sweeten the offering of leftover merchandise with a smattering of more expensive items, Little Black Bag says some customers win hot seasonal products—“Delights” in the retailer’s terms—worth four to five times the price of the bag.
There are more than one million trades a month on the site, says Dan Murillo, the site’s cofounder and CEO. “Every customer trade drives engagement and consideration,” he says. “The decision of whether to send or accept a trade offer encourages creativity—it’s like a game.”
The retailer has raised $10.75 million to date.