NYLP: Welcome to the New York Launch Pod the New York Press Club award winning podcast highlighting the most interesting New York startups, businesses and openings in the New York City area. I’m your host and New York attorney Hal Coopersmith and in this episode we talk to Aaron Luo and Carmen Chen Wu the co-founders of Caraa which makes luxury handbags designed to meet the needs of the modern woman. Caraa is a brand with deep roots in New York which blends luxury with functionality.
Aaron: What makes the brand special and what makes the product special, to Carmen’s point is that emotional connection between her aesthetics which connects with the consumers when he or she sees it. That’s the juju.
NYLP: In this episode we discuss the extensive research that Aaron and Carmen did before launching the brand, their design process, Caraa’s unique place in the fashion industry and at the end a sneak peak at Caraa’s next big product. That is definitely something you will not want to miss. And before we go to the interview if you are a fan of the New York Launch Pod please subscribe on your podcast listening app and for news and updates sign up for our monthly newsletter at nylaunchpod.com. If you decide you want to purchase a Caraa bag yourself use code NYLAUNCH at check out for ten percent off! And with that lets go to the interview. So, you guys have developed a brand based off of movement, is that right?
Aaron: That’s right. So you know, taking a step back, as a luxury consumer myself, when we first started the brand, we just felt that both for woman and males market, that the products were, especially the contemporary luxury market, the products were expensive. I’ve personally felt that the value proposition wasn’t there. And most importantly we felt that the product weren’t functional enough, don’t get me wrong, there’s a lot of beautiful bags out there in terms of the craftsmanship, construction, aesthetically speaking. But when it comes to the functionality, we just felt it wasn’t enough for I think an active lifestyle that we lived. So, when we first started the brand, you know, because we were moving constantly from one place to another. Right? So think about, we wake up at seven, leave the house, take meetings, go to PR meetings, go to vendor meetings, supplier meetings, constantly on the move. And then, you know, when we can, try to work out and we just didn’t really have a bag that could actually transition with us throughout the movement, within the day. So you know that’s kind of the thesis really when we first started the brand and say, why can’t we create a product that looks awesome? That’s still used some of the materials used by traditional luxury brands, but still had the functionalities that we need that can transition with us throughout the day.
NYLP: So luxury, movement, we’ve captured that, we normally talk about this at the end, but it seems like it’s a very New York style brand, luxury, high end and people back and forth doing that active lifestyle that you just talked about. How did that inspire what you’re doing?
Aaron: So, I think it is true. When I think about kind of our customer base, it’s very much in an urban setting where she is constantly commuting, right? So if you are, let’s say driving, perhaps you don’t really use your bags as much as if you were commuting in the subway, taking the bus, riding a bike.
NYLP: And she, so it’s a very female focused brand?
Aaron: Very, very female focused. I mean, we do have a unisex line that we launched last year. But even today I think the brand is very much female centric. So, it is true as far as who she is. She is very urban and she is constantly commuting.
NYLP: Well the research aspect is really interesting. I want to know a little bit more in terms of what research you’re doing and what is going into that because to the extent that you’re filling in a hole within the market, how did you identify that hole, what is your target consumer needing?
Aaron: When we first started the brand, we did a bit of a market analysis, right? In terms of segmenting the market a little bit and we felt that either you have the fast fashion brands, which the products were very fashionable, but don’t really last. So quality wise, there’s something to be said there. You have that group of brands, then you have the traditional sports brands, right? Where it’s very functional. But I think something to be said about perhaps aesthetically not really that pleasing, right? Especially for the female consumer. And then you have the luxury brands where it’s very well made, very expensive, but not really that functional. So we first felt that there’s something to be said for somewhat of a white space. This was three and a half years ago for a bag that is in the contemporary price point but yet very functional, very durable and very aesthetically pleasing to the eyes. So that’s how we initially identify kind of the market.
NYLP: How did you identify that because what you are saying makes sense, but how did you identify that as a pain point?
Aaron: Yeah, so it’s a combination of just working with a data company to kind of look at the market at a macro level and see what other brands, how much market segmentation they have. So more of a kind of a study that we did around that
NYLP: Before you launched, you did a study?
Aaron: So that, to give us kind of the macro insight, right. And obviously Carmen and I both come from the fashion world, from the kind of consumer standpoint and even just from the industry insider standpoint. We felt that that was true. That the data was telling the truth in terms of what was out there. All right. So that’s kind of how we initially started thinking about, hmm, perhaps there’s something here.
NYLP: So you have this idea, you want to test it, you go to a data company, say, is my thesis correct?
Aaron: Step number one.
NYLP: Step number one.
Aaron: So that was the first thing just to kind of get a sense of, hey, directionally speaking, am I off base or am I marching in the right direction?
NYLP: Turns out you’re not off base.
Aaron: Exactly. The data came back and said, you know what, something here tested. Right? Now, we didn’t go from there to like, sure, let’s go out there and build a brand and you know, and a hundred skews, right? So we initially started the brand with one skew, with actually one bag. Really, until today it’s our best-selling bag it’s our Studio Bag. We started there and tested the market. What’s interesting, I think is how that bag came to life and I want to touch on the point about how we go about design. It’s very much a combination between I think empirical data or I would say rational data and irrational feelings. And let me explain and I’d love to hear kind of Carmen’s thought on this because she’s really the artist here in this equation.
NYLP: You guys are co-founders. I thought you would know Carmen’s thoughts!
Aaron: I do. Well, I think I do.
Carmen: He does for the most part.
Aaron: So, when it comes to functionality, right? The way we go about design is that we capture the information from either a focus group or a group of ambassadors that are very close to the brand. So these are, you know, athletes, actresses, house moms, anybody that is close to us that lives our lifestyle. That would give us the feedback and in terms of, what is the ultimate bag that she needs to withhold her active lifestyle. So when it comes to functionality, I think that’s very much a, almost like an empirical exercise in terms of gathering data from our customers.
NYLP: And you’ve gathered this data. So, who is the she? What is the prototypical customer?
Aaron: We call her the full contact woman. Right? So she wakes up at seven, gets out the door, sometimes she exercises in the mornings, sometimes she exercises in the afternoon and sometimes she’s a mom with two kids, so she has to drop the kids off. So, I mean we don’t like to kind of put boundaries in terms of who she is, but in general she’s a millennial and she is very active and she lives in the urban area, right? So, that’s where we got our data when it comes to functionality in terms of what she needs.
NYLP: And high income, right? Because they’re pretty expensive.
Aaron: High income or at least cares about fashion. And then when it comes to design, that’s where I think the irrational part comes in, right? That’s the feeling part that Carmen infuses. I mean she is the creative director of the company. She, to a certain extent is the one who is taking the data and infusing her vision into bringing a product to life. And to a certain extent, we always say this, she is the one who’s telling the consumer what she needs before she even knows she needs it. Right? So I think that’s very unique because, and coming from having worked with some fashion brands in the past, a lot of times the design starts with the creative director only. So you get in the room, you get some data from maybe the merchandisers or maybe the buyers if you’re a wholesale brand and you know, the creative director really is the one who’s driving the direction in terms of betting on what the season or the next season is going to be. We do that for sure. And you know, we have a CFDA awarded fashion designer like Carmen leading the company, right? In terms of the creative direction. But we do take the feedback from our tribe and our community in terms of functionality.
NYLP: So Carmen, how are you able to identify what this full contact woman needs before she’s able to identify it?
Carmen:So I would say for the creative process, it always starts from an emotional standpoint. Like the first design always comes from an emotional point of view that comes from me as a designer. But once that view is set out, then I work almost as an engineer to think through what things can I do to this design to make it just so much more functional and helpful to the end user. And what’s very good about our supply chain is that we can afford to bring in very limited small batches so that we can afford to continuously refresh those batches and make the changes that are necessary. Like for example, our first style and most successful one to date is called the Studio Bag. And this bag is like the Cadillac of handbags. It’s a backpack that you can convert into a cross body and there’s two separate main compartments, one for your gym stuff that’s ventilated and then there’s a front compartment that has spots for your daily handbag things which need to be kept separate from your gym stuff cause it’s all like sweaty and stinky. This bag. Even though our fans rave about it, love this bag, they eventually came to us and said, “Hey, I take my studio bag traveling. I go everywhere with it cause I love it so much and I’m missing a luggage sleeve. I put a belt around it my suitcase and it stays put but I just really wish it had a luggage sleeve.” So, you know as the designer with my team we think about, well how do we put a luggage sleeve onto this bag that doesn’t really want to accommodate a luggage sleeve from an aesthetic standpoint, it just kind of looks ugly. So that’s a problem for us to solve.
Aaron: To answer your question, Hal, about how do you get ahead of consumer trends and how do you give the consumer something before she even knows that she needs it? It’s, I mean there’s the empirical aspect of it. There’s the data aspect that we gather from the ambassadors, from focus groups and so on and so forth. So that’s definitely there. But what you can’t replicate is Carmen. I mean she’s the designer at the end of the day, she infuses her feelings, her intuition. Call it guess, call it intuition, call it taste. She infuses that into the product, right? So that’s the art that comes with fashion brands to a certain extent. That’s what makes the product special.
NYLP: Right. And so what’s the artistic process where you’re marrying the form and the function, Carmen? Because 20 pockets doesn’t come out of nowhere, nor does the aesthetic vision. What’s that emotional place that you’re channeling to get to the destination?
Carmen:So, emotionally I guess it’s very, it’s very subjective. It comes from every day interactions. I guess it comes from walking down the New York streets and watching the women that, you know, go to work every day and do all these things and that’s inspiring in itself. And you know, sometimes on weekends if I do get a chance, I will stop by the MOMA or the Met. And you know, who knows, like just colors and shapes can be very inspiring. So if you think of a designer as a sponge, you have to continuously feed the sponge with water so it stays current and you need to feed it with everything that’s happening at that moment. And that sponge will eventually release something that just makes a lot of sense for that moment. And it’s very subjective. I guess every designer will be seeing different things and having different experiences, but as long as it’s in this one place, at that moment, it will all make sense at the end of the day. So I always say I could never move away from New York because the design aesthetic and the ideas and the influence that I get are very, very particular to this city. And I realized that when I go travel and if I stay in China or in Hong Kong for two months at a time, that design and the ideas and the juice that comes out starts to change into something a little bit different that may look more like something that is more proprietary to that space. So I always feel like I need to come back to New York and spend most of my time here in order to be current in my thoughts. And it’s hard to explain with words, but it’s really about a mishmash of visuals and colors and textures of what’s going on around you.
NYLP: Well, the colors and the textures and the fabric I think is a little bit different. It’s certainly noticeable than what other people are doing. How did you come up with that?
Carmen:I would say that our collections are built upon things that are extremely familiar to everyone because at the end of the day, the things that attract us emotionally are familiar things. They are not things that are completely alien and new. So it’s very important to be able to retain the things that are familiar to everyone, but at the same time give it a twist of interest that, you know, sparks that emotional want from the person that looks at the object. Because I would say even though our brand is built on functionality, the first reason why that a woman or man looks at the bag and feels that emotional connection that, oh, that’s something that I actually really want, not just need. The first impression has to be emotional. And that’s why keeping true to the design standpoint is so important for us.
Aaron: And that’s critical, right? Because to your earlier point, Hal, I mean, look, I mean, the truth is you can go and perhaps visit as you know, a store like an Amazon and there’s a lot of bags with all pockets, right? So if you just come out with a bag with a lot of pockets to a certain extent, there’s a lot of things like that out there. What makes the brand special and what makes the product special, to Carmen’s point is that emotional connection between her aesthetics that connects with the consumers when she or he sees it, that’s the juju. You know, it’s hard to describe to a certain extent. I mean, it’s almost like talking to a Picasso or talking to an artist, right? And asking him where do you draw inspiration? You know, and I think it’s very personal. It varies depending on the artist, on the designer to a certain extent. We try to have that balance between kind of the artistic side, the irrational side, the emotional side together with the intelligence that we can gather from the market.
NYLP: Well, I want to touch on that a little bit more because you mentioned that’s the juju behind the brand, but before you entered into the market, you mentioned that there were lower end functional and higher end fashion and I’ve always thought of the market as you’re either the low end or the high end and the people in the middle get slaughtered and you have the data to back it up, but you’re a luxury brand or a high end brand at a lower price point. How has that experience been in terms of marketing yourself and establishing yourself?
Aaron: Yeah, you know, you test certain things. I mean we’re pretty convinced that we want to be in the contemporary price point. I think at the end of the day we don’t talk about value that much because we’re not a value brand to a certain extent, but we did want to give a high end product that’s made no different than the luxury products that you see in some of the world’s luxury brands but at a fraction of the cost, it’s such an old story. You know, we don’t really talk about that anymore just because, I mean maybe five, maybe ten years ago, you know, when you say I’m a DTC brand, I don’t have wholesalers, I’m able to go directly to consumers at the fraction of the luxury. Back then, I think it’s still a very interesting story. These days, I think there’s a lot of brands out there, so we knew that we wanted to be in the contemporary price point. So that’s kind of the starting point. I think at the end of the day it’s all about do you have a unique point of view? Right? I think we were somewhat in the beginning, less worried about how much we wanted to price the product. More, hey, are we really going to come up with a product that really differentiates from everybody else? Because if it doesn’t, you have no license to exist. That’s kind of how we felt about it, right? There’s so much noise out there in the market, in any verticals, you name it, right? Not just in handbags but apparel, shoes and there’s so much product that I feel as a newcomer back then, if we didn’t have a unique point of view, we just should not enter. And we did. We did our analysis, we did our focus group, we did our homework and you know, tested that there was a viable market out there for that contemporary price point by making a product that’s beautiful, well crafted, yet very functional and very relevant to her lifestyle. So it’s not easy. I mean, it took us, you know, I would say a year and a half, two years just to get the building blocks right. I wish I had a perfect formula to say look, do this and you can actually confirm that you have a viable brand, or viable product or a product market fit. But I think it’s a little bit of either ration and then testing, right?
NYLP: So the value story isn’t told that often for direct to consumer brands, but at least starting at a high end price point where it could sell for a multiple of what you’re actually selling for, but still high end. So what was that experience of turning on the lights? Day one of sales where we’re saying, all right, we’re a high end brand that didn’t exist yesterday and we exist today.
Aaron: Yeah, it was scary. I mean it was scary in the beginning.
Carmen: It was very rough. We still remember the first person who bought a bag from us.
Aaron: Shout out to her. I have her name and actually we have a screenshot of who she is and I tell my team that one day we will reach out back to her and do something special for her.
NYLP: It’s like taping the $10 bill in the restaurant.
Aaron: Yes that first customer that came in, right? The early days were daunting. It was daunting because you don’t know, right? You have a hypothesis. Even with all the homework we did, even with all of the analysis that we did. The truth is you turn the lights on one day, you kind of hope for the best, but you know, reality is, it takes a minute to catch up.
NYLP: How did you market yourself as a luxury brand as soon as you turned on the lights?
Aaron: Yeah. And you know, it’s funny because in the beginning we didn’t really market ourselves, right? So there were a couple of things that were very clear to us that we wanted to do from the get go. First of all, we didn’t want to tell the value story just because I didn’t want to tell the customer, look, you’re getting a better product for cheaper. That’s just not the brand that we wanted to build. We’re going to let you decide after you touched the product for the price you pay, whether you think it’s the right product for what you need. So we were very clear in terms of not using that kind of language as part of the marketing. Part of our thesis when we started the brand was that, this was back in 2015-2016 right when we saw that there were a lot of DTC brands, a lot of native digital brands that did really well in the market space, right? So one thing we felt that was in common with all those brands is that they had, okay product, even good product, let’s just call it, but it wasn’t great. You know, it wasn’t kind of an industry leader within their category. They might disagree with me, but that’s kind of our opinion back then. But one thing that they were really, really good at was they were great at marketing, they were great at storytelling, and they had a great customer experience with the customers, right? So part of our thesis when we started the brand was that, hey, why don’t we learn from all those great brands that can before us. There’s a lot of good stuff, a lot of golden nuggets that we can take from, but we really wanted the product to shine. We kind of reversed that equation a little bit and said we really want to come up with a product that nobody can copy and add on the storytelling and the great customer service and so on and so forth. So because of that, to answer your question, in the early days we didn’t really do much marketing.
NYLP: So you turn on the lights, you let the product tell the story and there’s a demand for it and you were able to grow. You got into Equinox, you got into other high end stores. How was it having that conversation as a new high end brand to go to stores that are established that are also high end and say we’re a startup, we’re also a high end brand and we should be carried here because we sold out our first line fairly quickly. We sold out another line really quickly, you need to carry us.
Aaron: Yeah. You know, it’s an interesting story. Funny enough and I mean this in the most lucky way, most of the partnerships that we had were inbound. So it wasn’t much of us pitching versus people coming to us and saying, we love your brand, love what you guys are doing and love the branding. Let’s work.
NYLP: Inbound?
Aaron: Yeah. Inbound. And it’s interesting because we, bear in mind we did not want to, at least from the beginning, we did not want to do wholesale. You know, we were very clear that we wanted to create a two way dialogue with our customers and build a tribe and have more of a direct to consumer model. Right. So, you know, all the energy and all the budget and all the focus were about building a brand that’s directly speaking to her. That’s DTC. We were definitely open for partnership. You know, we know the power and the value of partnership. So we have a partnership with Equinox, we have a partnership with Nordstrom’s, we have a partnership with one of the Gap brands. And yeah, I mean it was, you know, obviously once we made the initial contact from the inbound, we were very much excited and open and you know, the ball kind of started rolling from there. But yeah, I think you know, if we can give any sort of advice when it comes to kind of how to forge that kind of partnership. I think for us it was very much focused on building a cool brand. So, you can’t have a brand without having a product. So we were very much focused on creating a really great product at the end of the day. I know I keep saying that, but that literally was our focus for the first year and a half, two years.
NYLP: And how many different bags is your target customer buying?
Aaron: If you asked me that question back when we first started, I would say one bag a year. When it comes to our product, our aspiration back then when we first started the brand was just one bag. If you asked me what’s my LTV, I mean the lifetime value of our customer is really my average order value. Right? Cause it’s just one bag. That number is, it’s definitely definitely climbing, the repeat rate’s definitely going up, we don’t disclose that in public, but we’re very, very encouraged to see that number starting to climb up and you should as a brand, if you don’t see that repeat purchase, you gotta look into numbers and ask why?
Carmen: Well, I would say that our Caraa fans have at least four to five bags already from the past two years. And we have that information on our back end.
Aaron: I mean, you know, we know she collects our bags. We know that for a fact because you know, we see the inbound customer service questions. You know, we see forums and blogs and customers talking about, hey Caraa is launching, you know, we recently launched a bag with pearls on it. Right? So it’s a limited edition and it was somewhat of a collectible because the price point was fairly high and it sold really well. And you know, customers who bought them talk about that. So it’s encouraging to see that repeat purchase in terms of how many more she’s getting beyond just that one.
NYLP: So your Caraa target is buying multiple bags and I just have to think from an outsider’s perspective, I know that you did the data research, but you’re a brand that’s rooted in movement, exercise. So I think kind of going to the gym, the full contact woman and fashion and both of those are so fickle to me. And you’ve combined the two. To me that seems crazy. How do you make sure that you’re not just having this one moment for the contemporary style and contemporary price point and then fade away. If that woman bought several of your bags and was like well this was fun for five years and then moves on to the next thing.
Carmen: Well we create styles that are truly different from each other. And what we say is that every person is different and every day in that person’s life is different. So from Monday through Friday you need different bags for different occasions. So, although our bags are very multipurpose and they can fit a lot of bills throughout the day, still she will need a big bag versus a small bag versus a weekender. And we do offer all those options. So she knows that Caraa bags carry all of those functionalities that she didn’t really think about before and that will help her. So she will trust us and come back to us for that next bag that she needs. She wants to go travel she gets a bigger bag or she just wants a bag to go to the supermarket with and she’ll come and get a small bag from us. But she always knows that all those bags come with a little bit of a surprise and something that’s unexpected that they don’t have from bags from other brands before.
Aaron: Yeah. And I would say too, it comes back to our mission, right? If I think about kind of who we are, like what’s our license to exist? Ultimately we are in the business of making high fashion or fashion in general more functional. Everything we do is around that concept. That’s kind of our crusade, mission in life. To answer your question, sports bags, is where we are rooted. We started with that. But if you look at our assortment and how we are evolving, how we will be evolving. We’re expanding beyond that. So, to Carmen’s point, you know, it’s about understanding what does she do, what’s her lifestyle like where does she go, what does she need? And then providing her with bags or beyond bags, right? Other categories that she will need in order to compliment her lifestyle.
NYLP: Other categories. You’re teasing something.
Aaron: Yeah. Well, you know, nothing yet in the works. We talked about that. You know, we talk about it constantly. It’s a tricky one because we always thought that we want to be in accessories only, right? That’s our forte in terms of design expertise from Carmen, our supply chain expertise from our family background. We always knew or decided back then that this is the category we’re in but as our tribe, our community grew and kind of expanded over time. We get questions all the time. Are you going to have a travel outfit for us and are you going to ever get into shoes? Just because I think that the customers became in love with the brand, right, with the aesthetic of it, with what the brand stands for. So they are asking for more. Again, you know, I’m not going to spoil anything and you know, in terms of what categories but never say never.
NYLP: Well I just want to go back to the point of my original question, which is in this age of Instagram and the influencer and a high end brand for the moment to not expire, where it’s, this was the cool item to have as a fashion item for this period of time. And now we moved onto something else because someone else did market research to find another hole in the market. With that in mind, how do you prevent yourself from maybe expiring or to put it more positively to stay relevant?
Carmen: Yeah, so we don’t expire old styles that our customers love, but at the same time, every season we do bring a couple or more new things and because our Caraa aesthetic is so malleable, it’s not set in one type of fabric or one color, like a lot of other fashion brands would have signature bags. When you see a Caraa bag, you can recognize it but they can be wildly different from each other. So every season we do allow ourselves to bring in the newest and the coolest and they’re always fresh styles. That’s how we stay relevant.
NYLP: And so you tease a little bit of the categories that you’re thinking about. Anything that people can look more forward to in the future.
Aaron: We have a game changing diaper bag or baby bag that’s coming up in late summer, early fall, that I think is going to be a game changer for the category. It’s over a year in development, right? So it’s you know, we didn’t want to release it just for the sake of releasing a new product, but we worked with, you know, an awesome group of moms just to kind of shadow her, right? And learn from her in terms of what works, what doesn’t work. What do you need? And not only the mom, the dad, right. Cause a lot of the time we found out that the dad ends up carrying the bag. So if that’s the case, hey, what are you looking for? So we did a lot of market research, obviously Carmen infused herself in terms of aesthetically speaking, what the bag should look like. I think that’s going to be very exciting. You know, it’s the diaper market, I think it’s an interesting market. It’s new for us. So we will see, I think other brands have adapted into that space a little bit. I fundamentally believe, this is going to be a game changer in terms of the diaper bag.
NYLP: Well it sounds like there are many wonderful items and many more things to come. That is a wonderful note to end things on. Aaron Luo, Carmen Chen Wu, thank you for stepping onto the New York Launch Pod and sharing your time with us.
Aaron: Thanks for having us Hal.
Carmen: Thank you for having us.
Aaron: It’s been fun.
NYLP: How do people learn more about you and Caraa Sport and all the things that are going to happen in the future.
Aaron: So definitely check out our website at Caraasport.com. We reveal a lot of cool things there. You can subscribe to our newsletter through email. Sign up to our Instagram. You know, we reveal a lot of cool content I think on Instagram, @caraasport. And look, I mean, if you’re out there looking for that next generation functional bag, check us out. And if you have any feedback on what you’re looking for, if you don’t find what you’re looking for on the website, send us a note. We always, always want to hear from our customers all leads.
NYLP: And if you want to learn more about the New York Launch Pod, you can visit nylaunchpad.com for transcripts of every episode and you can follow us on social media @nylaunchpod. And if you are a super fan of the show, Carmen and Aaron, are you super fans of the New York Launch Pod?
Both: We love the show.
Aaron: If you love the show, like Carmen and Aaron, please leave a review on Apple Podcasts. It is greatly appreciated and does help people discover the show.
SHARE THIS:
