Now bringing in $9 million a year, the 28-year-old launched her business from her living room for $30,000.

In her Hoboken, New Jersey, apartment, Jenny Lei gazed upon the towering stack of cardboard boxes. With $30,000 spent on handbags, she needed a new approach to sell them.

Lei, a UX designer without work, devoted months to designing a work bag prototype before manufacturing. However, after four weeks, she had only sold 20 totes.

"My plan failed spectacularly," says Lei. "I couldn't afford to not make it work. I had a lot of savings sitting in boxes in my living room."

Lei, a 28-year-old CEO and founder of Freja, a New York-based company, has achieved significant success in the past year, with the 4-year-old startup generating over $9 million in revenue, including $2 million in profit, according to CNBC Make It's review of company documents.

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Freja's only full-time employee, alongside five contract workers, is Lei. She attributes her company's growth, despite the competitive fashion industry, to maintaining loyal customers through minimalistic bag designs and a public commitment to environmental sustainability.

""From the start, I questioned whether the world needed another handbag brand. However, if I could create one that felt good to me and connected with a specific audience, it was worth the attempt," Lei explains."

Despite lacking fashion experience, Lei transformed hundreds of unsold bags into a successful luxury handbag company.

A 'really, really slow' start

In February 2019, Lei, a soon-to-be-unemployed graduate student at Cornell University, struggled to find the perfect work bag for her job interview in New York. She tried three different bags, but none of them were quite right. One was too small, while another lacked sufficient interior organization.

When my apartment is messy and I can't think straight, I feel like my confidence is affected. I feel like I went in on the wrong foot when I'm already nervous, and what I wear plays a big role in my self-esteem.

After the interview, Lei sketched out a structured bag with interior compartments for her laptop and portfolio, and a strap long enough to fit over a winter coat. She used her savings of $300,000, earned from a purse dropshipping side hustle she ran during graduate school, to order a $2,000 prototype from a sample maker in Brooklyn.

When she visited her parents in Guangzhou, China, that summer, Lei toured factories that specialized in vegan leather. She chose the factory that was the most communicative and transparent about its working conditions, she says.

Lei, a Chinese person, wanted Freja to represent what "Made in China" can look like.

Lei took a year to sell her inventory, despite creating a website, starting a marketing campaign, and writing blog posts about Freja's values and practices.

To alleviate financial pressure, Lei took a bold move by ordering a second batch of inventory with a new bag design and intensifying their social media advertising efforts.

According to Lei, the first two years were very slow.

Surviving in a cutthroat industry

In 2022, Lei generated $1.7 million in annual revenue by selling bags through social media ads. She used the money, along with two loans from Shopify, to create a wider range of bag designs in order to attract a broader audience beyond environmentally conscious working women.

The company's revenue is projected to reach $12 million this year, according to Lei.

In the $22.8 billion global luxury handbag market, Freja is a minor player compared to established brands like LMVH, which made $16.85 billion in U.S. dollars in net profit last year, and other brands like Sandy Liang and Alaia, which sell stylistically similar bags to Freja.

Katie Weir, a consumer and luxury industry strategist at Deloitte, says that surviving is the best-case scenario for most niche fashion brands due to the intense competition. Staying relevant over time is particularly challenging in this industry, she adds.

To remain competitive, startups must continuously adapt to changing fashion trends and consumer preferences, as Weir observes. In order to achieve this, Lei plans to host events to foster customer loyalty, offer mentorship to other young women entrepreneurs, and expand her product offerings to attract a broader customer base.

""I believed that no one is born a designer, but I can become one with dedication. Now, I think I can start using the title 'designer' this year as I feel we've made progress," says Lei."

Using the OANDA conversion rate of 1 EUR to 1.05612 USD on November 19, 2024, all amounts were rounded to the nearest dollar.

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