The Handbag Raincoat
NO DEAL
EPISODE SUMMARY
🕓 Air Date: November 18, 2018
Asking For:
$300,000 for 25%
Investor:
No Deal
Deal:
No Deal
PRODUCT SUMMARY
The Handbag Raincoat is a chic and innovative accessory designed to protect handbags from various weather elements. It comes in three sizes and features a hook-and-loop closure for easy access to the bag.
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Background Story
Morgan and Arley, the entrepreneurial sisters from Indiana, share a deep passion for fashion and a keen eye for innovative solutions. Morgan, a graduate of Indiana University, majored in fashion and later worked for 6 1/2 years as the director of merchandising for a sizable handbag company, overseeing a team of 80. The inception of their groundbreaking product, the Handbag Raincoat, was inspired by a common predicament faced by Morgan’s colleagues – the reluctance to use their favorite handbags on rainy days.
Frustrated with the idea of leaving stylish accessories behind or resorting to less appealing options during inclement weather, Morgan reached out to her sister Arley, and the duo embarked on a mission to find a solution. This pivotal moment led them to experiment with unconventional materials, such as shower curtains, on their living-room floor. The outcome of their creativity was a utility-patented Handbag Raincoat with a unique hook-and-loop closure, allowing easy access to the bag while providing protection from the elements.
The sisters’ background in fashion and their hands-on experience in the industry enabled them to identify a gap in the market and develop a product that not only addressed a common problem but also introduced a new category. Their journey from the fashion industry to becoming inventors showcases their resilience and determination to bring practical and stylish solutions to the market. With roots in the heart of the Midwest, Morgan and Arley have successfully combined their fashion expertise with an entrepreneurial spirit, creating a product that has garnered attention and accolades in the fashion and retail industry.
The Product
The Handbag Raincoat, an ingenious creation by Morgan and Arley, is a chic and practical accessory designed to shield handbags from the unpredictable forces of Mother Nature. Available in three different sizes to accommodate various handbag dimensions, this innovative raincoat boasts a hook-and-loop closure system, ensuring easy access to the bag while providing a secure and protective seal against rain, ensuring that the bag’s contents remain dry and intact.
Crafted with functionality and style in mind, the Handbag Raincoat offers a range of benefits. It allows fashion enthusiasts to confidently carry their favorite handbags regardless of weather conditions, eliminating the need to compromise style for practicality. The raincoats are not only versatile in size but also fashionable, adding an extra layer of flair to the accessory.
Customers can purchase the Handbag Raincoat through various channels, including online platforms like Bed Bath & Beyond, Nordstrom, and Container Store. The pricing strategy is tiered, with wholesale costs set at $5, $7, and $9, while retail prices range from $11 to $20. The accessible pricing ensures that this weather-defying accessory is within reach for a broad consumer base, making it an appealing solution for individuals seeking both functionality and fashion in their daily lives.
How It Went
The company’s position before Shark Tank
In its three-year journey, Handbag Raincoat has demonstrated commendable performance, achieving over $600,000 in sales. The company’s health and position in the market have been solid, with a strategic presence in retail giants such as Bed Bath & Beyond, Nordstrom, and Container Store. Their innovative product has garnered attention organically, featured in prominent outlets like Oprah’s magazine and “The View,” catapulting them into the public eye.
The company has successfully navigated the competitive landscape, facing challenges such as copycats, which they have adeptly countered with design patents, shutting down two imitators at a cost of $10,000. While the sisters have achieved a break-even point, their sales strategy has primarily relied on organic growth, with limited marketing and advertising efforts thus far. Handbag Raincoat’s initial funding of $360,000 came from friends and family, allowing them to bring their product to market. The founders retain approximately 84% ownership, illustrating a strong commitment to the venture.
Despite not opting for traditional marketing channels, the product has found a place in major retail outlets, showcasing the inherent appeal of the Handbag Raincoat. The company’s structure reflects the founders’ entrepreneurial spirit, combining fashion expertise with business acumen. With a focus on maintaining product integrity through design patents and a commitment to quality, Handbag Raincoat is poised for potential growth. The presence in renowned retail partners and ongoing efforts to expand the brand into other weather-defying accessories suggest a forward-thinking strategy.
The Negotiations:
The negotiations for Handbag Raincoat unfolded in the Shark Tank with mixed sentiments from the Sharks. The founders, Morgan and Arley, sought $300,000 for a 25% equity stake in their company. However, as the pitch progressed, the Sharks began to express concerns and pose critical questions. Barbara and Mark, early in the negotiations, voiced skepticism about the business’s valuation and questioned why the sales hadn’t skyrocketed despite prominent features in Oprah’s magazine and “The View.”
Kevin criticized the sisters’ lack of marketing efforts, viewing it as both a positive and a negative aspect. He, along with Mark, chose not to invest, citing concerns about potential legal battles and the sisters’ readiness to do whatever it takes for success. Daymond pointed out that the business seemed overvalued, expressing doubts about their ability to stay on retail shelves with current sales. Lori, despite adoring the founders, also opted out, stating that she couldn’t see a deal.
Ultimately, the negotiation concluded without a deal. The sisters left the Tank without securing an investment, facing a reality check from the Sharks regarding their valuation, marketing strategy, and the competitive landscape. While the Sharks appreciated the creativity and practicality of the Handbag Raincoat, the concerns raised during the negotiation led to a unanimous decision to pass on the investment opportunity.
