Cravar bucked the trend in an unloved industry

U-Ming Lee

Mar 5·7 min read

Cravar is an 8-year old leather bags and accessories maker from Jakarta, Indonesia. The sparks that led to Cravar came to teenage Yoki when he saw a leather bag on display in a Jakarta mall in 1998. A chance encounter with a small, family-owned leathermaker on a trip to Florence in 2005 rekindled the passion. In 2007, one of Yoki’s photography business clients led him to craft a leather cover for a photo album, reigniting Yoki’s love of leather. Yoki subsequently launched Cravar with a few partners in 2013.

Cravar debuted on Kickstarter in 2013. The initial product run was a resounding success, raising $31,546 for the start-up, more than 3.5x the $8,500 the young team hoped. Subsequent Kickstarter rounds were similarly oversubscribed. Cravar has since built a 10-person team around the business. By 2018, Cravar had shipped to customers in more than 50 countries. Sales had increased by 40% each year.

Buoyed by their initial success, Yoki and his partners made the momentous decision to open their first physical retail outlet, in Jakarta. The Cravar Ruang Tamu (Indonesian for living room) opened in November 2019. The first COVID-19 case arrived in Indonesia in February 2020, i.e., three months after the Cravar physical outlet opened.

As the trickle of new COVID-19 cases became a flood, Cravar was caught in a bind with 21 months left on a two-year lease. Nevertheless, Cravar pulled off a feat, breaking sales records in 2020. In the first two months of 2021, Cravar’s record-breaking spree looks set to continue.

To find out about the principles that Cravar used to grow sales in a hard-hit product category throughout the worst pandemic in a century, I asked Yoki to describe the key principles he applied to lift Cravar out of the crisis.

Here’s what I learned.

1. Cravar developed genuine personal connections with its customers

Building strong customer relationships sounds cliched. No business will attribute their success to treating their customers like dirt.

While global-scale fashion businesses like LVMH slice and dice their data with sophisticated analytical tools to understand their customers, Yoki avoided the data-driven, quantitative approach with Cravar. Besides, Cravar did not have the substantial expertise and funds required to pull this off.

Instead, Yoki chose to apply what he calls “analytics at a human level”, recognising he could build and sustain personal relationships with each of his customers. Cravar would stick by the truism:

The bitterness of poor quality remains long after the sweetness of low price is forgotten.

Nevertheless, as a start-up lacking the product development and marketing firepower of the big brands, Yoki recognised the real risk that some of their products could fall flat with their customers.

However, providing the type of white-glove service typically reserved for products at far-higher price points was entirely within Cravar’s purview.

Yoki developed nurturing relationships with each of his customers, going beyond dispensing product care advice, to sharing the ups and downs of their personal lives.

Yoki also created a prominent online space for his customers to foster a sense of community by sharing their experiences with the Cravar brand. Thus, Cravar’s Instagram page showcases more customer submissions than brand-created content.

In describing their framework for building customer relationships to weather the COVID-19 pandemic, professors Ted Waldron and James Wetherbe of Texas Tech University’s Rawls College of Business described five key strategies businesses can use to preserve their customer relationships throughout a crisis. They summarise these strategies with the so-called HEART framework, i.e.

Humanize your company

Educate about change

Assure stability

Revolutionise offerings

Tackle the future

Yoki attributes the human relationships he built with his customers kept Cravar afloat throughout the pandemic. The late-night chats he’d had with his customers over the years created a sense of reciprocity in his customers.

Years of speaking and listening to his customers meant Yoki could count on his customers being receptive to his regular updates on how Cravar was doing during the pandemic. They listened. They understood what Cravar was going through. They empathised with Yoki’s efforts to keep Cravar going and accepted his reassurances that Cravar wasn’t going anywhere.

The result of Cravar’s years-long effort to create an unshakable rapport with their customers? Sales from repeat customers more than doubled in 2020.

2. Yoki treated the production team as a family

Most of Cravar’s production team came from a single village with generations of leathermaking traditions. Many on the production team knew one another from back home, if not directly, indirectly through family ties.

As they moved from their homes in the village to the Jakarta metropolis hours away, they relied on these relationships to stay grounded as they made their way in an alien environment totally disconnected from their village life.

Yoki knew the tools he learned from business school, like pay-for-performance or setting and measuring KPIs, would be detrimental if applied to Cravar’s context. These methods presume a transactional “employer-employee” relationship that would only to alienate the production team and reinforce their feeling of disconnectedness.

Yoki understood that he had to build a nurturing relationship with his production team. More a village head than a CEO, Yoki worked hard over the years to foster a sense of community between everyone in Cravar.

For Yoki, this meant tolerating some of the good-natured jibes and insults that the production team threw at him from time to time, especially during stressful moments. More challenging, however, was the realisation that he had to temper generosity with harshness if any of the team crossed the line.

This “headman-villager” relationship would be tested throughout the lockdown. Cravar doubled down on its new product development throughout 2020, coming up with new SKUs at an unprecedented pace to signal to its customers that it would be open for business.

Producing new products at this rate also meant Cravar had to make the difficult choice of asking its production team to stay in Jakarta and continuing to work even though some team members were uncertain about how their families would handle back in the village. To reassure team members, Cravar paid the team throughout 2020, even when strict lockdowns forced a shutdown in production.

Paying the team their salaries throughout the lockdown helped to assuage some of the team’s financial concerns. However, Yoki is convinced that the team wouldn’t have stuck together throughout the trying times if he hadn’t developed a strong nurturing relationship over the years.

3. Cravar secured an investor whose values were 100% aligned

Cravar’s search for external investors began in 2016 when Yoki and the founding partners realised they needed a fresh infusion of funds to accelerate Cravar’s development. The search for the right investor took Yoki and his partners some years.

Cravar’s reticence at taking external money wasn’t due to price. Cravar received several expressions of interest from early-stage venture capital funds and business angels.

However, Yoki and his partners felt that they needed to have investors who were 100% aligned with their vision for Cravar more than they needed the money. Sometimes, this meant rebuffing advances from venture capitalists who viewed Cravar more as a portfolio investment, instead of joint venture partners.

Yoki developed a keen sense of when things were going south. As soon as the investor talked about anticipated exit dates and targeted IRRs, Yoki knew they weren’t a good fit.

As one potential investor after another fell by the wayside, the partners became concerned about Cravar’s foregone growth opportunities. Still, they decided to persevere in finding an investor whose values fit their own.

Finally, in 2018, the Cravar team found an investor who appreciated what Cravar was trying to do. This investor was looking for a higher equity share than the team hoped but the partners accepted without hesitating as they felt that the new partner could help bring them to greater heights than someone treating them as just another portfolio investment.

As Yoki put it:

Better to have a smaller slice of a big pie than a big slice of a small pie if it means more pie at the end for everybody.

The pandemic proved to be the trial by fire for the investor relationship. Yoki knew that COVID-19 could be an existential threat to Cravar. The investor would stand to lose his entire investment if things went south.

Yoki felt responsible for running his decision to double SKUs and paying the team throughout the lockdown even if they couldn’t come into work by his investor.

So, he felt validated in his investor choice when the investor approved the request without hesitation, telling him to do what he needed to do to survive.

Final Thoughts

Cravar’s entry into an industry in which consumers associate “made in Indonesia” products as affordable but not high-quality was a gutsy play. Nevertheless, Cravar’s experience shows that building social capital meticulously over the years has allowed them to grow at rates that would be the envy of fashion brands anywhere in the world.

Developing a people-centred organisation also gave Cravar the resilience to withstand the worst pandemic and global economic slowdown in living memory. In effect, by putting people first, Cravar built up a reservoir of trust over the years.

The strong relationships that Yoki built meant that everyone — customer, employee, investor — was willing to grant Cravar the breathing room to pivot throughout the lockdown. These relationships were the anchor that helped keep the Cravar ship steady throughout the ongoing storm buffeting the fashion industry.