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Getting a handle on carry-on-luggage innovation

Like a lot of lumbering land-based species, luggage has evolved slowly, from the steamer trunk to the suitcase to the 1987 invention of the Rollaboard. Since that milestone, the luggage world has been relatively calm.

But that calm caught the attention of entrepreneurs and investors, who — what else? — set out to disrupt the $40 billion luggage business. Startups are now trundling into the daylight like suitcases at the baggage carousel, and they’re attracting significant investment from venture capitalists.

Raden, which makes smart luggage equipped with a weight scale, phone charger and even a proximity sensor that tells you when your bag is about to emerge at the claim area, just landed $3.5 million from First Round Capital.

Away, another startup that makes suitcases with a phone charger, in May raised $20 million from Global Founders Capital, Forerunner Ventures and Accel Partners.

Bluesmart, which makes internet-of-things connected travel suitcase that is trackable and also includes a charging port for your devices, has raised $12 million.

Some approaches eliminate the bag drag. AirPortr is like a mashup of Uber and Skycap, a concierge service that sends a driver to pick up your suitcase and take them to the airport for you. When you arrive for your flight, you collect your bag from the AirPortr staff and check in normally.

Dufl takes your luggage entirely out of your hands. It stores your business attire in your personal Dufl closet. Before you travel, you go to the Dufl app and alert the company to which clothes you want packed. Dufl packs them and sends them, neatly folded, to your destination.

When you return home, Dufl picks up your bag from your hotel, flies it back to its warehouse, unpacks your clothes, cleans them and keeps them in your Dufl closet till your next trip. The company has $5 million in seed funding from individuals and family offices.

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VC-backed Bluesmart, which makes an internet-of-things connected travel suitcase with a charging port, has raised $12 million to date. Image courtesy of Bluesmart.

So why luggage and why now?

“The existing brands out there are not talking to the new consumer,” says Eurie Kim, a general partner at Forerunner, who led the firm’s $20 million investment in Away.

“You have this $40 billion market, and there are only two or three brands you can name. There’s Samsonite and its Tumi brand, and then a bunch of long-tail no-name products. Whenever we see that dynamic, we pay attention. There is a ton of opportunity to own the new consumer.”

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Eurie Kim, general partner, Forerunner Ventures. The firm is a backer of Away, which makes luggage with a phone charge. Photo courtesy of Forerunner.

The new consumers of luggage are millennials. And venture capitalists say that when these consumers buy a bag, they do it with the same mindset they bring to most of life: the idea that having experiences is more important than owning stuff.

At the same time, the millennials want the stuff they own to express who they are. So when they look at their suitcases, they want to see a reflection of themselves — which may be hard to do when they’re lugging a Samsonite behind them.

“Travel is the experience and luggage is at the core of the experience because it goes everywhere you go,” Kim says. “It’s part of your journey, so it should be something you identify with and represents who you are.”

Away makes luggage that represents people who enjoy “modern high-quality wanderlust-inspired travel,” Kim says.

Founded by Stephanie Korey and Jen Rubio, two women who previously worked at eyewear unicorn Warby Parker, Away is not targeting the high-tech, gadget-obsessed male. Aside from the phone charger, Away’s smart bags are not packed with apps and tracking technology.

“We’re not fighting for those customers,” Kim says. “The customer who buys Raden or Bluesmart is not the same one who buys Away. Away is more a fashion brand than a tech gadget.”

Which is not a problem, she adds, because the next-gen luggage business is not a winner-take-all market. There are many different groups of people to be targeted and there’s enough spending money out there for a startup to deliver a return without owning the industry.

In addition, profit margins on luggage are fat. Luggage tends to be expensive, but there’s room in the market for startups to deliver disruptive pricing on high-quality bags.

Away keeps its prices down by selling direct to consumers, a model the founders learned at Warby Parker. Bags start at $225 for a carry-on, which includes a battery that can charge an Apple iPhone five times. Away recorded $12 million in sales its first year and is growing rapidly. It plans to expand to a broader travel brand with products like blankets and garment bags.

As for exit opportunities, Kim says the major luggage companies will soon be forced to look for new customers via acquisition. While luggage sales are hanging in there — North American sales rose 3 percent last year, to $3.5 billion from $3.4 billion in 2016 — incumbent brands must continue to innovate to reach new customers or they’ll be left behind.

“What 25-year-old do you know who says, ‘I really want a Samsonite bag?’ It’s not happening,” Kim says. “If a big brand decides it needs to reach these new consumers who Away understands, they should be excited about what we have.”

But even Samsonite is innovating. The luggage manufacturer, founded in Denver more than 100 years and which is now based in Hong Kong, teamed up with Samsung to develop a GPS-enabled luggage called GeoTrakR.

What Dufl has is not a millennial marketing strategy or a new technology but a novel idea: a personal packing and handling service for travelers who are too busy (or lazy) to deal with their own bags. Will it take off? The Tempe, Arizona, company recently expanded to serve Europe and Canada, as well as Singapore, Tokyo, Hong Kong, Sydney and Melbourne.

The company started when Chief Executive Bill Rinehart, a serial tech entrepreneur, found himself spending his weekdays traveling and his weekends cleaning his clothes and repacking his suitcase. “It just seemed antiquated that we ask employees to be on the road constantly and we also ask them to spend all this time getting ready for their next trip,” he says.

Dufl addresses the pain points of traveling with a carry-on bag. It does your laundry, packs your bag, runs it through the terminal and gets it to your hotel so you can make the meeting that starts 30 minutes after you touch down.

Dufl works, Rinehart says, because the clothes that business travelers wear on the road are usually not the clothes they wear at home, so they don’t mind keeping them off site in their Dufl closet. Customers even buy clothes online and ship them directly to the Dufl warehouse, which is located in the fabric-friendly climate of Arizona.

“Based on our surveys, 89 percent of our users say Dufl has changed their life,” Rinehart says. “Think about a person who travels a lot, a management consultant who’s constantly on the road. Now she never has to do dry cleaning again. She never has to pack luggage and drag it around. That’s a huge impact.”

Dufl charges $99 per trip to ship a bag, and its average customer travels 1.7 times a month. That adds up to more than $2,000 per user per year.

The company’s user base is now in the thousands and Rinehart’s focus is on getting to scale. He estimates that 4 million “power travelers” in the U.S., and tens of millions worldwide, are potential Dufl customers. His goal is 300,000 to 400,000 users, which would get the company to $1 billion in revenue.

Suddenly, the luggage market doesn’t seem so boring anymore.

Tom Stein is a Palo Alto, California-based contributor. He can be reached at tom.stein@yahoo.com.