Roc-A-Fella Records co-founder Damon “Dame” Dash said in a recent YouTube video that he was planning on buying financially troubled online street apparel retailer Karmaloop LLC with rap superstar Kanye West. Karmaloop, No. 134 in the Internet Retailer 2014 Top 500 Guide, recently filed for Chapter 11 bankruptcy protection after a string of e-commerce investments, including women’s fashion e-commerce site MissKL.com and a video production arm called Karmaloop Media, failed to bear fruit.
Company founder Greg Selkoe confirmed to Internet Retailer that West and Dash have expressed interest, but says they aren’t the only ones looking to buy the company.
“I have talked to them,” Selkoe says. “They are interested, but they’re one of five or six groups that I’ve been speaking to. None of them are saying they want to fundamentally change the business.”
West and his representatives could not be reached for comment.
Selkoe says investors he has spoken with believe in the Karmaloop brand and want to keep him on board should they buy the company.
So what could Kanye West possibly want with a financially troubled online apparel retailer?
“We service a culture that they’re a part of and they believe in,” Selkoe says. “I think that they see that we have a huge amount of upside potential. The biggest thing is it’s a good investment and they (could) make a lot of money down the road. I think that they believe in the company.”
On March 23, Karmaloop filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the District of Delaware. The retailer’s filing lists assets of between $10 million and $50 million against liabilities of $100 million to $500 million owed to more than 10,001 creditors. Among the companies owed money:
- GSI Commerce Inc., which eBay Enterprise rebranded under its own name in 2013 and handles fulfillment: $4.46 million
- Navigo Consulting Group: $1.44 million
- Google: $995,507
- Hybris Software: $461,844
- DHL Express: $382,440
- Adobe: $227,687
According to Top500Guide.com, Karmaloop saw its online sales growth plateau in recent years, going from $60 million in 2009 to an Internet Retailer-estimated $200 million in 2012, before slowing to $206 million in 2013.
Selkoe says Karmaloop has been operated as usual since the bankruptcy filing, and that business has spiked since the initial announcement. He blames the retailer’s current financial woes on a series of four failed e-commerce ventures during what he calls the e-commerce gold rush from 2011 to 2012.
“We made a couple of strategic errors,” he says. “We had to make the hard choice of closing [other businesses] down, but we continued to carry the debt of these businesses that didn’t exist on Karmaloop. It was taking away from our ability to grow and make money on Karmaloop.”
According to a press release announcing the filing, Karmaloop has 4 million monthly unique visitors and sells more than 500 brands through its website.
Other Top 500 Guide retailers to file for Chapter 11 in 2015 are SkyMall Inc. (No. 247) and Wet Seal Inc. (No. 416).
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