Recently, startups have offered credit at an e-commerce checkout so that a customer can purchase a product without having to pay immediately. Klarna or Clearpay are the two most notable in this field. But what if you flipped the model so that consumers could later buy the item at a lower price and the retailer could cut waste? This is Purple Dot's model that pays itself off as a payment option for fashion brands.
It has now raised a starting round of £ 1.35 million, led by Connect Ventures. with the support of AI Seed, Moxxie Ventures, Andy Chung and Philipp Moehring from AngelList, Alex Roetter (former SVP of Engineering on Twitter) and the family office of Paul Forster, co-founder of Indeed.com.
Purple Dot was founded in August 2019 by senior Skyscanner employees Madeline Parra (CEO) and John Talbott (CTO) and enables consumers to ask for a cheaper price. The benefit for retailers is that they can then decide whether or not to bring out a mid-season fashion product at a slightly reduced price in order to secure sales.
The customer still pays in advance and then waits for the item to be confirmed. Otherwise, they will receive a full refund. The Purple Dot payment method is next to the "Buy Now, Pay Later" financing options.
Unlike Klarna, we don't encourage consumers to buy things they can't afford.
This "waiting price" usually does not fall below a 10-20% reduction from the suggested retail price, thereby reducing the losses from end-of-season discounts, where discounts are much lower. The benefit for the consumer is that they do not run into debt on their purchases.
The startup claims to have had talks with a number of major British and US brands, but has already secured menswear retailer Spoke, which will also use the technology for “pre-order”. This means they can test new styles, designs and fabrics in a limited way, reducing waste (and therefore carbon emissions) when they choose a new line of clothing.
Madeline Parra, CEO of Purple Dot commented, “When customers shop online today, they can either pay the retail price or walk away. If they go away, the item goes through the discounting process, becomes unprofitable for the retailer, and is disposed of in a landfill. This binary system won't work for anyone – the customer will lose the item as it may be out of stock in its size before trying to buy it again and the retailer will lose the sale. Purple Dot tackles this problem head on by offering a new way of shopping while embracing unsustainable, relentless consumerism, poor pricing tactics, and profitable sales. "
Speaking to TechCrunch, she added, "Unlike Klarna, we don't encourage consumers to buy things they can't afford."
Pietro Bezza, The general partner of Connect Ventures stated, “Purple Dot's innovative offering benefits retailers by providing a solution to their inventory problems. End-of-season panic selling has long created financial uncertainty for retailers and negative environmental impacts alike. "