Funded by Connect Ventures, Purple Dot plans to take on Klarna-style purchase debt
In recent times startups have appeared offering credit at an e-commerce basket checkout so that a customer can buy a product without needing to pay right away. Klarna or Clearpay are the two most notable in this field. But what if you flipped the model around so that consumers could buy the item at a lower price later on, and the retailer could reduce waste? This is the model of Purple Dot, which bills itself as a “worth-the-wait” payment option for fashion brands.
It’s now raised a seed round of £1.35 million, led by Connect Ventures, with support from AI Seed, Moxxie Ventures, Andy Chung and Philipp Moehring from AngelList, Alex Roetter (former SVP of Engineering at Twitter) and the family office of Paul Forster, co-founder of Indeed.com.
Founded in August 2019 by senior Skyscanner employees Madeline Parra (CEO) and John Talbott (CTO), Purple Dot allows consumers to request a “worth-the-wait” lower price. The advantage for retailers is that they can then decide whether or not to release a fashion product mid-season at a slightly reduced rate in order to secure the sale.
The customers still pays upfront and then waits to have the item confirmed, receiving a full refund if not. The Purple Dot payment method sits alongside “buy now, pay later” finance options.
Unlike Klarna, we don’t encourage consumers to buy stuff they can’t afford.
This “worth-the-wait” price does not usually fall below a 10-20% reduction from the recommended retail price, thus reducing losses from end-of-season discounting, where discounts are much deeper. The advantage for the consumer is that they don’t then rack up debt on their purchases.
The startup says it’s already in talks with a number of major U.K. and U.S. high street brands but has already secured menswear retailer Spoke, which will also use the tech for “pre-ordering”. This means they can test out new styles, designs and fabrics in a limited manner, thus reducing waste (and therefore carbon emissions) when they commit to a new line of clothing.
Madeline Parra, CEO of Purple Dot, commented: “When shopping online today, customers can either pay the retail price or walk away. When they do walk away, the item goes through the discounting process, becomes unprofitable for the merchant and is resigned to landfill. This binary system isn’t working for anyone – the customer loses out on the item, because it may go out of stock in their size before they attempt to purchase it again, and the merchant loses the sale. Purple Dot tackles this problem head-on by providing a new way to shop, taking on unsustainable, unrelenting consumerism, poor pricing tactics and profit-crunching sales at the same time.”
Speaking to TechCrunch she also added that “Unlike Klarna, we don’t encourage consumers to buy stuff they can’t afford.”
Pietro Bezza, general partner at Connect Ventures, commented: “Purple Dot’s innovative proposition benefits retailers by creating a solution to their inventory problems. End of season ‘panic sales’ have long caused financial uncertainty for retailers and a negative impact on the environment in equal measure.”
This post first appeared here: https://techcrunch.com/2020/11/06/funded-by-connect-ventures-purple-dot-plans-to-take-on-klarna-style-purchase-debt/