Startup interview: John Talbott, Co-Founder, Purple Dot
RTIH gets the lowdown on London-based fashion tech company Purple Dot. “We believe we have the potential to be bigger than Klarna, and one of our goals is to make that happen, without getting shoppers into debt,” co-founder John Talbott tells us.
RTIH: Tell us about Purple Dot
JT: Purple Dot is all about rewarding shoppers for their patience. That’s why we call it ‘Worth-the-wait’ shopping.
Brands often want to sell products before they’re committed to fulfilling that order. For example, to help better predict the demand of pre-launch products before manufacturing, or to help accelerate sell-through mid-season.
By using our “Worth-the-wait” solution, shoppers can get early, exclusive access to the hottest new items or a great price on something they love that is not in a sale, as long as they are willing to wait for a little while.
Shoppers choose the Purple Dot option on the retailer’s online product page, we make the checkout process clear for the Shopper to explain the wait time and if there is any risk that we would need to refund them instead of the retailer shipping the product.
RTIH: What was the inspiration behind setting the company up?
JT: We started Purple Dot because of the broken relationship between the shopper and the retailer. The industry is struggling with predicting shopper demand while also meeting growing expectations around sustainability and profits.
It’s a tough balance. You’ve probably seen the stories in the press about unsold inventory being burned or buried, and businesses going under because of deep “desperation discounts.” So how can we help fix it?
We knew there had to be something better than the existing approach. Traditionally a retailer predicts demand, manufactures a fixed amount, and sets a price. The shopper either buys at that price, walks away to find a better price elsewhere, or waits for an end of season sale.
We knew that if we can tap into shoppers who are willing to wait in exchange for an exclusive benefit -- like a hot new item, or a small in-season discount -- the retailer can better manage their sales cycles, resulting in better sell-through overall.
RTIH: What has been the industry reaction thus far?
JT: Based on the feedback and adoption so far, the industry loves Purple Dot. The pandemic has accelerated the need for meaningful and radical change for the retail industry to survive.
Retailers need to rethink their sales cycles to seriously address the problems of excess inventory, pricing, and discount policies. They know that relying on heavy discounting as a solution to poor demand prediction can damage a brand irretrievably, and they can’t continue to burn, bury, or job-off (sell in bulk) their excess inventory.
They’re recognising that Purple Dot is a highly effective means by which they can better match demand with supply.
“From our experience, the coronavirus pandemic has either been a wake-up call, and retailers are acting fast to re-invent their business models, or they’re paralysed by it”
RTIH: What has been your biggest challenge/setback?
JT: Saying “we no longer want to do big end of season discounts, but we will give our customers pricing options during the season” is radically different for retailers, even scary.
It can be a challenge to get retailers to summon the courage to embrace change and start understanding demand better to break the hellish deep discounting cycle.
RTIH: What are the biggest challenges facing the online retail sector right now?
JT: 2020 has been the “year of the unexpected,” to say the least. Many retailers were already grappling with existential threats to their businesses, and unfortunately, the pandemic has just accelerated that.
The old way of doing things where unsold inventory was ‘solved’ by deep discounting and then destroyed is not sustainable for our planet or for the retailer’s margins.
From our experience, the pandemic has either been a wake-up call, and retailers are acting fast to re-invent their business models, or they’re paralysed by it.
RTIH: What’s the best question about your company or the market asked of you recently by (a) an investor and (b) a customer?
JT: We’ve been asked whether we have the potential to be “bigger than Klarna.” We believe we do, and one of our goals is to make that happen, without getting shoppers into debt.
The best (and most frequent) question we get from shoppers is simple: “Why haven’t I been able to shop like this before?” We can’t answer that, but Purple Dot is here, and the retail landscape will change as a result.
RTIH: What can we expect to see from Purple Dot over the next 12 months?
JT: We’re working with the most forward-thinking fashion brands, like Spoke, to help them integrate Purple Dot into their platforms.
Where the most innovative brands like Spoke lead, we expect more traditional brands to follow. They’ll want to address their inventory issues and offer their customers the same level of experience that our solution provides these early adopters.
After all, nobody likes to feel left out of a good thing.
