Matching brands with consumers who value their products, new Australian online marketplace Akagu is bridging the gap between consumers’ increasing expectation for high quality at low cost and brands’ concerns about damage done by discounting.
The startup is empowering consumers to determine what they’ll pay for their favourite fashion labels, while providing designers and retailers with an alternative to heavy discounting that can damage brand values.
Akagu’s solution for clothing retailers is Australia’s first Dutch auction marketplace that focuses purchase behavior on perceived brand value and it is already showing positive results for retailers and purchasers alike.
Since its first live sale in December 2015, the start-up’s early sales events show the new customer journey is already driving higher returns for brands.
“Our initial sales show an average of 10 per cent on sales margins was recovered by designers,” says Melbourne entrepreneur and Akagu founder, Jimmy Zhong.
Unlike online auctions already familiar to Australian fashion shoppers, the Dutch auction format starts with a higher price which gradually decreases rather than the other way around. Purchasers can bid to secure an item early in the sale or take their chances and wait for a price drop while taking the risk that another shopper may secure the item.
“To a degree, this wait and see approach to purchasing is already happening in retail stores, with buyers waiting weeks to see if their fashion object of desire will be discounted or sell out,” continues Zhong. “The beauty of a Akagu, for both the shopper and the retailer, is that rather than waiting weeks, our auctions take place on a particular day over a mere matter of hours.
“By giving customers the power to decide what they are willing to pay for items, their brand experience still recognises value, without labels being cheapened by stores abounding with unwanted stock at clearance prices.”
Investors have recognised the opportunity, with Melbourne property developer Capital Alliance investing $400,000 in a bid to support what it considers to be an industry game-changer.
Capital Alliance founder and director Mohan Du said he saw potential for labels being able to quickly sell off excess stock without damaging their brand, particularly with Akagu’s ability to offer this opportunity with speed and mobile convenience.
With more than 60 per cent of traffic for sales already on mobile, and with the average auction lasting only a few hours, the Akagu experience is designed to meet increased consumer demand for on- the-go shopping while maintaining the thrill of a good deal.
Currently offering exclusive auctions to members only, Akagu’s first sale went live with more than 500 subscribers. The start-up will officially launch in February 2017, with plans to expand its platform to other industries in 2017.
