Our Journey Continues: Purple Dot – The Pre-commerce Company

At Purple Dot, we help eCommerce brands sell more by selling earlier - so everything that gets made, gets sold.

Where we’ve been

At Purple Dot we started with a simple premise: unsold inventory sucks. Regardless of what or where you are selling, brands around the world pour their hearts into developing products for their customers.

But somehow, 1 in 4 products produced for eCommerce is never sold. As two examples, the United Nations estimated that in 2019 there were over 41 million metric tons of unsold electronics discarded. In fashion, McKinsey estimates at least $50 billion of new unsold inventory mounts up *somewhere* every single year. TLDR: From business impact on merchants to the environmental impact on our planet, unsold inventory is a serious and urgent problem.

From the outside looking in, many believe this problem exists because merchants simply overproduce products that people don’t want. And yes, that does happen.

After spending over 3 years working with merchants, closely on the ground and starting with first principles, there’s more than meets the eye. Despite merchants using the best and most innovative forecasting tech and strategies to avoid overproduction, the macro-effect of these data-driven approaches have been largely unmeasurable. But why?

‍What we’ve learned

In reality, merchants typically don’t have a massive lack of understanding of what their customers want – not at this scale. The prevalence of the “notify me when back in stock” is just a tiny demonstration that merchants can be really good at knowing what their customers love.

Instead, it's a massive lack of control of their inventory management – and the timing of when they can sell.

Let’s take just one example. We worked with a large global toymaker on a new product launch and they marketed this launch date for months to drum up hype. But, they learned a few weeks out from their launch that some products were going to arrive late to the warehouse.

This is a merchandiser's worst nightmare. If products arrive late, they miss their launch date. And if they miss the launch date, they miss that demand. And what happens if they miss that demand? Missed forecasts. Unsold inventory. Dead boxes in warehouses that will never be sold.

And these stories happen 1000s of times a day, for dozens of reasons, all across the world. It reminds me of “missed connections” on Craigslist – the timing just doesn’t line up like they planned.

That toymaker was so close to losing control of a successful launch. But instead, they decided to take back control and sell the delayed stock anyways and on time. They used Purple Dot as their platform to ensure everything from the trusted customer experience to touchpoints with the warehouse made it even possible to sell stock that wasn’t on-hand. They beat their forecast instead of missing it.

We’ve learned that in eCommerce we don’t yet have the basic table stakes to easily sell stock that is not at the warehouse – whether it's 1 hour, 1 day, 1 week, or 1 year away. The building block foundation breaks (big time) if merchants sell that stock. Trust erodes with consumers, warehouses go into meltdown – all because V1 of eCommerce was built for a structured, unrealistic world where stock arrives and then (and only then) do you sell it.

And although it can be tempting to jump to whizzy formulas and algorithms as the solution to any complicated problem, sometimes you have to walk before you can run. You have to start at the ground level, getting down to the brass tacks underneath the hood – where the hard stuff REALLY lies. This is where real change happens first. And this is where we’ve focused and built.

‍Where we’re going

Since launching with our first customer SPOKE London nearly 3.5 years ago, we’ve listened closely to customers on how they can take more control over their inventory and their timing, with one thought in mind: how can we create a world where a merchant never has to think twice about selling early?

And from there, our customers ran with Purple Dot – embedding pre-commerce deep into their inventory management and merchandising strategies for countless use cases powering anywhere from 5%-80% of their overall business. We’ve processed millions of dollars of GMV – all of which represents stock that before Purple Dot was always at risk of not being sold. But instead, it gets shipped out to the consumer as soon as it arrives, as it should be. No inventory risk. No spiraling storage costs.

That’s why we’re excited to announce we’ve closed a $10m Series A round led by OpenOcean with strong participation from Commerce Ventures and our existing investors Unusual Ventures, Connect Ventures, Moxxie Ventures and Paul Forster (former CEO and co-founder of Indeed). It enables us to continue building and putting our customers first, and to continue to grow fast.

We firmly believe that the next 10 years of innovation in eCommerce is going to come in the time period before stock arrives at the warehouse. This is the opportunity that is untapped at solving this urgent problem of unsold inventory. Afterall, there is only so much more the industry can do to optimize for selling after stock arrives – like making your checkout faster, or reducing returns, or a perfectly timed abandoned cart.

But before stock arrives? The opportunities are endless and transformational. And we are just getting started.  

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PS we are hiring! We are a focused team that is proudly customer led and takes pride in execution. If you are one of those people too, please take a look at our open roles.

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