Purple Dot Secures Funding to Rival Klarna - Buy Now, Pay Later

Recently, new companies have emerged offering credit options directly at an online store's checkout, enabling customers to purchase products without immediate payment. Klarna and Clearpay are prominent examples within this space. However, consider an alternative approach where customers could acquire items at a reduced price at a future date, and retailers could minimize waste. This is the core concept behind Purple Dot, which positions itself as a “wait-and-save” payment solution for fashion brands.

The company has now completed a seed funding round of £1.35 million, spearheaded by Connect Ventures, and including contributions from AI Seed, Moxxie Ventures, Andy Chung and Philipp Moehring of AngelList, Alex Roetter (formerly SVP of Engineering at Twitter), and the investment firm of Paul Forster, the co-founder of Indeed.com.

Established in August 2019 by former senior Skyscanner personnel Madeline Parra (CEO) and John Talbott (CTO), Purple Dot empowers consumers to request a lower price with a “wait-and-save” option. This allows retailers to determine if they wish to offer a fashion product at a slightly discounted rate during the current season to finalize the sale.

Customers make payment initially and then await confirmation of their order, receiving a complete reimbursement if the item is unavailable. The Purple Dot payment system operates in conjunction with traditional “buy now, pay later” financing options.

The “wait-and-save” price typically represents a reduction of 10-20% from the original retail price, helping to mitigate losses associated with substantial end-of-season markdowns. For consumers, this approach avoids accumulating debt on their purchases.

The startup reports ongoing discussions with several major retail brands in both the U.K. and the U.S., and has already onboarded menswear retailer Spoke, who will also utilize the technology for “pre-orders.” This functionality allows them to evaluate new styles, designs, and materials on a limited basis, thereby decreasing waste – and consequently, carbon emissions – when introducing new clothing lines.

Madeline Parra, CEO of Purple Dot, stated: “Currently, when shopping online, customers have only two choices: pay the full retail price or abandon the purchase. When a customer abandons a purchase, the item often enters a cycle of discounting, becomes unprofitable for the seller, and ultimately ends up discarded. This limited system is disadvantageous for all parties involved – the customer may miss out on the item if it sells out in their size before they return, and the retailer loses the potential sale. Purple Dot directly addresses this issue by introducing a new shopping method that challenges unsustainable consumer habits, ineffective pricing strategies, and damaging sales practices.”

In an interview with TechCrunch, she further explained that “Unlike Klarna, we do not promote consumers purchasing items they cannot afford.”

Pietro Bezza, general partner at Connect Ventures, noted: “Purple Dot’s unique offering provides benefits to retailers by resolving their inventory challenges. The frequent ‘panic sales’ at the end of a season have historically created financial instability for retailers and have had a detrimental effect on the environment.”