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An Online Outlet for Stores

     A two-way marketplace for resellers of outlet merchandise 

    ֿDomain E-commerce
    Status reached: $185K pre-seed
    When: Q1 2022, for one year
    Team: Founder with business and operations background


    Thesis/Idea

    An e-commerce/online outlet for off-price retail

    Today, people go to physical stores and look through piles of off-price retail clothing, since much of  this merchandise is not on the website. The idea was to have people scan the barcode while shopping in the physical stores (could be store employees, but also students or people looking to make some additional income) and then offer the items for sale on social or via Let.

    • This concept already exists via huge communities of resellers. The idea here was to consolidate the resellers. 
    • The way it would work: James scans items in the physical store, when there’s a notification that someone bought the item, the money goes to James’ virtual credit card, James buys the item with that virtual credit card, Let, our app, keeps the extra. There are vans in different malls, and James goes to the van to give them the item (identified via QR code) and then gets his commission. At the end of the day, the van takes all the items to UPS for shipment. 
    • We found this especially interesting when we saw people going into off-price stores and buying large amounts, making it clear that they were resellers. 

    Research

    • Tried to get customers as quickly as possible for validation. By the end of March we had a scanning app – Let Scanners- and a marketplace app. The focus was Cedar Hill, an outlet mall in a suburb of LA, where there are a lot of off price stores.
    • We took an Airbnb, built a storage area, and acted like Let traders. We brought in some people to help.
    • Our day-to-day: 7-8 hours of scanning in stores, then wrapping up the items bought and sending them off.
    • Marketing; via tiktok shorts
    • 250 transactions in the two months the company existed. 
    • 10K users signed up 

    Why the idea didn’t progress: 

    • Started worrying when AVO closed, impacting the sentiment of B2C investors, who now wanted high ARR, which wasn’t feasible. 
    • Came back to Israel and tried to raise money from Angels, but were unsuccessful. 

    Insights 

    • The real-time element is complex. It was expensive to build inventory and the CAC of B2C is high. In retrospect, I would have worked with the employees of retail stores and built it slowly. The gig economy part needs to come later. 
    • As a young founder, it’s easy to disregard negative feedback from investors, but we were overlooking important feedback: building a two-way marketplace is very expensive and the idea had too many moving parts. 
    • Educating this market is very difficult. Getting someone who isn’t a reseller to go into a store and scan items costs a lot. 
    • Now could be a good time to do it because buyers are looking for off price merchandise. 
    • It appears that the big retailers are trying to fight against the resellers and backdooring (ie, employees hiding merchandise for the resellers).
    • Tried to bring a very big design partner, via a cold email. In retrospect, seems like they were just gathering data. 
    • Still believe in the concept of bringing outlet/off price merchandise online.
    • No one significant in the US to help with consulting or validation. 

    Tips for a founder working in this area: 

    • Start with a design partner in the off-price market.
    • Work with employees 
    • Decide where to sell based on current trends (ebay, Amazon)
    • Focus on relevant geographical areas. If I lived in the US I would have done it bootstrapped.
    • Spend more time meeting relevant investors.
    • Cold emails work if you send A LOT of them. 

    Want to contact the founders? Sababa!

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