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Startup launches new auction-based fashion site

Melbourne startup Akagu will officially launch its new auction-based fashion site of the same name on 28 February.

Since soft launching in September 2016, the marketplace has attracted more than 2500 subscribers and over 30 fashion retailers.

Akagu has also sparked the interest of retailers outside the fashion industry and is exploring opportunities to diversify its offering.

The appeal is its unique Dutch auction sales format, which starts at the recommended retail price and decreases periodically until a buyer is found, or the sale ends.

The sales format is an alternative to the price competition among fast fashion labels, which has created a “race to bottom” mentality in the fashion industry.

“There’s an increasing demand for smaller-run, independent labels producing higher quality clothing. However, much of the time, the price point just isn’t attractive enough to consumers,” Akagu founder Jimmy Zhong said.

“That’s the beauty of Akagu’s reverse auction process – users are given access to high quality pieces at prices they are willing to pay,” he said.

According to Zhong, the sales format is already showing positive results for retailers and purchasers.

“Our initial sales consistently show an average of 10 per cent on sales margins was recovered by designers, with our highest reaching 46 per cent, so, while the purchaser was driving the price, a valued deal was achieved for all,” he said.

When it officially launches this week, Akagu will be open to any Australian consumer. Up to now, it has been a subscription-only  shopping service.

Melbourne property developer Capital Alliance has invested $400,000 in startup. Mohan Du, Capital Alliance founder and director, said he saw potential for the mobile-designed platform to grow beyond the fashion industry.

The startup is looking to move into the travel industry with the aim of applying the reverse auction sales format to hotel accommodation by the end of 2017.

“We envisage the Akagu model working well across various other industries, which is why we see Akagu as a lifestyle platform beyond just fashion,” Zhong said.

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