Bidz Direct ended up raising $400,000 in seed funding despite bad taste left behind in the sector by Alphatise
Bidz Direct’s platform allows users to browse products listed by sellers – namely, retailers – and purchase those items, or set a price that they are willing to pay for a particular item. If a seller is able to match that pricing, then the user will be able to purchase that item instantly.
In March, I wrote an article about Bidz Direct, in which I stated that the startup’s biggest challenge was going to be the bad press surrounding another startup playing in the same space Alphatise. I also said that co-founders Phil Tran and Zaven Matevosian would face some tough questions as they prepared to launch their platform and raise funds.
Today, the startup announced that it has secured a $400,000 round of seed funding led by angel Raghu Kanchi, a connected investor with a strong and far-reaching network in India. This brings the total amount of capital raised by Bidz Direct to $550,000.
The funding will be used by the startup to launch its product into the Australian market and develop strategic plans to expand into the Asia Pacific region. BidzDirect is especially looking into online growth opportunities in India.
“The online shopping trend is shifting towards instant gratification and we are excited that we have the technology to satisfy consumers who want things immediately,” saysTran. “Gone are the days where consumers are willing to waste 7 to 10 days for an auction to end only to find out at the last minute that they have been outbid by a bot.”
Both Tran and Matevosian are pricing experts, having worked in the special pricing division at IBM for the last 14 years. They realised that what they are trying to do – i.e. take on eBay – is no simple feat. “It’s a long journey ahead, but we already begun, and that to me is the start of success,” says Tran.
At the moment BidzDirect is currently in its pre-launch phase; and now that it has reached its funding goals, intends to launch the platform in the coming months. The strong India focus is in line with Startup Daily’s previous theory that the platform would end up having a rather strong Asian presence, perhaps with even more traction in that part of the world than Australia and the United States.
As I mentioned earlier, the major problem that Bidz Direct was always going to face funding-wise was the fact that Sydney startup Alphatise, which officially ‘launched’ in August last year, had been dragged through the media and soured investors’ taste for this vertical within the ecommerce sector. Rumours within the startup ecosystem are that Alphatise is currently trying to refinance for $1.5 million. However, if that is true, nothing is happening to keep the existing customer base engaged. At the time this article’s publication, the Alphatise website doesn’t exist and the application has been pulled from the app store.
Unlike Alphatise, Bidz Direct does not sell false hope to its users. Bidz Direct mitigates this ever happening through technology and automation. Its approach is to take advantage and grab the sale while the opportunity is presenting itself. In fact, instant gratification is key to making things work in this space.
The Bidz Direct platform has a unique pricing engine that sits behind everything and matches the price requests made by consumers with sellers that are willing to fulfil those purchases instantly. Unlike Alphatise, which then went out and tried to find a supplier, Bidz Direct has taken a page out of eBay’s playbook and already has an established network of ‘Bidz Direct Sellers’ using its platform. Most of these sellers are similar to the types of suppliers that you would already see selling items on the eBay platform as an additional sales channel for their bricks and mortar or retail businesses.
On Bidz Direct, when entering products into the platform, sellers choose a ‘lowest price’ option for their items that ensures they still make money from the sale and if the pricing that users are searching for falls within that range for that product, then it is a match and hopefully a sale. No negotiation is necessary. Sellers have already predetermined in the system where they are willing to drop prices to and that process is automated via Bidz Direct’s software.
As far as revenue streams go, Bidz Direct is keeping things simple with a 5 percent flat fee on sales made across the platform – that is less than half the price of an eBay listing. Tran realises the potential there is for not-so-tech-savvy retailers to leverage off his technology as opposed to building their own site.