With the help of machine learning and an eye for untapped opportunities, the founders of Azura Consulting have built a data creation and inventory management system connecting fashion stock with more than 100 online marketplaces worldwide.
Established in Sydney just 18 months ago by Sam Wood and Tim Bloore, the group is notching 34 per cent month-on-month revenue growth with $3 million turnover expected this financial year, with a small percentage of sales coming from their own e-commerce website Azura Runway.
The two-pronged business model began with luxury fashion and expanded into fast fashion when COVID-19 hit, but now the founders want to harness their technology to take more Australian fashion brands to the globe.
The moment for blue sky thinking happened when Wood and Bloore, who have decades of experience between them in e-commerce and advertising respectively, noticed friends who were wholesaling bulk lots of luxury fashion items ended up with too much supply slack.
"They would always be left with some remaining pieces, but the products didn't have very good descriptions or they didn't have proper images or the data that came with it," Wood tells Business News Australia.
"So they had no way of getting rid of the products that they couldn't sell through bulk."
Their first solution was Azura Runway whereby the pair would create manual descriptions for these excess items and sell them on their own online portal, but the real business growth driver was the decision to feed the products onto marketplaces around the world.
"For a store that relied heavily on wholesale trade or bricks and mortar, they were able to plug into us and then we would feed them across 42 marketplaces worldwide, and the whole business grew from there,"
The earliest iteration of Azura Consulting was an easily replicable business model, but just before COVID-19 hit the pair embarked on technology development that was to alter the course of their journey.
"We were always handwriting or doing the hard yards with the descriptions, but then we built this AI technology, which kicked into gear around April 2020 and gave us the capability to list 100,000 products across marketplaces worldwide," Wood says.
The platform's capacity as a zero inventory model has grown a lot since then.
"With access to industry-leading AI and machine learning, Azura's platform can curate 150,000 products from over 1,200 brands in a matter of moments and feed these items, using direct integrations, into these e-commerce marketplaces," he says.
"Azura's omnichannel approach to sales, with direct data integrations into premier fashion marketplaces across the globe minimises reliance on any one channel, reduces marketing expenditure and ensures a strong, reliable and proven revenue stream."
He emphasises marketplaces tend to require very specific data to list their items, which can be administratively arduous for users, whether they be a wholesaler or a small offline retailer.
"What our tool does is it will scan the image of the product you have, and it will tell you when that dress for example is short sleeve, whether it's got a crew-neck, whether it's knee length, what colour it is," he says.
"It pulls data out that doesn't actually exist, so it creates the data in that product, and that's what sets us apart.
"Let's say you and I both had the same products listed online. If your product was as you have it and our product was the one that we've created data for, obviously this would make our product a lot more attractive to the marketplaces and consumers because they would actually know what they're buying."
The initial focus was on high-end luxury brands like Prada and Dolce & Gabbana, but in May 2020 "luxury fashion kind of died", according to Wood.
"We then started pushing fast, affordable fashion. It grew exactly the same way as the luxury fashion did - even more so - and it was really the technology piece and the sales channels behind it that enabled those brands to grow," he says.
The Australian market now accounts for around half of Azura's sales, selling its suppliers' stock via 10 e-commerce marketplaces domestically.
Wood also sees significant opportunities to service more international markets, backed as well by a partnership with DHL Express which has been Azura's "go-to to get through customs in a fast, efficient manner". The process works by the company sending the shipping label to the brand, Azura then picks the products up and ships them to the end customer.
The entrepreneur also plans to boost the Azura Runway brand itself, which is currently only promoted in Australia and accounts for just 5 per cent of sales in the fast-growing group.
"There's two goals, because the business is a hybrid model. Azura Runway is the website itself and we would love that to be at a FarFetch (NYSE: FTCH) level where it's a destination site for luxury fashion," he says.
"For the omni-channel approach on marketplaces we want to continue until we're on 95 per cent of all marketplaces worldwide, but also taking Australian fashion brands to the world.
"We want to get all the boutiques and brands into our platform, and then send them across the world into the US, Europe, everywhere.
"As far as we can see, no one else is doing that, and a lot of fashion brands we work with are struggling at the moment with obviously COVID and bricks and mortar, but e-commerce requires very little marketing on their side and it gives them access to customers they've never had access to otherwise."
Path to profitability
Wood says if the founders wanted to they could make Azura profitable today, but to achieve their global ambitions they need to reinvest and put capital into its scale-up.
The group is currently owned by both the co-founders, but they are now set to dilute their stake by 10 per cent through a crowd-sourced funding (CSF) round to raise $1 million, in a bid to supercharge growth.
He expects the extra fund raising will also help with the cash flow challenges of the business as many online marketplaces can have payment terms of up to 90 days, meaning Azura often has cash tied up in their accounts that can't be immediately accessed.
"If we just left it as is now with the existing marketplaces, we're profitable now, but because we are trying to continue to grow there are more marketplaces and more suppliers, and we'll continue to build that up," he says.
"At the moment we're growing at around 34 per cent month-on-month. For us the machine is built, the technology is built, and there are roughly 1,000 marketplaces worldwide that work in the fashion space.
"The lasting impacts of COVID-19 travel restrictions, combined with the growing prominence of younger generation luxury consumers, have driven the success of global e-commerce platforms."
According to a study by Bain, online sales of luxury goods last year skyrocketed at a pace equivalent to five years of growth, doubling its market share from 12 per cent in 2019 to 23 per cent in 2020. Younger generations are expected to drive 180 per cent of the growth in the market from 2019 to 2025.
"Azura is delivering luxury and fashion to consumers and showcasing Australian designers to the world. With a view to IPO in the future, this raise will enable us to grow even faster and realise our market potential," he says.
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