Today’s consumers are behaving differently. Budget-conscious, convenience-obsessed and values-driven, even their contradictions are an accepted part of their profile (yes, as it turns out, you can hold sustainability as a core value and trade it on occasion for price or convenience).
But inflation and high-interest rates mean consumers also have less disposable income, and now they want personalised shopping experiences and flexible payment options that reflect their increasing price sensitivity.
Merchants, meanwhile, have been scrambling to serve this dynamic and multidimensional consumer in a chaotic, post-pandemic landscape. Short-term financing services like buy now, pay later and other split-pay products have soared in popularity (the number of US BNPL users grew 56% YoY in 2022, totaling over USD 85bn in volume). However, concern is growing as the consumer credit-like nature of these products has caused regulators to step up oversight.
Price optimisation remains another issue for struggling retailers looking to maximise profits, increase market share, and enhance the customer experience — with a need for more (and better) data to sufficiently optimise their pricing models in real time.
And in the current economic landscape, excess inventory continues to plague retailers. Unsold merchandise represents a massive financial and environmental issue within the fashion industry, where a staggering 30% of unsold clothes and $600M of luxury merchandise are burned each year. It’s a literal sustainability dumpster fire.
That’s why I couldn’t be more excited about our recent backing of the innovative pricing software company, ergo.
price-sensitive consumers find a brilliant, new way to buy the products they want and stay within budget. It’s a win-win.
To deliver on the promise of more personalised, more sustainable, more flexible online shopping experiences, ergo has built an e-commerce plug-in for merchants which enables consumers to essentially name their price — making a lower offer on a product than listed. Merchants can then accept or reject that offer on the backend.
In the future, ergo will also provide retailers with valuable market pricing data, analytics and consumer insights in the form of a price discovery and optimisation tool based on ergo’s ability to collect true willingness-to-pay data. ergo’s real-time pricing data will allow merchants to price items more efficiently from jump — even before listing online. This kind of optimisation will help decrease inventory holdings attributable to suboptimal pricing.
So ergo allows retailers to optimise pricing, increase conversions and clear inventory sustainably. At the same time, price-sensitive consumers find a brilliant, new way to buy the products they want and stay within budget. It’s a win-win.
ergo is currently in beta as a Shopify app, with plans to develop the product and eventually expand to other online platforms.
Founded just this year in New York, ergo is led by its founder and CEO, Claire Stepanek. Equal parts bright, driven and passionate, Claire combines a maths, economics and neuroscience background with deep pricing knowledge acquired during her tenure at Apple, where she ran supply chain across China, Japan and Korea.
We are thrilled to invest in ergo’s pre-Seed round, alongside Wischoff Ventures, to work closely with Claire as she endeavours to change the future of pricing — bringing intelligent pricing strategies to retailers whilst empowering consumers to get the products they want at sane prices.