Luxury fashion seller Azura hits profitability as AI plugs data gaps

Luxury fashion seller Azura hits profitability as AI plugs data gaps

Azura Fashion Group co-founder Sam Wood.

An artificial intelligence (AI) overhaul has allowed Azura Fashion Group to drastically cut costs and expand into more global markets in recent months, with co-founder Sam Wood claiming the Sydney-based startup has now achieved profitability within two years of a $2 million capital raise that was put towards tech development.

The majority of Azura's business comes from selling well-known fashion brands on existing e-commerce marketplaces, and this model has been supercharged since February by the roll out of its AI Transformer system, which has also enabled recent breakthrough deals with the likes of Farfetch Australia and Next UK.

"I think our total database number six months ago was around 100 million people that we could sell to, but by launching into places like Korea and the Nordics we're now hitting 300 million subscribers," says Wood, who co-founded the business in 2019 with Tim Bloore.

"As soon as we turned on the AI model it was almost instant."

From what he describes as a previous "Frankenstein" model of using various third parties to ascertain data on products to be either sold or resold around the world, Wood notes the funds were used so that Azura could build its own infrastructure from the ground up.

"We needed the barcode, some kind of technology that scans images and pulls back the information of what that is. Everything we sell is branded, so that information is somewhere online," says Wood, who won the Sydney Young Entrepreneur Award - Fashion & Design in 2021 and 2022.

"We've built this AI Transformer which pulls data in from suppliers in all different formats, whether it be CSVs or APIs, and it pulls it into our system and then uses artificial intelligence to pull data out of images using Google AI; the same technology behind Google lens, but their enterprise software.

"Once that process happens, it then gets sent through to Microsoft and goes through OpenAI. Using the data Google has generated, it then cross-references that against multiple websites like GS1, and also the brands’ official websites to go and find the model name and model number."

What these two steps achieve is the difference between being able to label a product as, for example, a 'Nike shoe' versus knowing it is a Nike Airmax 97 with the measurements, width and price.

"Then we use Amazon’s AI tool to go and find what that product’s been listed for in every single country. So now we have all the market research around this product. Then we add shipping on that so we know where we will and won't be competitive," he says.

"All of a sudden we’ve gone from having almost zero data on a product to being able to know that we can sell the product at a certain price point in every single market, and then also have the taxonomy as well as the translations for every single country we sell into," he says, noting that of the 30 countries where Azura sells, nine markets are not in English. A year ago, around 30 per cent of sales were outside Australia, but now that share has lifted to around 60 per cent.

"Something that used to take us almost three or four months to get now takes us around 24 hours."

This has translated to major efficiency gains for Azura, taking much of the more tedious human labour out of the process, running through an automated system and freeing up time for the company's nine staff members to do more meaningful work.

"This came out in February this year and from February to May our fixed costs went from $165,000 down to $70,000 because all of a sudden we didn’t have to use all of these external agencies anymore that were pulling in bits and pieces," he says.

"There are very few touch points in terms of when a product comes into our system to when it goes live and is sold, which allows us now to pick the best logistics routes as well.

He says the AI Transformer has also helped provide more precise knowledge of the weights and dimensions of different products, with ramifications for cost savings that add up across large volumes.

"When we go to print the label, we’re not guessing anymore," the 35-year-old entrepreneur explains.

"Before we used to say ‘Let’s do everything in 2kg to be safe’. Now we might know that it's actually 800g. The cost difference between 2kg and 800g say with DHL Express from Italy to Australia is almost half. We’ve cut our logistics bill in half, we've cut our operations in half. 

"Now we’re hitting a position where the business is beginning to be in the profitability stage, and everything above basically from June to July continues to scale."

Following this recent growth, Azura is now raising the same amount as in late 2022 - $2 million - via crowdsourced funding platform OnMarket, which Wood says will go towards scaling up revenue and profitability, as well as increasing brand awareness.

"The last raise we did was to build our own internal database, which is now complete, so now it's all about scale," he says.

"We're now looking to scale profitability and make this business extremely profitable, and 10x our business valuation and looking for an exit within the next two years.

"Before we wanted strategic partners to kind of build the business up. Now with crowdfunding, it's about getting a fan base out there to help us grow the business and build Azura’s name up, so when we do go to market  everyone knows who we are."

Currently, the brand isn't highly recognised because it operates through other retailers - only 5 per cent of sales come from its own e-retail sites Azura Runway and Azura Reborn, the latter relating to circular fashion which is still an important part of Wood's ambitions.

"We now look after the entire second life for Farfetch in Australia," he explains.

"We have our own buyback system which is Azura Reborn Buyback where customers would sell their bags back to us in exchange for money, in exchange for credit on Azura.

"Because that system works so well, Farfetch has now white-labeled our service to be able to do all of Farfetch’s products as well."

He hopes to replicate this same set-up in other markets, and highlights the business is starting to gain more traction and credibility within the global retail space as well.

"When we first started this business, we were doing deals with your generalised stores in Australia like Catch and Kogan where they sell everything, and people aren’t really going there to buy Louis Vuitton bags," he says.

"Now we’ve just done a partnership with Next in the UK and we’ve launched their entire luxury fashion arm, which is a huge thing for us.

"That’s a hundreds of billions of dollars company dealing with an Australian startup, and I think that’s a huge win."

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