PARIS — Berlin-based app Giftd raised an angel round of 535,000 euros to further develop its platform, which helps brands move their unsold merchandise through marketing giveaways.
Strategic impact investor Thies Network, Berlin Business Angels Club board member QuantumReality and accelerator Ultra.Vc joined the round, alongside Maciej Gałkiewicz, chief executive officer of pre-seed tech investor Ragnarson.
Giftd’s value proposition is twofold, said founder Hannah Kromminga. It helps brands and retailers offload their unsold stock while using the merchandise as a low-cost acquisition tool to strengthen existing relationships with brand fans, as well as acquire new customers.
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“There’s 30 percent of residual stock that brands don’t know what to do with across the industry on average,” said Kromminga, a long-time tech entrepreneur and cofounder of the Greentech Alliance.
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The industry is increasingly facing a volume problem. As new European Union regulations ban companies from destroying unsold apparel, clothing and footwear products, brands need to find a new channel for the anticipated glut of goods.
Traditional channels of sending to markets in the Global South or donating to charity are becoming more difficult for brands, both logistically and from a PR perspective. The app aims to offer a “zero-waste solution” to offload the excess stock that has previously failed to move through all existing channels, while spinning it into marketing gold.
The idea for the platform came through Kromminga’s work with Fabletics, which approached her when she was working in the secondhand clothing space. The activewear brand was looking for a way to disperse its residual stock after a sample sale.
The team developed a loyalty campaign around the Fabletics merch, and further expanded into the idea of Giftd.
Giftd launched in Germany in June, and now has three brands on board, including Fabletics, S. Oliver’s handbag brand Liebeskind Berlin and streetwear label Irie Daily. Five large fashion brands are currently in the testing phase.
Following the fundraising round, Giftd aims to roll out in additional European countries and the U.K. in 2025.
With premium brands warehousing millions of items per year, Giftd aims to be a new channel.
“What we want to achieve is to become the go-to solution that sits between the clearance channels that the brand owns, and those other practices, and offer an opportunity to get rid of the stock in a way that still creates value for the brand,” said Kromminga.
Through the app, brands can create giveaway marketing campaigns with unsold inventory, distributing invite codes directly or through social platforms and influencers, or leverage Giftd’s in-app data to target new customers.
“We’re creating this kind of viral loop within the social network of people who are already subscribed,” she said.
There’s also a little bit of magical math. While the brands are clearing out unsold stock, customers attach the original price to the gift. “Because it’s an exclusive, invite only, and it doesn’t have a price tag, it reevaluates the product for the consumer.”
Using the unsold merchandise as a customer outreach tool costs up to 10 times less than a comparable marketing campaign, the company estimates. The average price point in their current customer base indicates that brands are willing to pay between 5 and 20 euros per giveaway item, which is allocated to marketing budgets.
Brands can ship directly from their warehouse, use Giftd’s fulfillment partner, or offer in-store pickup.
The latter is an additional boost for the brand as retail locations look to increase foot traffic and shore up physical retail. “This has shown a really interesting marketing effect where people discover retail, and making people discover retail is such an important part of winning and acquiring new customers,” she said. “[The brands] are keen to do more of it, even if it’s small scale.”