7351 Views

Online Transformation of K-Fashion wave by Donggle

MinChi Park
by

June 25, 2020

Leveraging the 10 years of running a successful early-stage accelerating program from its headquarters at San Francisco, 500 Startups Korea has launched the “Seed Program” in May. 750 startups applied, and we have selected a couple of companies to work with. (Drum roll~~) Please join me in welcoming 500’s new family, Donggle

Donggle is a B2C fashion fulfillment commerce platform. Without any middlemen, it directly connects fashion wholesalers from Dongdaemun market* and customers through its website and mobile app. What made Donggle attractive was that its founder, Youngha Choi, is someone that could be denominated as a “Dongdaemun native” based on her years of experience of selling in the market. 

*Dongdaemun Market is a large commercial district comprised of 26 shopping malls, 30,000 specialty shops, and 50,000 manufacturers. (Source: VisitSeoul) 

 

Donggle’s customers need to pay a 5,000 KRW monthly subscription fee in order to purchase fashion items from Dongdaemun shopping malls at a wholesale price, which is 40-60% cheaper when compared to retail price. Donggle handles logistics on behalf of the wholesalers by doing bundle delivery, so customers are not burdened by individual delivery fees. Customers can easily place their orders through the website or mobile app and receive their purchased products, all without having to visit the bustling Dongdaemun Market themselves.

The Dongdaemun wholesalers, who are on the other shareholders in this platform, can make extra profit by selling online through Donggle. There is a common saying among Koreans that ‘Dongdaemun market never sleeps’. This means that it is nearly impossible for wholesalers to allocate their time and energy to sell online even if it guarantees an extra profit. Clothes made one afternoon can hit shelves the very next morning. Wholesalers mostly open their stores at night, and retailers purchase offline in Dongdaemun and sell them online. And, there are parts of the market that also have retail markets available for ordinary consumers during the day. 

According to KIET (Korea Institute for Industrial Economics & Trade),  the estimated size of Dongdaemun market, is $12 billion, making it the leader of “fast-fashion” in Asia. However,  online innovation has not been so fast in this fashion hub. Only about 6% of the market is connected to some form of online(estimated by GMV through B2B platforms e.g. Linkshops and Sinsangmarket). 

There are wholesale fashion markets in the world that have a full-chain cluster of manufacturing factories and wholesale sellers – Korea, the United States, China, Brazil, and India. Among them, Dongdaemun is the only one where the wholesale market runs until dawn. 

There are several major fashion fulfillment startups out in the market. However, none of the sellers in those platforms are  Dongdaemun wholesalers since they are mostly retailers that resell items purchased from Dongdaemun Market. This is why Donggle has price competitiveness compared to other fashion fulfillment services. This is possible because the founding team understands Dongdaemun fashion market inside-out and is able to articulate in the colloquial language as the wholesalers. Donggle has connected approximately 100 wholesalers in the app(and web) so far, and they sell the same items to ordinary consumers and retailers for the same price.  

 

Value Chain of Donggle

 

Even though the business model is different, those platforms have proved that online fashion platforms based on Dongdaemun Market are growing fast and that disruption might change the market dynamics of this traditional market. This offline-to-online transition will not only affect the Korean fashion industry but that of all neighboring countries like China and Southeast Asia.  

Youngha Choi, the CEO & co-founder, grew up working with her parents who also used to be Dongdaemun fashion wholesalers from a young age. She organically started her own career in the market as a fashion wholesaler at one of Dongdaemun shopping centers. She has noticed the growing pain points of wholesalers who have been struggling to keep up with market transformation. It is getting harder to keep price competitiveness against Chinese wholesalers that copy Dongdaemun designs, manufacture them overnight, and sell them at a cheaper price point that of the clothes made in Korea. 

Dongdaemun has been hit hard by external risks multiple times such as diplomatic conflict with neighboring countries and the recent COVID-19 outbreak which led to a decrease of visitors and bulk buyers coming to Seoul. It will continue as long as it is heavily dependent on offline sales. The co-op of shopkeepers of Dongdaemun shopping centers had already tried to build an online market targeting global customers, but it didn’t work because of a lack of experience and knowledge. Donggle is capturing that market opportunity to transform the giant fashion mecca of the region, and 500 Startups is thrilled to be a part of its growth.

 

Written by Yolanda Kim (Investment Principal) 

Most Popular

June 19, 2020

Pre-SAP 2: Monetization with DIVE Studios

June 25, 2020

Online Transformation of K-Fashion wave by Donggle

June 26, 2020

Presence, a voice-first tool for remote teamwork

January 02, 2020

Pre-SAP 1 인터뷰 시리즈: Ghost Kitchen편

Recent

Seed Program 배치 3: 프로덕트 최적화, mommom편

“나에게 시드 프로그램은 공기를 정화시켜주는 공기청정기이다” Seed Program 배치3 인터뷰 시리즈: mommom편 내 아이에게 가장 좋은 것을 주고 싶은 건 모든 부모의 마음입니다. 하지만, 어떤 육아용품을 사...

초기 단계 벤처캐피탈로서 ESG 도입을 가속화한다는 것

해당 게시글은 500스타트업의 ‘2020년 ESG 연간 리포트'에서 발췌한 내용을 토대로 작성되었습니다. ‘2020년 ESG 연간 리포트’에 대한 자세한 내용은, 이 링크를 참고해주세요.   2020년은 제도적 차...

Seed Program 배치 2: ICP 분석과 온보딩 개선, Payple편

“나에게 시드 프로그램은 방아쇠이다” Seed Program 배치2 인터뷰 시리즈: Payple편 바야흐로 '구독'의 시대입니다. 다양한 서비스부터 제품까지, 우리는 정기결제를 통해 이용하고 있습니다. 그 정기결제를 계...

Seed Program 배치 2: B2B ERP 론칭, Veluga편

"나에게 Seed Program은 다시 한번 돌아볼 수 있는 기회이다 " Seed Program 배치2 인터뷰 시리즈: Veluga편 지금은 ‘플랫폼 비즈니스'의 시대라고 해도 과언이 아닐 정도로, ‘플랫폼 비즈니스’는 거의 모든 분...