Instead of providing a marketplace for brands such as Armani, Gucci and Issey Miyake, Alphagreen has created a sales platform for cannabidiol (CDB) products, medical cannabis, alternative healthcare and plant-based wellness lines
Those familiar with the business models of the fashion e-commerce sites Farfetch or Etsy should have little problem understanding how Alphagreen works.
However, instead of providing a marketplace for brands such as Armani, Gucci and Issey Miyake, Alphagreen has created a sales platform for cannabidiol (CDB) products, medical cannabis, alternative healthcare and plant-based wellness lines.
Initially, at least the plan is to focus on CBD in the UK, Europe’s biggest markets for oils, balms and food additives that contain the non-psychoactive elements of cannabis.
In Germany, meanwhile, Alphagreen is in the process of receiving its licence to import and distribute to pharmacies medical cannabis, which it is expected will provide an important source of income.
There are currently 35 brands on the site, selling hundreds of different products.
Moving quickly up the rankings
The expertise of its founders, including chief executive Alexej Pikovsky, in the dark arts of search engine optimisation (SEO) are quickly driving the Alphagreen site up the web rankings.
“My CTO built two successful businesses…he did so by dominating traffic using SEO,” explains Pikovsky.
“We have the same play-book. So, we have a number of content writers all over the world that create unique output for us.”
Its content strategy allied with the slick technology driving the marketplace are helping ensure Alphagreen is a go-to site.
Asset-light model The business model behind it is fiendishly simple. So, while Alphagreen provides the marketplace, the individual companies hold the physical inventory and take care of the fulfilment too. That means the company is asset-light and therefore ties up very little working capital.
“We are direct to consumer and online,” says CEO Pikovsky. “We don’t have our own products, but order and curate brands to offer to customers.
“The brand receives the order directly and does the fulfilment itself; we don’t touch it.” Its ‘take’ for finding and introducing new customers is 30% of the sale price before VAT. That compares favourably with Farfetch and Etsy, whose commission might be 5-10%. Like rolling a snowball, there is an inflexion point where the business will take on a momentum of its own. It is not quite at that stage, but the portents are good, says Pikovsky.
Funding boost Moreover, it has the financial wherewithal to get there having raised £500,000 of funding in February.
The timing was lucky as the shutters came down only a matter of weeks later as the coronavirus pandemic sent the western world into lockdown.
The plan is to expand the Alphagreen offering by bundling products into thematic areas such as “recovery, immune system, mindfulness and sexual well-being”, according to Pikovsky.
At the same time, it may offer its expertise on an individual basis in the form of managed service solutions. It is also keen to provide a business to business marketplace to wholesalers along the lines of the LeafLink in the US.
“This is something we are very excited about,” says Pikovsky of the company’s B2B plans. So, there are plenty of opportunities for the group to pursue. Does this mean there may be another fundraiser in the offing? “I wouldn’t rule this out; watch this space,” says Pikovsky.