Redbubble's (AX:RBL) rapid market growth is driven by three disruptive key trends: customer demand for personally relevant goods; manufacturing- and print-on-demand; and the sharing economy of the internet with economically viable and easily shared technology. These trends mean its individual customised production to order is economically viable. As a result, RBL has a disruptive retail model with long-term growth potential based on low customer acquisition costs, as well as a positive working capital cycle with neither inventory nor warehousing requirements.
A global platform for creative products
Redbubble is a global online marketplace where independent artists upload creative works for production on demand by third-party fulfillers. About 600,000 artists currently use the platform with 28 fulfilment locations. RBL appeals to consumers seeking affordable, distinctive, high-quality products. The model differs from conventional retail in its large range of designs and creative works. The main markets are North America (64% of revenue), the UK, Europe and ANZ.
Strategy: A growing, sustainable, diversified market
The strategy is to build a high-growth, sustainable and diversified marketplace by (1) helping customers ‘find their thing’; (2) forming deeper customer relationships to increase their lifetime value; (3) acquiring new customers at low cost; and (4) upscaling the platform, improving economics, speed, affordability and experience.
Rapidly expanding metrics and profit turnaround
H118 web metrics are healthy, with customer numbers +40% y-o-y to 2.4 million, artists +33% to 218,800 and site visits +39% to 127.5m (of which mobile 54%), converting at 2.0%. 46% of sales are from paid sources (although immediately profitable), and cost per paid customer is reducing. Around 65% of selling artists are already on the platform. H118 revenue was +30% at A$102.3m and EBITDA A$0.9m (H117: -A$1.1m). Net cash flow was A$18.6m positive on seasonal factors.
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