From SEEK to Redbubble: Scaling Two & Three-Sided Marketplaces | In Practise

From SEEK to Redbubble: Scaling Two & Three-Sided Marketplaces

Current Chief Executive Officer at Redbubble

Redbubble

Why is this company interesting?

Redbubble is an Australian-listed three-sided marketplace connecting individual artists, fulfilment partners, and customers. Artists upload unique designs and Redbubble partners with fulfillers to produce 'print-on-demand' (POD) products and ship to consumers.

Redbubble's competitive advantage lies in the 60m long tail of unique designs that drive organic traffic via SEO to customers looking for customised products. The flywheel starts with artists uploading designs, this unique content driving organic traffic which drives sales through the fulfilment network. As the fulfilment network scales, delivery time and cost declines which drives sales and the flywheel again.

Redbubble reminds us of Etsy in 2016; a marketplace with a unique and sticky supply side and a new CEO to focus the company on driving sales for sellers. RBL's 5-year revenue CAGR is +35% with gross margins over 40% and an estimated ~15% long term EBIT margins.

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Executive Bio

Michael Ilczynski

Current Chief Executive Officer at Redbubble

Michael is the Current CEO of Redbubble, the three-sided consumer marketplace listed in Australia. Prior to joining Redbubble, Michael spent 13 years at SEEK, a two-sided job marketplace, leading teams across strategy, product & technology and commercial operations, culminating as CEO Asia Pacific & Americas. Michael led over 3,000 employees across 11 countries covering the SEEK portfolio companies. Prior to SEEK, he worked at McKinsey & Company and previously served in the Australian Army Ready Reserve.Read more

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InPractise Notes

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

In your experience, moving from SEEK to Redbubble, how do you look at the fundamental differences between the two marketplaces?

While they are both digital marketplaces, they are quite different in a number of aspects. The classifieds marketplaces are a unique beast whereas Redbubble is, in one sense, an ecommerce platform for consumers, but it could also be viewed as an artist services platform, with the fulfilment, logistics and third-party network on top. In SEEK, you’ve got a two-party marketplace, versus Redbubble, which is much more of a three-sided marketplace.

There are also some interesting differences in terms of the nature of the content. SEEK had a smaller corpus of ads that were perishable and, basically, refreshed every 30 days, whereas Redbubble has 60 million plus pieces of content, across 100 odd different products, so we are talking about three or four billion SKU combinations that are all non-perishable and are all, arguably, evergreen. But they are both digital marketplaces, so there are some things that are similar.

How does that difference in content impact the business?

It makes significant differences. One of the big strengths of Redbubble is the long tail of content and the advantages that has, both from a competitive moat perspective but also for what it plays into long tail SEO and SEM; it makes that a much more important part of the business. It makes the optimization challenges more important. Relatively small tweaks to an SEO algorithm can have significant effects because we place so much in long tail and so little in head terms, into those areas.

The positive part, for me, is that the content library is such a wonderful defensive element and a unique competitive advantage that you can’t just throw money at to replicate. That is the part of the business that I think is a really great base from which to build.

Given that SEEK have a small corpus of, effectively, business customers, uploading content in the form of ads and Redbubble has artists uploading designs, how do you think this changes the philosophy of the company?

Redbubble’s history is definitely in serving artists; that’s what the platform does. It helps them monetize their passion; it enables them to sell products featuring their designs. Thinking about the artist has been fundamental, and effectively, not to monetize the artist. Whereas in the SEEK context, the hirer, the person placing the job ad, was the customer that you were selling to, that you were generating revenue from and who you would look at from an account management perspective.

That said, one of the things that we are starting to do in Redbubble is to start to think of our artists and manage them from an account management perspective, in terms of tiering them, giving them different levels of service, potentially, and thinking about where they fit when we onboard them. That is obvious, and has been done in some ways, but we’re trying to really increase that account management philosophy that we can bring to the top-selling artists, then the middle tier and then go broader. We’re looking to have a more specific focus on what is the level of proactive service that we should be giving to those different tiers of artists.

But our goal is always to align ourselves with the artist, as opposed to monetize the artist. It is the consumer who pays, so you have to think about the consumer. Whereas, in the SEEK context, the jobseeker never paid. There are fundamental differences that I have had to get my head around.

How do you think these new artist services could improve the stickiness and the relationship you have with the artist?

Stickiness hasn’t really been a huge issue, in terms of artist retention; retention is really, really high. What we want to continue to work on is artist engagement. We want to make sure that artists have an incentive to come back to the site, to curate their work and to apply their work to new products. When a new product comes along – we’ve just launched hats – their existing designs don’t automatically get configured onto those products. The artist needs to come on, configure it, set their price and say that they want to sell that product.

It’s important that you get artists with really well-selling content, to come back, reconfigure and continue to engage with the site, as well as continually adding new designs. While there might not be a huge amount of completely new products, there are new launches. For instance, a new iPhone case will come out in September, with the new iPhone. It’s really about ensuring an ongoing engagement and connection.

I uploaded an In Practise logo and test it on products and, yes, it does take some time to configure it to each product, to make sure that the image is at the center. How can you make it easier for the artist both so that they keep re-engaging but also, when they do upload an image, it can automatically be configured in the middle of the product?

Yes; absolutely. We’re working on a new version of that uploader interface for artists. It is quite a significant, longer term, product development and product engineering project. Firstly, it will refresh that whole experience, to make it a little more user-friendly but it will also guide artists as to what products their image fits more specifically on. For example, some artists will upload a circular image and that type of image works really well on some products and really badly on others. We should be informing artists and saying, this image, based on its resolution and size, works better on these products as opposed to these products.

That new version of that uploader tool is a very important and long-term investment. This is not a week’s project; it’s months. Then you’ve got migration and all those sort of things. It is a really important area for us and we’re quite excited about what that will look like. It will help artists but it will also help consumers because we will have better matches between the design and the product that the artist is selling the designs on, when they come into site and start browsing.

You mentioned how, historically, Redbubble is all about the artists. Some would argue that there has not been enough focus on the customers. How do you look at this slight transition from a pure focus on artists to now also focusing more on the demand side and the customers?

The heart of Redbubble, particularly among a lot of the staff, is with the artists. As I said, that’s why we exist; we exist to serve artists and help them sell products. The way that I talk about it with our staff is that it’s not about shifting the focus but it’s about adding the focus and recognizing the core job artists want out of the platform is to sell their products. Therefore, our job is to bring the consumers to the site, enable them to have a great experience on the site, find the products, find the designs they can buy from the artists and then transact in a really good way. We want them to have such a great experience that they come back and either buy more from the same artist or more from other artists. That’s our job.

Focusing on the consumer is not about not focusing on the artist. It’s actually about focusing on the core thing that the artists want from the platform, which is to sell products featuring their designs. Yes, we’re trying to get some balance into the way that we focus, to really focus on all aspects of that consumer journey. As I said, we’re really honing in on the uploader and renewing that experience to make it better and investing in our group artists’ team.

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From SEEK to Redbubble: Scaling Two & Three-Sided Marketplaces

September 8, 2021

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