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.
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.
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.
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.
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.
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.
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.
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.
It really is about balancing and bringing in more of those ecommerce practices and disciplines. It’s really easy to go through the site and identify some areas where you might say that it’s not quite best practice, from an ecommerce perspective and how can we improve the site, to maybe pick up what’s working on the TeePublic site versus the Redbubble site and vice versa. How can we cross-pollinate good ideas? Increasing our focus on that core job of the platform – to bring the consumers onto it to enable them to buy the artists’ products – is really important for us, over the next couple of years. That is what will drive our step change strategy, moving forward.
Adam, who ran the TeePublic business for a number of years, is a great contributor to our overall group. There are some things that they do differently in the way that they think about their SEO and the way that they think about their crawl and even some on-site things, in the way that they present sizing and other element in their apparel, that we can pick up. There are a lot of small, nuanced things that work really well. At the same time, Redbubble was able to take some of their experience in some of their paid acquisition channels that TeePublic used and said, these channels give a really great return on ad spend. It has been mutually beneficial. Whilst they still operate quite separately, I would say the businesses are cousins, heading towards siblings, but it’s not one business, with two brands. We’re a house of brands and a house of businesses, in terms of how they operate, at the moment.
Primarily, they are both growing quite strongly and they’re both pretty small. Our focus, for both businesses, is on growth. There are specific options where we are starting to work together. The group artists’ team that I mentioned, that is actually a group team. It was established out of TeePublic, because they were probably a bit more advanced in thinking about their artists in that fashion. But that is now a team that serves both businesses.
We are heading slowly towards some functions that are serving both businesses; both businesses are growing strongly but they have different cultures. Our focus isn’t on cost savings and efficiency; that’s not worth the disruption that would happen from trying to centralize. They operate on different tech bases; they operate in different locations and they have somewhat different cultures. Most importantly, they have quite different customer bases. The customer demographics between the two sites is actually quite different and so the content on the sites is actually quite different.
We don’t want to interrupt that growth and that focus. That is more important to us, at the moment, than some potential costs savings which I think we could always get down the track.
When we look at who the core customer base is, for Redbubble, it’s an interesting mix of Gen Z and Gen X combined. Imagine a usually teenaged female and their Gen X mum; they are the core Redbubble customers. When we look at who are our most loyal customers and who are our superusers, over and over again, we see these family units where it is often the teenager who has introduced the parent to Redbubble, and then they start purchasing for the whole family, for their friends and away they go. It’s really clear.
With TeePublic, we see it’s much more of a core Gen Y audience and it’s a little bit more male skewed. The content that those two demographics are interested in and even the way they want things presented is a bit different. It’s really complementary rather than competitive and that’s why we’re continuing with the two brands, two businesses.
Often it’s the teenager that is first exposed, but it’s the parent who is the primary purchaser. That’s where we’ve got the opportunity to really those help those first-time consumers to understand the value proposition even more broadly. It’s not just that they can buy a t-shirt for their child, but they can also get a hat for their husband and a really unique floral throw cushion. They can get a duvet cover and a bit of wall art; that’s the challenge that we’ve got, to communicate that CVP.
Yes, both in terms of the audience and the fact that TeePublic has a slightly smaller product mix at the moment. That is clearly a big opportunity that we can work on, over time, particularly in terms of getting the supply chains to work even more closely; they do work reasonably closely already. The marketing teams, as you can imagine, work quite closely, to make sure we are not stepping on each other’s toes, particularly in SEM.
Additionally, TeePublic has less of a geographic spread as opposed to Redbubble and, again, that creates a bigger opportunity. More of TeePublic’s revenue is generated in the US, relative to Redbubble. You can see these opportunities for both businesses to grow quite effectively and together; just not combined.
When TeePublic was acquired, my understanding of the history is that the supply chains were completely separate; different fulfillers, different deals and so on. While the two teams still operate separately now, they have started to work together, at least in discussions as to which fulfillers are used for which products. You can imagine that they can start to talk about rates and there are efficiencies and savings that are mutually beneficial for both of the businesses. At the moment, that is primarily in the US and the UK; that is where the two businesses overlap significantly. There are still opportunities for us to work even more closely together, as we move forward.
I think there are a couple of ways to look at it. Firstly, who are the different consumers and what are their needs? Secondly, what is the brand proposition that is going to meet those customer needs? At the moment, all of our customers are, primarily, consumers and we’ve got Gen Z and Gen X served by Redbubble and Gen Y served by TeePublic. As we develop, which brands translate into new geographies, or do we need an additional brand? But you could also imagine, potentially, other types of customers where the third-party fulfillment network that the platform connects into, could be really beneficial.
Those B2B potential opportunities are in the idea bucket and they’ve been touched on a little bit, but they are all future opportunities for us. We haven’t put them down on our medium-term aspirations because I don’t like to put down something that I don’t know that we’re going after. We know that we’re going to build our brand; we know that we’re going to have new products; we know that we’re going to expand geographically, with our two businesses. But you can see how there are, potentially, other opportunities, given the assets and the network that the business has, that could create further value down the track.
Companies that are looking at that have to be really aware of the fact that it is a very different selling model. It has got less marketplace effects; it is much more of a B2B model. You would want to be confident that we’re bringing something unique into a transaction like that, otherwise you’re just another buyer. Unless there is something that you are bringing that would really plug in and create real value, that is where companies can get into trouble with acquisitions. It seems as if there is logic, but what are you bringing and what are you bringing uniquely?
When we look at our universe and where we are – and we’ve talked about the fact that we do want to be more proactive in looking at M&A opportunities, over the next couple of years – you can imagine that there are quite a few different paths that we could take that we do think would be value accretive. We’re just not going to jump into something for the sake of it; we will be very thoughtful and diligent. We’ve got enough capital to do one or two, so you want to make them worthwhile.
Yes; that’s where it’s important to understand what it is that the company you are acquiring would bring versus what the current group brings and is it complementary? In any acquisition, whether we were talking about something that took us into a new geography, a new business model or something that just allowed us to scale in our current geographies, it’s very clear that it’s about what the value creation thesis beyond is. Are we just going to plug that in and that’s going to help?
I’m a big believer that there has got to be something pretty strong and relatively unique, otherwise we all know that M&A can be value destructive. I’ve been fortunate, in my career, to go through a lot of acquisitions and investments. I’ve seen some of them go fantastically and seen some of them struggle. It tends to always be that it’s when the thesis isn’t as strong that you can look back in hindsight and see that, at that point in time, the thesis was a stretch or it was two steps rather than one step from what you’ve done before and that’s when you can get into real trouble.
For the B2B, it’s hard to theorize. When we talk about our M&A universe, we are focused, primarily, on how we continue to scale the business. We know that marketplaces, like ours, in general, get better with scale. How do we accelerate the scale of the business, to get to that next level? You see that margins get better and problems are easier to solve. There are a couple of exceptions and I think that anyone who works in content and user-generated content will know that, sometimes, those problems get harder with scale as opposed to easier. But in general, they get easier. So our number one focus is on how we scale.
In scaling, when you are looking at someone you are acquiring, what would it be that the group was bringing to that acquirer? Not just to say, you’re going to plug into us and that’s going to give us scale, but to say, here’s what we can help you with, that will genuinely help. Hopefully, that will be things that we think we do well. We think that we’ve got a really good focus on our marketing and our different acquisition channels; we use a really diverse spread. It is one of the things I have been really impressed with at Redbubble, in terms of the understanding of what comes from organic, what comes from different paid channels and the focus on the profitability of those channels; the flexibility of the marketing team to move spend between those channels is really quite impressive.
Obviously, as you’ve talked about, the ability to have a third-party fulfillment network, that is in all of the major Western markets, from day one, and the ability to take artists and content and instantly take it from selling in one geography to selling across all of these geographies could be helpful. You can see how that could really add scale to another provider. Vice versa; could the group bring content into an existing market, to really boost the content library of a player, if they are in a different geography? You could see how that could really help, as well.
It’s a great question because, to me, it gets to one of the hearts of the advantages of Redbubble, which is that there is this really strong constant addition of new content and new artists coming onto the platform. Because the core proposition to the artist is no-cost, no-risk to get going on Redbubble, there is a constant stream of new content coming on. What that provides is a constant expansion of both SEO and SEM opportunities.
To me, there is this underlying asset that is constantly enhancing the core of the business. At the same time, I look at that core and the things that I have been open about, such as the fact that our brand awareness is actually reasonably low and our repeat rates could be significantly improved. Not only do we have this ongoing new library of content that is coming on and enhances the core, there is future growth just from enhancing our brand awareness, through increasing our transaction funnel and, particularly, repeat rates.
For me, the core organic growth drivers are really, really clear. There are years of opportunity there, just by pushing on these relatively fundamental growth levers. That is just in existing markets, before we get to new markets.
It is interesting because they definitely worked together, to some degree. In that sense, there is some similarity. What you would see with SEEK is that there are different balancing mechanisms. The goal was, if you had the most job ads, you would get the most job seekers and, if you have the most seekers, you would get the most job ads and it just naturally reinforces itself so beautifully. It’s like all those classifieds sites; it’s not just winner takes most; it is the winner gets better and accelerates away.
With a site like Redbubble, because it’s a transactional site, it has the potential to have the same dynamics but it’s not as fast and it’s not as simple. With SEEK, the marketplace just reinforced itself. As long as you weren’t pricing out new ads coming on, it would build and build and build. SEEK always had this wonderful philosophy of always pricing low to not do that relative to, economically, how it could have potentially priced.
With Redbubble, it’s a bit different because there is no price to content coming on. But what you need to do is to make sure you have a way of communicating that content and that offering out to consumers, to generate that flywheel. As a business, we have to work harder to generate that. When you get one consumer on, you’ve got to really work hard, not to just get them through that first transaction, but to help them understand that value proposition so they come back and start to repeat. Additionally, to ensure that they have a great experience so they start to spread the word and you begin to get that little bit of virality.
We’ve got to work harder, as a platform, to generate it, but I think those flywheel dynamics are definitely there. As I’ve said, we get better with scale. As you get higher scale, you can have a better fulfillment network that puts manufacturing closer to the consumer, which reduces shipping costs, which reduces shipping time which, we know, helps conversion. The more conversion you add, the more economics it brings, which brings more artists and so on. It really works but, as a platform, I feel it’s our job to work harder and, at the moment, that’s where a lot of the opportunity sits, in first helping the consumers to be aware of proposition and then, when they get on, helping them get through that first experience. But when they get through that first experience, our big opportunity is to increase their understanding of the breadth and depth of the site and the multiple purchasing opportunities that they can have. That is where the big opportunity for us lies.
When we started to talk about this within Redbubble, what we want to be for artists is their first choice and their best choice. First choice, because the onboarding is easy and it’s low-cost, low-risk. But then best choice in the sense that the economics, the return from their investment and their effort, is the best on Redbubble, versus any other way they could go about monetizing it. It might not be in absolute dollars, but in return on effort and return on investment, it’s the best. There are other sites and ways for artists. They can open up their own shop on Shopify and connect in with some third-party fulfillers, so why do they still stay on Redbubble? We think it’s because the return that they get is great.
There are opportunities for us to help artists to get more out of the work that they have already done. Firstly, as we said, that engagement so they know to come and reconfigure their designs onto new products, as they add. Also, areas we can do a lot more work on is helping them understand, potentially, where there are areas of demand from consumers; different search areas or opportunities that we do see spike on the site that maybe we don’t have a lot of content around. That sort of outreach is not something that we do at the moment and we’re getting a lot of spikes in areas of nature.
It’s really interesting because you see these different areas – pretty random, sometimes – or something happens in society or in the community that sends an increase around. What are we doing to communicate out to say, it’s not just that we’ve got new products that you could add content to, but there are actually these new areas of demand from consumers that aren’t being met?
That intent-based search is the majority of what happens and how people discover. Many more people enter onto Redbubble through that very intent-based process – whether that’s paid or unpaid – versus someone who just lands on the homepage because they’ve heard of Redbubble and just start to browse and search.
At the moment, relative to other ecomm sites, the first transaction conversion through that process and the funnel statistics are actually okay. I think one of the challenges is, if you go through that process, some of our research with post-purchase customers has shown that they have a good experience and they would happily buy again, but what they don’t get, through that very efficient process, is much of an understanding of the broader Redbubble value proposition. They don’t get much of an understanding of the breadth of content or the depth of products that could be available.
They know that they’ve just bought a fluffy dog t-shirt, but they don’t know that they could get this high-quality piece of wall art or that they could buy their mum a beautiful cushion, because we don’t do a very good job, in that process, of explaining the broader proposition, without distracting them from the transaction funnel. There is opportunity, in that process, to better inculcate the Redbubble value proposition, without hurting conversion.
Once that customer has made their first purchase, there is clearly a big opportunity for us in how we repeat market to them, not just to send them recommendations very similar to what they did, which is a lot of what we do at the moment, but actually to send them recommendations or brand messages that help to explain the broader Redbubble opportunity. How you communicate that, in a creative way, that cuts through and gets attention, is one of our challenges. That is where we talk about this experimentation mindset; multiple types of experiments with a whole lot of different content, inserts, packaging or upsells, to get that better understanding in customers who have, otherwise, had a pretty good experience, but who just haven’t understood the broader proposition.
Yes. Again, there are elements of the business that need a lot of work but between the CDP that we’ve put in, our search and recommendations team, these are all relatively small teams but that aspect is actually going okay. It’s giving them the permission and the opportunity to go broader and move away from their initial transaction repeat comeback goals and say, let’s experiment more broadly. Let’s experiment more with the brand message; let’s experiment more with completely different designs. Let’s use our data, because we are at pretty good scale. I think we talked about, openly, that we had about 9.5 million unique customers; that’s a big amount of customers that you can experiment on, in the course of a year, and try different things to see what actually drives longer term repeat.
I think that’s the core problem to solve. If there was an easy solution, it would already have been implemented. When I go to the teams, the obvious stuff that you’d ask about is there. There are no silver bullets; we just need a whole lot of lead bullets and we need to grind and grind and grind. If there was one silver bullet, there have been plenty of smart people who have worked at Redbubble, over the past 10 years, who would have discovered it. We’ve just got to grind out every part of the user journey, from when they first hear about the brand, through whatever channel they do, through the whole on-site experience. Particularly through the physical experience and making sure that it is awesome and that we explain to people why it might take four, five or six days to get to you; it’s because it’s unique and it’s being made on demand. That means zero waste and it’s great for the environment, but that means it takes a bit of time.
When it gets to them, they have great packaging, they have a good unboxing experience and the physical product lives up to their expectations every time – and we’ve got some work to do there – and then there is something in there that gives them the spark to come back.
Most people would know that most purchases get a little Redbubble sticker; that’s fantastic and a lot of people really love the sticker. What are we doing to drive it? Every aspect of that user journey needs to be targeted, improved and experimented and that will all add to repeat rate; there is no single thing. Additionally, over the top, investing in our brand. Our overall brand awareness is really important. All of those things will work together and repeat rates and loyalty is just something we are going to grind out, over the next few years.
There are a few things that are really helpful. The core purpose was actually to help marketing create better audiences in terms of their marketing messages and their variety of pre and post marketing channels. That is already showing real benefits. Particularly with where the world is going and the importance of first-party data as opposed to the reliance on third-party data for marketing, that was a core reason and was the business getting ahead of where the world is going for, potentially, a cookie-less world, in a few years’ time.
The second part is the customer understanding which is understanding both acquisition costs but also annual value or lifetime value of customers and then being able to break that down by whatever cut we want. That might be time, in terms of the month or week that the cohort joined; it might be in terms of whether they signed up for membership or not; the marketing channel they came in, the platform that they are on, in terms of mobile or desktop and being able to do all those different cuts so we can see where those areas of gold are, where customers, through a particular channel or on a particular platform, happen to be much more loyal than customers from a different channel or platform. That will really enable us to target our marketing spend much more effectively.
At the moment, all of marketing targets on a first transaction profitability basis, which is what we’ve talked about. That’s great, because you know it’s profitable and it’s very efficient. What it doesn’t allow you to do is open the funnel a bit more, on particular channels. The more we can say, actually, that channel has a much higher annual order value than this channel, so we’re going to put some more marketing dollars in and we can, potentially, go beyond first transaction profitable on that channel, because we’re really confident that the annual order value is significantly higher than the average or through other channels, the better.
Remarketing is a really important part for us; there are multiple aspects of remarketing. Obviously, like most organizations, both email and remarketing display, through the display networks, is important. I’m sure any customer from Redbubble would know that they get the follow up emails and they also get the display ads as they zoom around on the web. They are important but there are also other channels that we have been working on as well. Some we don’t want to talk about because we think we are fishing in nice ponds that not everyone is in at the moment.
The paid marketing team have multiple goals for new customers and repeat customers. They try out different channels for both; how does this work for acquisition versus how does it work for remarketing? They separate and monitor the spends for those different campaigns. As I said, that’s one of the things that I’ve been impressed by. For a relatively small marketing team, they are quite innovative, in terms of the channels that they look at and how they continue to move. They are very happy to shift spend as we see costs go up or down in different channels and it’s very dynamic at the moment. The last 12 months has seen costs move all over the place, on a pretty rapid basis, so you need a team that is really switched on.
Obviously, it is something that I asked, as well. To have the confidence to really stitch that together properly, you’ve got to be very confident in the various data sources. You’ve got to have both consistent attribution models, if you’re using attribution for certain channels, and data definitions. As those have changed you can say, this is what it looks like but these three weaknesses or this data definition changed, which may have put that out.
Moving ahead, we need to really standardize that, to give us much more clarity confidence on both the look back and look forward data, around those cohorts. That is something that we are now doing internally. It has really only been up and running for the last two or three months; it’s a relatively small team so it’s not yet something we’ve wanted to share out. You want to have confidence that it’s really accurate and not moving, so I didn’t want to put that pressure on the team saying, hey, we’re going to release this data externally, as well. But internally, yes; that is very much how we are thinking about it now.
Absolute dollars may be different because you have got different value items; product mix moves that a lot. Obviously, we’ve been clear that apparel is our largest range and we put out our broad product mixes in our results. Etsy has a lot of hand-crafted goods and quite a lot of products with higher average purchase value. That said, there is a breadth of purchasing opportunities on Redbubble that we think about.When we see what our repeat rate is, we can see that is not a consumer who is purchasing for themselves but their family, their friends, their home, their walls; they are tech items and they are accessories.
That is where, when we focus on ourselves, we say there is a lot of opportunity for us. To be honest, the initial and individual basket size, to me, is less important than their annual order value; that’s what I really want to move. I’m very comfortable if someone comes on and their first purchase is just a few stickers, which might only be a $10 purchase. If they come back and buy a t-shirt, then come back and buy a poster and then come back again and buy an iPhone case, that’s fantastic.
We’re trying to move the business from single-transaction focus to much more around total customer order rate and average annual order value. We think that they are the right metrics for us to be thinking about. At the moment, there is a lot of focus around user conversion and AOV; that is right, as it’s the first-time funnel. But the next evolution is to move from first-time funnel to customers’ order rate, annual order value/lifetime value. That is an evolution in the business that we need to go on.
That’s exactly right. If you don’t have the data or if you’re not confident in the data, then you stick to what you are confident in. The first-time stuff is what we’ve been quite confident in, for some time.
I would think, in general, just given the size of their platform, we look at Etsy and think that they have done an amazing job. If you look at where they were, five to seven years ago and you look at where we are now, if we can go on half of their journey, we will be really happy. Personally, I have spent some time going back and looking at the journey they went on and what they focused on and what we could learn from them. That is a good way to look at it.
But we’re not going to be exactly like them; our proposition is somewhat different. They have probably got a broader selection of products because of the number of unique artisans they have on the site but, at the same time, we’ve still got 100 plus different products, across 60 million plus individual designs. That’s pretty broad. For us, we can be a lot further along than we are and there are a number of really good, at scale organizations, who have shown that there is a lot of growth, there is a lot of TAM and there are a lot of people who are interested in unique products. They are interested in reducing their environmental footprint; they are interested in supporting small artists. That is what Etsy and others have shown.
The market is there and there is a huge market, relative to what we are, and that’s what we want to go after.
I think that there were a few things, but I think they were pretty clear on their ambition; they set some really clear strategic goals. They focused, very clearly, on both the artists but also on the core customer needs. I do also think they concentrated quite a bit on repeat; they were willing to invest in their brand. Additionally, they focused a lot on execution. You see them now, talking a lot about customer completion and shipping times and all of these things that we know matter.
But the core of it is that they were willing to have an aggressive strategy and they were willing to invest in their business. They took some heat from the outside world, for their willingness to invest for a while, but then it really paid off, because it enabled the business to scale. What often happens with these marketplaces, as you can see, is that they just get better with scale. They were willing to take the medium to long-term view, be aggressive with their investment and it really paid off. That is a good journey for public companies to be willing to do. They were open that that was what they were going to and I think they did a great job at showing operational metrics, along the way, to build that confidence in the business.
At the moment, we are experimenting with a lot of aspects of shipping. Free is one aspect, but just lower cost, in general, is an important aspect; we need to find out what that sweet spot is. Free shipping does, obviously, have a real cost to business so you want to be clear that, whatever reduction in shipping costs we are doing, that it really pays off in value.
One of the things that we are really focused on now is what impact it has on repeat rate. With some of our shipping experiments, we’ve seen that it didn’t make that much of a change for conversion, but there are some suggestions that what it does actually impact is longer-term repeat rates. That means we need to spend more time because, by definition, repeat rate loyalty experiments take longer. You’ve got to put the experiment in and then you’ve got to wait 30, 60, 90, 180 days, to see what happens, to see if they come back.
That is really on our radar for the next calendar year. We’re about to enter into the holidays and holidays are our major selling period; we’re quite a seasonal business, so you can imagine that we want to experiment less during holidays. At those times, it’s much more about execution.
But it’s not just about shipping costs. We want to experiment what we can do with time? What can we do with looking at the fulfillment network? The best way to reduce shipping costs is to have it closer to the customer. As we get more scale, we can bring on additional fulfillers. One of the metrics that we track is our localized fulfillment; how many items are produced for artists in the same geographic region as the customer? It is when something needs to get fulfilled from the US to Australia that the shipping costs blow out.
At the moment, with hats, which we’ve just launched, our first fulfillment partner is based in the US. If I want to get a cap into Australia, the shipping cost is quite high. As demand and the content library builds, we will look to localize production – on behalf of the artists – closer to the customer. That is the biggest lever for really quickly driving down shipping costs and shipping time.
Those are all opportunities for our logistics team to look at. Some orders, yes, they are routed to the same fulfiller and that reduces cost. Even if we can’t batch the order, I think there is a question as to whether we should be incentivizing that customer. If they’ve got a larger basket size, maybe their total shipping cost does reduce, even if the cost to us doesn’t; that is just good customer service and good incentives. Whether that’s on the one purchase or on their second or third purchase, we don’t do things like that, at the moment. We don’t do things like, if you order three items, we always reduce your shipping cost by 5% or 10%. They are all just great ecommerce experiments that we should be running. Whether that’s worth it or not, I don’t know, but is that an experiment we should run and we should try? Absolutely. All of these opportunities are on the table and that’s why I get excited about saying we’ve got years of growth in front of us.
That’s exactly right; there are a lot of lead bullets. Our challenge is that we are a relatively small team. We only have about 300 employees, across both businesses, so we can’t do everything at once. My job is to really help the team prioritize, provide as many resources as I can, but know when to say no. We can’t be everything to everyone. We can’t do everything at one point in time.
The repeat rate will be a big driver for us. When I look over a two, three or four year period, the brand of Redbubble is relatively unknown. I would challenge you to speak to 20 people and ask what Redbubble does. The UK is a big market for us but so few people know about us. I think, in the longer term, we need to build that brand knowledge through a combination of spend, great service, great proposition and word of mouth; all of those things need to go together.
In three or four years’ time, hopefully I will be showing you a brand awareness chart that says, in 2021, we were here. That’s one of the great charts that Etsy shows. Here is our brand awareness, through the funnel. That is an interesting thing that we can compare ourselves to today and say, we’ve got a big opportunity here.
We’ve got to be realistic about who we are, our size and the spend that we can put in. There are plenty of case studies where relatively small brands, with relatively small spends, can punch above their weight, through being really smart; being really targeted with the channels they use and targeted with their messages. Being willing to take a bit of risk in the way they convey that message, to get that cut through. The great thing about this world is, if you can get that cut through, if you are willing to be a bit different and take a little bit of a risk, we know that brands can really explode beyond their spend. I think that’s the challenge for us.
One of the challenges for Redbubble is that it’s not the simplest value proposition to convey in four words. That is a really unique challenge for our creative and marketing team to work through. They’ve got the CVP nailed but are trying a whole lot of different creative messages, to see what really hones it, simply, because it’s not simple. That is our opportunity and we need to find a way to cut through, within the scope of the dollars that we are going to have. Like I said, it’s not impossible. It is not easy and there is no specific formula. I’m hoping that a little bit of that fairy dust gets sprinkled on us and that’s what we can do.
Yes, but I think, with all good advertising, there is a frame of reference. It’s important to be able to leverage off that frame of reference, of helping independent artists.Etsy does a great job of bringing humanity into their everyday products. I think what’s great about Redbubble is that it can make every day meaningful; it can create specific items for specific people. There is something there that is really magical, around the uniqueness and the ability to express yourself through your everyday items or express your relationship through design.
One of the things that attracted me to Redbubble was that I had been a customer and I had personally experienced, when you get a design right, that says to the person that you are giving that gift to that I understand you and I can use this design to say to you something that words never could. I know that you’re into that game or that meme meant something to you or you love mountain biking with the design that I’ve chosen. There is magic in that.
With Redbubble’s content library, and with great search and discovery and all the things we need, that magic is there and that’s what excites me. How can you convey that in a marketing message and then how do you live that promise, every time we help an artist sell a product and physically fulfil it?
We haven’t shared, specifically, what those targets are but, internally, it’s around focusing, firstly, on our conversion rates. With that brand marketing, you will have customers with less intent coming to site; they will be coming out of curiosity. We need to make sure that whichever platform they land on, whether it’s desktop or mobile web or app, that the ability to explore, the knowing what to do, the conveying of the proposition by directing them to search, that that is working well for lower intent customers; that they are exploring, finding items and adding them to lists or baskets and then transacting. We really want to be confident in that journey so that’s why we want to have a bit more time to be able to work on our search a bit more, work on the site experience and the user interface as well as giving the marketing team time to experiment with the different messages and propositions.
Also, we will give our CDP and our marketing teams more time to get comfortable with the analytics because this will be a different audience. We need to be able to track that audience and give them that search and discovery experience.
With both Redbubble’s iOS and Android app, we do see higher engagement and a longer time interacting. That does actually convert into higher transaction volume. If you look at the app, you will see it is structured quite differently. It is more around content discovery and then the product comes out. Whereas desktop and mobile web is much more product and then the content falls out.
My assumption would have been that product and content falls out would be more effective, yet we see this very different and deep behavior on the app. One of the other things we want to think about is, do you push people to the app when you are doing brand? Do you pick up some of those aspects and bring it back into mobile web and desktop because they are much bigger channels at the moment? We’re not going to have nailed that, but to just do some more exploration, before you really push the button on brand, is pretty important.
It is like an experiment, within an experiment, within a broader business. It is interesting because onboarding is a little harder into the app. When you talk to customers they will say, the first time I needed to spend a bit more time and then I started to work it out. We’ve got a good, small and focused team working on those; they do a lot of customer research and there is a lot of improvement that we want to do on the apps, as well, to make sure that is really the premium exploration experience for those who are our best customers.
This is something that has evolved. Definitely, when I’ve looked into the history of Redbubble, I think we do now have a really great range and assortment with quite a bit of breadth in the product range. However, we do think there are some specific categories and products that we could add to the site that would give artists more products to sell and would really hit a consumer need. We will continue to, selectively, add completely new products.
At the same time, when you look at that range, what we will be increasingly doing is going back and looking at current products and refreshing, replacing or renewing them. There are quite a few products on the site that were maybe added four, five, six or seven years ago and it’s still, primarily, the same blank, the same underlying product that gets printed on.
We talked about one or two of these in our recent investor release and about how going back and refreshing and changing or adding new colors or slightly adapting the style actually got us some nice little uplifts. The team that looks after this area have got to focus on new products but they’ve also got to focus on refreshing products that are older or underperforming that we think should be doing better and, potentially, retiring some products. We have quite a collection of old iPhone cases that just don’t sell much but they are still on the site.
Whilst, technically, you have got infinite shelf space, you don’t have infinite mind space. If you accidentally serve up an iPhone 4 case when you should have served up an iPhone 12 case, that interrupts the experience and that’s not great for customers.
There are one or two but I’m not going to talk about them out loud because we do have some similar players in the space. There are a couple of obvious ones that the team is focused on. Hats was a great one to add because it was an obvious one that was missing but, actually, technically really hard to do because of putting the print over where there is normally a seam. We had to work with one particular fulfiller, to come up with a blank that could be printed on, with the existing technology. That is why we are excited about the product, because it wasn’t easy. If something is not easy, it is often worth doing and it’s a great example of what the platform is. It is working with these third-party fulfillers, to bring you products for artists to sell.
We would be honest and say that it’s variable. There are some products where we are really proud. We think that, for the price point and for our core demographic, we are bang on where we should be, in terms of product quality. But there are others where we’d say, for that price point, for that customer and their expectations of what they would be getting, we’re probably not quite there. That is what we really want to focus on because we know that that impacts. We can see that in some of our data, in terms of whether that’s in NPS from different products or returns or repeat rates for customers; we are starting to now get a view on what the different repeat rates are for customers who purchase different products. That data is gold for us to go in and say, we’ve got an issue with product X. We can look at the blank and say, actually, the issue is the blank. Given the price point and given the quality of that item, it is not meeting customer expectations.
When I talk about refreshing the existing product base, that is a core aspect to it. We know that there are some areas where we are really knocking it out of the ballpark, but there are other areas where we need to do better.
Technically, it could be replicated. They are all third parties and any organization could go out and do deals with all of them. I don’t think it is correct to say that it is unique. What is unique for us, at the moment, is the scale that we can bring to those fulfillers, on behalf of the artists; we can negotiate bulk deals. Therefore, the geographic coverage and the product breadth that we can provide or offer to any individual artist should be so much more than any other way they could do it themselves. This is why scale matters.
If we’re the biggest scaled platform out there, by definition, we should be able to provide the best opportunity for artists, relative to what they could get anywhere else. While they could go out and do deals with the fulfillment network themselves – and nothing would stop them from doing that – they should not be able to negotiate as good a rate because they don’t have the volume. I think we put in our deck that we’ve got over 40 fulfilment locations now, so there is work in maintaining that. Then you’ve got to maintain quality, SLAs, customer service and returns.
For us, this is where scale matters and this why our step change strategy of trying to focus on topline growth really matters, because you create competitive advantage through your scale.
I think the challenge for someone like an Etsy is that it is a somewhat different business model for them where they would actually start to do a lot of the services on behalf of the artist. A lot of what Redbubble offers artists is what Etsy asks the artists to do themselves. It would mean they would need to want to take on a different value proposition. Secondly, just the image library. You are moving into a different business model, a different business line. It’s very different.
I think that’s why there are not that many platforms that are doing what we are doing because there are unique challenges that you need to put together. It would be a very deliberate decision to go into something that is different.
We see Etsy as much as inspiration, more than competition. They have shown that there is a customer who cares about the proposition, but we do different things, we offer different purchasing, we’re different business models and we’re serving a different type of artist. That is why I think that we are complementary rather than really competitive.
There are a few different aspects. There are a few other very similar players out there, who have quite similar business models, but they tend to be heavier into one or two products lines, relative to us. Then there are what I could call the alternate options for artists. That is where you get into players more like Shopify, who might allow you to have your own store and then they have integrations with some third-party fulfillers. It’s competition because a consumer could go on and find them, but it’s a different business model and a different proposition.
You want to be aware of it because these artists have choices. They have choices around which platforms they use and how they want to sell products. We need to be on top of our game and understand what those different choices are. There are also different choices for consumers. The other way to look at competition is, who is competing for that consumer? The consumer isn’t first thinking, I want to buy something from an individual designer. They are thinking, I want to buy a t-shirt or a hat with a unique design. Where are all the players that they could go to? That’s a greatly different competitive set and that is where we have got to really lift our game as an ecommerce player because that’s who we’re competing against.
That is the risk of always just focusing on what the competition for the artist is; you also have to focus on the competition for the consumer. That opens up the channels that we are in, opens up the marketing messages, forces us to lift our game and forces us to look at the end quality. What is the customer getting at the end point, in what time and at what price point? We are focusing on that as much as we are the competition for the artist because both of those things really matter.
The beauty of marketplaces is that you have to be an ‘and’ business; you have to be both. It can’t be artists or consumers; it has to be both. Great marketplaces know how to balance the needs of both sides of the marketplace, think about both of them simultaneously and hold two competing ideas. On one side, I have to think about it as an artist services platform and, on the other side, I have to think about consumers and all the different places they could go to shop that have nothing to do with independent artists; it’s just, where do they buy a cool hat. That’s the challenge and that’s what makes these marketplaces fun. It’s what makes them unique when they work and it’s also what makes them hard to replicate. They’re not easy businesses.
I think there are a couple of things. Firstly, I spoke before about the consumer perspective and the magic when you get it right. To me, that’s quite unique. When you can express your relationship, through a design on a poster, a t-shirt or an iPhone, that’s unique. But what breeds that uniqueness is the content library. That is the core competitive asset and moat that we think about a lot.
Underneath that, you put the scale of the business; the fulfilment network that the platform has been able to help pull together. The fact that an artist, in Venezuela, can upload a design and they are selling to someone in the UK, the US, Canada or Australia, pretty much instantly, at no risk and no cost, that’s a brilliant thing. We’re helping that person supplement their living. There are multiple aspects. They are business aspects but they are value proposition aspects, as well.
While we’re a small business, what I love about both the Redbubble and the TeePublic is that there is a huge amount of heart in the organization. There is great care for the artist and there is real belief in the mission of helping creativity in the world and helping independent artists thrive and monetize their passion. Those things, combined, for me, really create a unique organization.
Firstly, I think you’d be asking that of a different CEO. They would be looking back and saying, the other guy stuffed it up. I think there is a wonderful opportunity. I think it will be about our execution. I don’t have any question about the TAM; these are massive consumer markets. For me, it’s about execution. Are we able to bring in the right people? Are we able to provide the right resources, strategy direction and prioritization? Can we get the execution right? That is a great position to be in.
The execution won’t be easy; we’ve got a lot of challenges with small teams and there’s legacy stuff to deal with on the site. Then there are just the scaling and growing pains that any organization has, when you move past 200, 300 people, to 400, 500 people, as we will do over the next five or six years.
There is all that stuff but, to me, it’s execution. We’re not going to go slowly because the market wasn’t there and it was tough. Like I said, if that’s where we are it will be a different person because, quite rightly, they should have bought in someone else to have a better shot, because the opportunity is there.
I’m not trying to be cliché, but that’s where it’s not about me; it’s about me helping build a great team. When I started, we were missing two executive roles; we didn’t have a chief supply chain officer or a chief product officer. Those are two critical roles and we have managed to fill them in the last couple of months. We’ve got a little bit more executive turnover which was expected. It was part of the brief; we knew that there would be executive change. We need to fill those crucial roles and build a great executive team that wants to be here for the next four, five or six years, to go on this next tour of duty, in this next phase. I can’t do it; I’m not an expert in all of these areas and I’m just a person. What I need is a great team and what they need is great teams below them.
Part of the change that we’re going through within the business is that we are in a new phase; we’re in an investment phase right now. We’ve set our aspirations for the next four to six years. Let’s get a team, right through the organization, who are up for that journey. There is no way around having great people, a great strategy and provide them with the resources. My job is to set the direction, hire the team, provide them with the resources and the enablers to go after what they need to.
Then to make sure that team is functioning as a team because, in all marketplaces, you all work together. You can’t be off in your silos; we all affect each other. My job is to make sure that the team works as a team.
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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.