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Investor Dialogue: Redbubble

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.

{audio:0:00:20} Michael, can you provide a short introduction to yourself and your history working on Redbubble?

{audio:0:00:26} I was a web designer, graphic designer for about seven years. I worked at a small agency in Manchester. During that time, I stumbled across the world of print on demand and, in particular, t-shirt design and websites that allowed artists to upload work and to receive royalties or get payments for designs that sold. This was maybe 2013 or 2014 and I came across a collection of websites in different places like this. One of the places that people were uploading to was Redbubble and, being a graphic designer and having the ability to create designs and to take funny jokes or something that was happening pop culture related and create a design from that, I thought I'd jump in and give it a go.

{audio:0:01:15} I uploaded some designs to Redbubble and, within something like 30 days, I received an email that said your design has sold and you've made £3 or something like that. That was my initial experience. It was that little spark that kind of showed me that this was possible and I made my first bit of money from it. Ever since then, I've kept uploading to Redbubble and I’ve been making thousands a month from Redbubble, for at least the past five or six years.

{audio:0:01:53} It’s been a very good relationship. It's a strange one because I've never really had much formal interaction with any person at Redbubble; everything's done automatically through the site. But that's how I got started with Redbubble.

{audio:0:02:09} What’s your distribution of revenue per month roughly today, on the different sites?

{audio:0:02:18} The biggest one is Merch by Amazon, which is Amazon’s own internal print on demand service. That is the biggest and has been ever since it launched. Merch by Amazon launched in October 2015 so I'd already been on Redbubble a couple of years by that point; I already had a decent portfolio of designs. When Merch by Amazon launched, I obviously uploaded all my designs over there as well and, within a few months, Merch by Amazon was the biggest of my sites in terms of what was bringing in the most income.

{audio:0:02:55} I would say not much changes over the years. Merch by Amazon has certainly held its place and Redbubble has just been slowly, consistently growing bit by bit. But I would say Merch by Amazon is probably two to three times the income from Redbubble in any given month and then there’s some other sites as well, such as TeePublic which is also owned by Redbubble but operates as a separate platform and as a separate site. I would say that usually is bringing in almost the same as Redbubble for me. TeePublic’s done very well for me over the years; I've got some quite well embedded designs on there.

{audio:0:02:55} Then there's a collection of other places which would be bringing up the rear and not really doing much, such as places like Society6 or Threadless and other places like that. In terms of the big ones, it's Merch by Amazon, Redbubble, TeePublic. The other one which is slightly different is Etsy, which is not a print on demand site obviously. Etsy is an open marketplace but you can sell on Etsy and use print on demand fulfilment sites such as Printful and Printify to fulfill those orders. Etsy is quite a big part of our business as well, but it's not really comparable to Redbubble and TeePublic directly because it's a different beast.

{audio:0:04:23} Are you getting the same revenue growth as Redbubble on Etsy?

{audio:0:04:29} It’s a lot choppier with Etsy month to month. Obviously, Q4 is when we tend to do very well on Etsy; that's when it really picks up. I would say, on an average month, it would probably be half of Redbubble for us right now, but you probably see that get dwarfed a bit more when it gets to Q4 and the shopping season.

{audio:0:04:50} Why do you think Amazon Merch is the big leader?

{audio:0:04:56} I think it's Amazon, isn't it? It's the world's number one ecommerce destination. Redbubble is not a household name; obviously Amazon is. Let’s say I'm looking for a funny dinosaur t‑shirt for my kid or something like that, a lot of people these days – and this has been accelerated in the past couple of years as well with Covid – will go to Amazon first, especially with the growth of Prime and stuff like that, when they're looking for a product rather than, for example, going to Google and searching for ‘cute dinosaur t-shirt’. Let me see if Amazon's got this and if it hasn't, maybe I'll go and look elsewhere.

{audio:0:05:46} It's Amazon; it's got the reach, it's got the brand and it's the number one destination. It’s a search engine in and of itself. Seven or eight years ago, people looking for a t‑shirt would maybe not necessarily immediately think of going to Amazon, especially if they were looking for something that was maybe pop culture or a bit left field or a bit weird. They would assume that they're not going to be able to find that on Amazon. I still think that's largely the case but I think a lot of people have that kind of mentality of saying, I'll just go to Amazon first.

{audio:0:06:19} Is Amazon Merch growing much? There were reports of them limiting artists, so are you a unique case where you’re in there and so you get larger sales but most of the other artists can’t get on Amazon Merch?

{audio:0:06:34} It's hard to say. We have slightly more public data on Redbubble but when it comes to Amazon Merch, it is hard to kind of judge what's going on sales wise. I think Amazon Merch didn't know what they had on their hands when they launched it. It was launched as a completely different kind of product. It quickly became apparent that this was a print on demand site and a lot of people flooded over. Quite quickly, Amazon realized they had an incredible business on their hands and they had never really prepared for that, but they quickly invested in it and made it happen.

{audio:0:07:11} What sets Merch by Amazon apart is it's within the Amazon ecosystem. Everything happens there. It's not like Redbubble; it’s not a separate brand. It’s appealing and it reaches Amazon's own customers. Yes, I got in early, I had a lot of designs. I was able to jump on Amazon and get those designs in there and get them embedded and that's why we still make money from those designs five or six years on. I think it's hard to tell whether Amazon is struggling to grow Merch or is successfully growing Merch. If you could look at the numbers of sales I think it would obviously dwarf any other POD company in a direct comparison. If you could pull out the t-shirt sales from Merch and compare them, I think it would dwarf them.

{audio:0:07:59} But they have a different modus operandi. They have a different kind of goal and I think one of the big things they’ve focused on is looking at officially licensed stuff. So if you go on Merch by Amazon, the bestsellers will be Disney; there'll be Star Wars; there'll be officially licensed brands that Amazon has signed deals to work with and I think that's very sensible. It makes sense for them to push that but Merch by Amazon has never been big on targeting the independent designers. They've attracted them because it's Amazon – it's the biggest marketplace in the world – but they've never pushed that in the way that Redbubble does because part of Redbubble’s marketing and its whole approach is hey, independent designers, come and support independent creatives. That’s the kind of vibe they have.

{audio:0:08:46} Merch by Amazon doesn't have that and I don't really think it could ever develop that, so Merch by Amazon is always kind of a behind the scenes thing. It's not a brand. It's just part of Amazon and you can have your designs on there but you're not going to be building and growing a brand through Merch by Amazon. You have a bit more of a chance of doing that with Redbubble, as an independent designer, and you're not going to get crowded out by Star Wars and Lego or whatever it might be that's taking up the best-selling spots.

{audio:0:09:15} What matters most to you when you’re choosing a marketplace?

{audio:0:09:26} I think the biggest one is the distribution or the traffic. If I upload to Redbubble, I know that they have one of the biggest organic traffic levels and that's what's going to drive the sales. I get emails very often from people saying they’ve just launched a new website; we’ve just launched a new platform or marketplace, please come and upload your stuff. Well, I'm not going to spend time uploading my stuff because you're brand new. You don't have any traffic, you don't have any traction. It's going to be a waste of my time. With Redbubble, not only can I see their traffic numbers, or at least rough estimates of them, but I know through experience that things sell. The ultimate test is, you upload something, you give it a month or so and have you actually made any sales?

{audio:0:10:10} New platforms and new stuff comes and develops over time. I’ve got a big blog post on my website about that. I usually try and look at those stats once a year to see how they are comparing against one another; Redbubble versus Teespring versus TeePublic on the traffic side. New platforms and new sites do come over time but Redbubble is obviously the most well-established, it's been there the longest, it has the traffic, it has the reputation in Google; it attracts high rankings for search terms which others can't do.

{audio:0:10:45} That's going to be the number one thing; if I'm going to upload stuff, if I'm going to spend my time uploading my designs to a website, I want to at least believe or be inclined to believe that they have traffic, that I'm not wasting my time and that I'm not just uploading stuff to a place that's not going to really work.

{audio:0:11:05} How do you compare the quality of the products on Amazon Merch versus Redbubble?

{audio:0:11:13} You certainly can compare them. You can order the products and compare them yourself, physically. Personally, the mindset I've come to after a few years in the game is that I am not responsible for the product, so I am not the seller of record. Redbubble might like to imply that I am but in reality, I'm not. Redbubble is doing the printing; Redbubble is doing the production. I am just providing them with artwork. In the same way that a music artist might upload their music to Spotify or something, this is the same model. This is something that comes up a lot; people have ordered something from Redbubble or a fan has ordered something and they're not happy with the quality. What do you do about that?

{audio:0:12:02} Obviously, no artist wants to be associated with poor quality in the long term but I think a fair amount of customers these days are beginning to realize that there's a distinction here between the artist and the product that I'm getting. They understand this distinction between artwork and merch, the actual product. It’s not something I stress about or worry about. Redbubble has to deal with customer service issues and they do; same with Amazon. I’m yet to find a print on demand company or fulfillment company that is perfect, that doesn't make mistakes in production.

{audio:0:12:41} Is the quality comparable across all the players?

{audio:0:12:45} Yes. These days, the majority of print-on-demand companies are using the exact same printers, the same material, the same blank t-shirts.

{audio:0:12:54} The same Kornit equipment?

{audio:0:12:56} Yes, there’s not a lot of variables there. Of course, there probably are companies that are worse than others when it comes to quality and customer service but certainly, amongst the big players, I'm yet to find an issue that has gone on consistently and that has damaged my sales, for example.

{audio:0:13:17} Amazon own their facilities where Redbubble outsources fulfilment, so doesn’t that make the quality of the turnaround time much better?

{audio:0:13:28} Like I say, because they're all using basically the same equipment, Redbubble is outsourcing it but they're outsourcing it to someone who's using the same printers that Amazon's using. I think Redbubble understand that the quality of the products and the turnaround is all important to them so they're not just signing up anyone to print t-shirts in a bedroom. They're working with decent suppliers. Yes, it's not in-house, but that's Redbubble’s business model. They understand how it works and they know that they don't want to be outsourcing to someone who can't do decent quality and who's going to get a lot of returns and requests coming back to them.

{audio:0:14:10} Is it multiple countries or is it only in the US they have Amazon Merch?

{audio:0:14:17} No, it's now in five or six countries. It’s in US, UK, France, Spain, Italy, Germany and Japan. I’m not fully clear on what facilities they have for printing. I think Amazon maybe have one European printing facility or a couple right now and I imagine they have something small scale in Japan. In terms of sales, it's very much US weighted with a little bit in UK and Germany. Those were the ones that opened up soonest, but I don’t see a lot of sales from the smaller ones like Italy and Japan. I think it's still ramping up their exposure to those countries and I don't know whether they’re pushing it or whether they’re just slowly opening that up or whether there's simply not the demand there yet. Amazon does have reach in those countries but it's not yet anything like the kind of exposure and distribution that is in the States.

{audio:0:15:19} I would assume your distribution of sales would be much broader in Redbubble given they have a broader footprint?

{audio:0:15:30} In terms of where the sales are coming from, Redbubble doesn't give me that information. I know that for most my royalty amounts, it works out in US dollars which means it's a sale from the US. If it's a sell from the UK it's usually denominated in pounds so I know by looking through my emails that the majority of my sales are to the States. You do get sales to Australia; you get sales in euros and stuff like that.

{audio:0:16:06} Redbubble does have that distribution. It’s just very hard to have any kind of hard data on how that would compare to like Amazon. I would say our sales from Amazon are like 90% USA. I think it's probably slightly less than that with Redbubble but it's hard to really compare the two.

{audio:0:16:28} What do you see as the major risks for Redbubble from Amazon Merch?

{audio:0:16:40} I think they are quite different business models and I don't think they’re direct competitors. I think Redbubble’s potential to grow as a business and as a company isn't likely to be that challenged by Merch by Amazon. I think Merch by Amazon is Amazon's internal platform; it's for its internal customers. Yes, Merch by Amazon designs can rank well on Google and they could outrank Redbubble in that sense and that's already taking place, but Redbubble has still been able to grow pretty well while Merch by Amazon has been in full flow. Merch by Amazon has been around since 2015. It's not like it arrived yesterday. If Merch by Amazon was going to cannibalize Redbubble, you would have expected to see some of that already happening.

{audio:0:17:30} It seems to me like Redbubble’s been able to grow while Merch by Amazon has grown so I don't think they’re necessarily direct threats in that way. I see Amazon as almost its own mini internet if you like, it's a different world and then there's the rest of the internet. Redbubble has a very good claim on the non-Amazon world of t-shirts and print on demand products and stuff like that. It also has this opportunity to be something like an Etsy type of model that appeals to people who want to support independent creators, who don't want to necessarily give their money to Amazon or the big conglomerates or whatever and enjoy that vibe of I'm going to go browsing through for some nice-looking artwork.

{audio:0:18:23} That thing of being in someone's head – we probably all have this to some extent – there's certain products that you will default to Amazon to go and look for if you need it. I need some shaving cream, I need some socks, I'll go and look on Amazon; but then there'll be other things where you don't go to Amazon straight away and you'll be like oh no, I wouldn't even think to go and look for that on Amazon. I think that's where Redbubble has an advantage. If they can grow their brand to such an extent that when you think oh, I'm looking for a funny t-shirt or I'm looking for a cool poster or I'm looking for some nice pillows or whatever for my bedroom that your brain goes to Redbubble kind of like the way it might currently go to Etsy or something. That's I think the bigger opportunity for Redbubble long-term and I don't see that as being necessarily in conflict with Amazon. I feel that they’re quite distinct streams.

{audio:0:19:17} What about the potential competition from Etsy?

{audio:0:19:23} There is more of a direct comparison between Etsy and Redbubble. The big difference there is that like you say Etsy isn't a print on demand site; it doesn't have that function and I'd be quite surprised to see them add it in the same way that Amazon added Merch by Amazon. I don't think it's really that aligned with Etsy’s marketplace and its whole vibe. They want to be handmade stuff. They want to be custom jewelry and all that kind of deal. They don't really want to be hey, come and get t-shirts. They do sell a lot of t-shirts but it's not necessarily what they want to be known for.

{audio:0:20:02} Whereas Redbubble, I think, is almost more comfortable being the pop culture t‑shirt place. We’ll be the place you come to for funny this and funny that, and that kind of deal. The difference and why I think that Redbubble can co-exist or still grow is Etsy requires people to jump through hoops. It requires an artist to hook up with Printful and be someone who deals with customer service and deals with returns which is a big thing with print on demand.

{audio:0:20:32} You have to deal with a POD company to sell through Etsy?

{audio:0:20:33} Exactly. With Etsy, I have to handle all that. With our Etsy stores, we get questions that we have to answer. We don't get any of that on Redbubble. If someone gets a t-shirt and it doesn't fit them like they expected it to, then they're going to send it back to me. I'm going to have to then arrange a replacement or whatever and I'm actually going to be making a loss on that order. You have to be making quite a decent amount of sales on Etsy to cover issues like returns and to come out profitable; whereas with Redbubble of course, hey, it's all golden. There's no negatives. I upload something. I don't have to deal with it. If it gets returned, it's not coming out of my royalties right now, so there's none of those complications.

{audio:0:21:20} I think those are the big reasons why Etsy would struggle to challenge Redbubble’s growth or to cannibalize anything of Redbubble because if they want to attract the designers and the artists, they're making them jump through all these different hoops. They’re making them handle all these complications which Redbubble are just like hey, just give us your artwork. We'll do the rest, keeping it very straightforward and simple.

{audio:0:21:47} What do you think’s the biggest competitive risk to Redbubble?

{audio:0:21:51} I don't know how big this is because I'm not like a legal expert or anything, but I think one of the big things we've seen is intellectual property and the crackdown on things like that. Redbubble’s almost always involved in a couple of court cases at any given time. They've managed to fend those off pretty well and, to be fair, I was speaking to someone the other day who’s an investor in Redbubble saying they don't worry about that stuff because Redbubble has more than enough cash to settle cases and deal with issues like that.

{audio:0:22:25} The thing that kind of would worry me a little bit is we have no data on what percentage of Redbubble’s sales are what type of design. If you go back to 2014, how many of Redbubble's designs sold are actually IP infringing, unofficial designs, unlicensed that they would technically not have the rights to? I would say it's going to be at least 50% if not more, maybe much higher than that.

{audio:0:26:19} It’s that high, really?

{audio:0:22:58} I don't know whether it's that high today. I think Redbubble is already beginning to tighten their policies and tighten stuff but I think, if you go back four or five years certainly, all you needed to do was pull up Redbubble, sort by bestsellers or sort by trending and you'd see whatever it might be, Star Wars, this, that, the other. Some of it might be you could argue borderline parody, but some of it will be just plain, wide open LA Lakers or whatever it might be. It would just be clear IP infringement.

{audio:0:23:34} I think Redbubble’s obviously aware to that fact and I think the more cases that are brought against them, the more they tend to crack down on stuff. The question is, how much of that crackdown, how much of them putting up walls a little bit to stop new designers coming in or to kick designers out, how much of that actually impacts their growth long-term? How much of their profits have been historically from IP that they don't have the rights to and, if they were to truly clean house and get rid of all those designers and get rid of all those accounts, would their profits suddenly take a massive hit?

{audio:0:24:09} It's a question that I don't have a clear answer to. You'd have to have data from Redbubble; you’d have to dig into it. That’s something that I think could be riskier in the long term, mainly because there was talk a year ago about changes in the law in the States in particular around copyright law and things like that. Typically, Redbubble have defended themselves under a legal act that I can’t remember the name of. But basically, Redbubble are saying, we are not responsible for the designs that are on our site. We are just a platform. We’re not responsible for them. They've been able to use that defense.

{audio:0:24:54} Now if that defense evaporates or if a court says no, actually Redbubble you are responsible because you're selling products, what does that to do Redbubble’s business model? You're not like Facebook or Google that is just indexing stuff. You are actually producing a good, therefore that protection doesn't count. Does it mean that they have to individually check every single design that gets uploaded because they're obviously not doing that at the moment. Do they have to bring in customer ID for designers so people have to give them passport information or verify or know your customer type stuff.

{audio:0:25:31} I think that's the threat and then once Redbubble has a few cases that go against it, it would probably wake up to that reality and be like okay, we actually need to kick out a lot of accounts. Then the question would be how much damage does that do to Redbubble’s long-term business model? Can they continue to grow if the only designers they have on there are truly independent designers producing original work that isn't tied to any IP, that isn't parody, that isn't referencing the latest whatever it might be.

{audio:0:26:10} Do you think they could grow if it was purely independent artwork?

{audio:0:26:14} It’s a good question. I don't know. I'd like to think so. I'd like to think that there's opportunities with the kind of data that Redbubble has. This is one thing that I think could come at some point. Redbubble has obviously a lot of data because they’ve got a lot of traffic. They know what's trending. They know what people are searching for on there. They know what people are ranking for and stuff like that. With their data and with their distribution, could they work more closely with top designers and top accounts to kind of feed information to people, so they could be like this is what people are searching for right now? We need more designs like this. We have a supply issue over here.

{audio:0:26:50} People are searching for this but there's only five designs or whatever. Can you create stuff for this? So some kind of symbiotic relationship like that, instead of the traditional model of it's an open marketplace, we rely on designers to create stuff and then hope that people come and search for it. Could you tie those two sides of the circle together and do things like that? Opportunities like that mean that Redbubble can grow because it starts doing more proactive work with designers and working more closely with them on things like that; I think that could plug some of the gap.

{audio:0:27:37} I think if you ask me outright, if I had to bet one way or the other this is what's going to happen, is it going to be up or down in five years if Redbubble culls all of the infringing stuff, I wouldn't be too confident in that bet. I think it's a pretty challenging situation for them to be in, to go from a world where anything goes and you've got thousands of designers who are constantly uploading stuff that may or may not be safe to a world where you've got 10% of those designers and they're not necessarily chasing trends as violently because they don't have as much of an interest in doing so; I think that's a very questionable concern.

{audio:0:28:21} The other question around that is if a majority of the demand for sales is actually branded IP or designed, then that does compete more directly with Amazon and even just the brands themselves.

{audio:0:28:40} Yes. If someone searches on Google for Star Wars t-shirts and Redbubble now doesn't have any because they were all infringing and so they don't have any to even rank on Google, then yes, that traffic is going to go straight to Amazon because it's the one with the designs. That's the one where they have the supply. It would be difficult.

{audio:0:29:02} Maybe if Redbubble get large enough then they can just have a deal with Star Wars.

{audio:0:29:06} Exactly, yes. Redbubble does have some of these accounts. It doesn't have Disney or Star Wars but it has Rick and Morty. It has some of those deals already in place. If it's big enough and if it has the demand, it can plug some of that gap with those deals. Of course, these are not necessarily something that has to be exclusive. I think Disney does deals with various print-on-demand companies, so there's no reason why Redbubble couldn't get a piece of that pie whilst they're still selling on Merch by Amazon as well.

{audio:0:29:39} When you create a new design, what are the first steps in your mind?

{audio:0:29:50} For me, usually, Merch would be the first place to upload something because it's a very easy upload process with Merch and you get the most bang for your buck. For one design on Merch by Amazon, I give it a title, a description, tell them a little bit about it and that design is then put on at least 20 different products, across seven different marketplaces. One upload, fairly straightforward, fairly simple.

{audio:0:30:23} Not as many as Redbubble products. I think Redbubble have 70 odd products.

{audio:0:30:25} Redbubble has more products, definitely. Of course, given the traffic and stuff, that's why I like to get something on Amazon first, then it would be Redbubble, then it would be TeePublic. Redbubble doesn't have the quickest and easiest of upload processes. They have more products and that's why the upload process is more complicated. It’s kind of weird because, obviously, Redbubble owns TeePublic, but TeePublic’s upload process is very quick and very easy and you upload one design and it’s listed across those products.

{audio:0:30:59} Is that only for t-shirts or do they offer many other products as well?

{audio:0:31:00} It’s not just t-shirts. They have a lot of the most popular products; they have mugs, they have posters. The thing that complicates things with Redbubble is they have these all over print t-shirts; they have almost any kind of product you can imagine, such as clocks and backpacks, which obviously takes a lot of time to set up and personalize for each individual one.

{audio:0:31:21} How long does it take you to calibrate the design across all the products?

{audio:0:31:24} It really depends on the design and how much time you're going to take and go through each one. It can be at least like a five to 10 minute process for an individual design, which might not sound like a lot but when you've got a lot of designs to upload because my business model requires a big portfolio of designs, you need a lot of designs to make this work. That really is a bit of a turn-off for, who am I going to upload to today?

{audio:0:31:52} I’ve done the In Practise logo on Redbubble; it’s surprisingly easy to get set up. But I think only five products worked and the logo’s not even in the middle, so they didn’t really look great.

{audio:0:32:06} Yes. That’s it. You've got to resize, you’ve got to adjust. You might want to change the background colors. It’s not a straightforward process. On the other hand, if you do go through that process, the great thing is, as I say, that product's there and it's available forever, potentially. It’s getting in that mindset as an artist that you're creating something here once and it can sit and make money for you for five or 10 years to come. Redbubble is not the slickest process. TeePublic have it down a lot better and Merch by Amazon’s is fairly straightforward as well.

{audio:0:32:41} How could Redbubble improve the uploading process?

{audio:0:32:42} I think they could just do more automation of the process. For example, the reason it's simple on Merch by Amazon is you have a set canvas, you have set dimensions and wherever you position something there, that's the position it’s going to be on the product. What Redbubble does is they basically strip away the canvas and that artwork. Redbubble just kind of guesses and says, we'll put it here. It doesn't look good there. The least they could do is a bit of computer learning to be like okay, well, this design is wider than it is tall, therefore it needs to be positioned further down on the shirt or it needs to be positioned slightly to the left on the mug or whatever it might be.

{audio:0:33:24} I'm not saying it's super straightforward but these are things that computers can figure out pretty quickly these days. It’s not rocket science to be able to understand the dimensions of a piece of art and place it centrally where it's going to look best and where you're not going to have to crop it. I think these problems can all be solved. It’s just that Redbubble’s focused, I think, on getting new products added and they've always relied on artists to do the legwork of doing that, but I think over time that can turn people off. It can turn artists off because they say, I don't really want to upload to Redbubble; it's taking too much time. I’ll just whack it on TeePublic instead; I’ll whack it on Merch instead and I’ll keep putting it off.

{audio:0:34:11} I personally don't do much of the uploading myself anymore. My sister works for me, we have a couple of staff, so they do the uploading process. I'm an anomaly, I think, if you compare me to most of Redbubble's designers. Not many of them would have the benefits of someone doing the uploading for them who they can pay to do that. That just leads me on to another thought is that long term, how many of these designers on Redbubble are making anything like a full-time income? It's going to be a very, very tiny percentage of them.

{audio:0:34:48} What does that mean long term? How many of those give up at some point? How many of them say, you know what, I'm not uploading anything else? They're not necessarily going to pull their designs off Redbubble because that takes effort and there's no reason for them to do that, but if they stop uploading as frequently, what does that do to Redbubble’s profits over time? Presumably they start plateauing at some point. They don't have the same reach.

{audio:0:35:16} I think long term, that could be a threat. The question is, is Redbubble able to keep on onboarding new designers enough to compensate for that churn of designers leaving? I don't know how old Redbubble is – probably coming up on 10 years or something – but I've been with them for seven or eight years. They seem to have been able to grow through that time but I think that’s still a question that remains to be seen. Will artists stop being attracted to them?

{audio:0:35:47} At some point, will word get around that oh, it's not worth it, or yes you can make a little bit but it's never going to be a full-time income. The reason I think I do so well from Redbubble and similar sites is I did something most designers don't do. I basically got my head down for two years and churned out design after design and created a massive portfolio of designs. Most designers don't do that. Most designers treat it, as I'm going to just put on the designs I have or I might create a design. They're not treating it like a business. That was the difference for me. I treated it like I'm going to make a living from this, so I'm going to have to create an incredible amount of designs. I think that's not the mindset of most of the designers and there’ll always be a percentage like that who do kind of see the opportunity and go full throttle at it, but they're only going to be a small percentage of the designs.

{audio:0:36:41} What’s the sense you get when you speak to other independent artists?

{audio:0:36:46} I'm often talking to artists who are just discovering the opportunity in the first place, so they've only just come across Redbubble, for example. That’s different. People don't tend to email you to say, I'm giving up on Redbubble; they just slip out of your community or you don't hear from them again. My sense is that artists have increasing amounts of opportunity. They have ways of selling stuff. They don't have to use Redbubble. They can use Etsy, they can use Shopify, they can set up their own website and sell directly. But I think there's still a strong pull from sites like Redbubble because what they represent is, I can upload stuff and then I don't really have to promote it. Redbubble has the organic traffic; it can allow my designs to be seen and found even if I'm not a famous artist or someone with an Instagram following.

{audio:0:37:47} I think there's always going to be an opportunity there and that market's always going to exist. I do think there's a risk that, if your designer is like me, understands that and has built a successful business off the back of it, at some point they say, well, we're doing better or we've now grown to such an extent that we can set up our own Shopify. We know a bit about marketing and we can make that leap and then, over time, we just slowly stop uploading to Redbubble and we focus on growing this thing over there. That's probably always been the case for Redbubble's existence and it still seems to continue to grow in spite of that.

{audio:0:38:27} Do you think it’s likely that professional artists, like yourself, could see themselves one day just not uploading to Redbubble and focusing on your own channels or just Merch?

{audio:0:38:45} We have a Shopify store, but it's always as well as. We've never left a platform or stopped uploading to anything, certainly the ones that make us money. But we've had seasons where we haven't uploaded to Redbubble for six months or so because we've been purely focused on Merch by Amazon. Like anything else, people are led by what's working. If something's delivering for them, if it's making sales, then they're inclined to put more effort and more time into that.

{audio:0:39:20} So you actually uploaded to Amazon Merch for six months but didn’t upload to Redbubble?

{audio:0:39:25} Yes; that was going back a couple of years. We realized that Merch by Amazon is really growing, so let's make sure we give our full attention over here. Of course, those designs would eventually make their way onto Redbubble. You would realize that Redbubble’s rocking along; it's not doing this rocket ship growth so we're not going to throw as much attention on it.

{audio:0:39:48} Is that quite common across other professional artists to focus more on Merch now than Redbubble?

{audio:0:39:55} I think artists are always going to focus on what brings them the most income and what does it most immediately. Redbubble’s not Amazon. It doesn't have the same exposure that Amazon has, so it is a more of a longer-term type of prospect. It’s the same with Amazon to be fair; it's not like Amazon is an overnight thing. You just have more chance of selling something quickly on Amazon than perhaps you do with Redbubble, but there's also this difference between the markets. Amazon's great for generic type designs and stuff that’s family friendly. Redbubble has more of an audience that's more pop and internet culture and so you can tap into things quicker. In some cases on Redbubble, if it's that kind of thing, then you might be able to sell on Amazon.

{audio:0:40:49} This is very much a strange world where it's hard to pin down exactly what's going to work where and why and what trends are happening and why it might be selling on this site, but it's not selling on that site.

{audio:0:41:04} If it’s giving you a couple of grand a month, you’re going to keep uploading to it. If you do build a presence, a brand yourself, Merch gets massive then Redbubble becomes less and less relevant for an artist.

{audio:0:41:25} It just becomes another place that sends you some money every month. This is the case with all the platforms. You always hit some point of diminishing returns where you are uploading the same as previously but you are not seeing the same growth, or you’re plateauing or the growth is stalling. I think that's something that every artist hits at some point. You might hit it after a year; you might hit after five years. That's the point at which artists decide well, I've got something else that's opened up, or my Instagram is really popping so I'm going to go and focus on that and they just stop uploading to Redbubble. From Redbubble’s perspective, the bigger question is, can they keep on recruiting new artists? Can they keep on attracting new talent that can compensate for that churn?

{audio:0:42:16} How can they attract new talent?

{audio:0:42:20} I think that's it. Redbubble have not done a lot of marketing. As far as I can tell, they’ve certainly not done big pushes to attract new artists. They’ve done some YouTube ads but they've never given things a push. Given Redbubble’s cash reserves, given the position it sits in, it's in a good spot to do some effective marketing to build this brand. If you’re someone who is doing handmade stuff in your bedroom and you didn't know of Etsy and then you see an Etsy ad on TV, then you go okay, a platform where I can sell my stuff. That’s cool.

{audio:0:43:03} There's a lot of artists out there who have no idea about Redbubble, have never heard of print on demand and it's still a new opportunity for them. Can Redbubble do effective marketing to reach those people? It’s probably going to have to be more offline to start building the brand somehow that way. I think there's opportunity for that and I think that's probably their best chance but they've shown growth anyway, in spite of all these things.

{audio:0:43:35} So when you upload designs, you spend some time making sure the design fits the products and you set your price. How do you market your designs when you upload?

{audio:0:43:53} With Redbubble, we don't; there is no marketing. What you have to do is think about keywords, so kind of a search engine optimization mindset. What am I going to title this design? What tags do I give it so that it is likely to show up when people are searching and when Google is indexing this page and this design? That’s it; we're hands off for the most part. For us personally, we have an Instagram account for some of our brands and we do push things. We don't direct people to Redbubble, but sometime we post a new design, it takes off, it goes kind of semi viral and people like it and then that will generate the demand that then finds its way back to Redbubble.

{audio:0:44:39} People might go and search for it, not because it's anything to do with our brand, just they like the funny design and they might find it on Redbubble and buy it on there or find it on TeePublic and buy it on there. Even that is, obviously, very fuzzy around the edges. That's not true marketing in any sense. We don't do Facebook ads. We don't drive traffic to Redbubble. We rely on Redbubble being an organic platform where people go and search for stuff on there or they're searching on Google and Redbubble happens to be the top result for ‘funny dinosaur t-shirt’ or whatever it might be.

Independent Artist, Top 10% Seller on Redbbuble

Redbubble: A Perspective from a Top Selling Artist

Former General Product Manager at Redbubble

Redbubble: Product Categories, Supplier Relationships, & Growth Opportunities

Former Chairman at Redbubble and Director at Stockford

Redbubble: A Three-Sided Marketplace

Current Chief Executive Officer at Redbubble

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

Former Product Manager at Redbubble

Redbubble: Market Size, Product Quality and Customer Acquisition

Redbubble

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. 