Redbubble: A Three-Sided Marketplace

Former Chairman at Redbubble and Director at Stockford


Why is this company interesting?

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

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

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


Executive Bio

Richard Cawsey

Former Chairman at Redbubble and Director at Stockford

Richard has over 30 years of executive experience across financial services and technology startups. He is a Former Director at Stockford, an Australian accountancy roll up and is the Former Chairman at Redbubble, the Australian consumer marketplace, where he was an early angel investor and Chair for 10 years. Richard started his career at Morgan Stanley before joining St Georges Bank where he became Stockford Director. Richard now runs Denali Venture Partners and is an investor and advisor to many early stage technology companies globally.Read more

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Interview Transcript

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

Richard, can you provide some context to how you first came across Redbubble?

I knew one of the founders who introduced me to the other founders, back when Redbubble was still a concept. I became one of the first external investors beyond that initial founding team. Three years later, I joined the board and then became chair of it through its growth until IPO, then left on 30th March last year, after Anne Ward took over as chair.

What was particularly interesting to you in those early days?

The numbers aren’t right, but the way that I remember them was that 18% of the world's population wanted to be creative on a daily basis. Only 1% of those could do that through their job, a fraction of which could make a living from it, and a tiny fraction of those would become rich and famous. In other words, it was a hair on fire problem, and if there was a solution to put it out, you would quickly adopt it. In early stages at Redbubble, we saw that artists had that problem. They wanted to get validated for their work, but the Redbubble business model took several years to evolve.

At that stage, it was very early in social networks and we were unsure whether the shop would work, but due to that pent up demand, we felt there were no solutions for independent artists, which is what became the foundation of the business.

Does it come from working with artists and understanding their needs?

Yes, and Redbubble stood for independent artists through all the time I was there. Consumers came to find unique things to decorate their lives or to gift. Finding something unique from independent artists has been its core driver and has maintained its core direction.

In those early days, were they partnering with fulfillers simply selling t-shirts? What was the dynamic of the business for the first five years?

It started to develop fulfiller relationships. First it was in photography, then the brave new world was t-shirts. We spoke to the outsource partners who were coming online. At that stage, the predecessors to the current Kornit machines were coming online and there was a range of people looking at using the new print on demand services. That could allow you to profitably do a supply of one, rather than a screen print run of thousands to make it economic.

Can we walk through how a unit flows through the system; what is the first step in the process?

The first step in the process is a consumer buys a product. They find a design they want and a product to put it on, then size and submit the order and pay their money. After an appropriate number of checks around fraud and other bits and pieces, it gets allocated to the relevant fulfiller. Today, with fulfillment all around the world, that is heavily localized, but before it was sent to the fulfillers we had in a small network. They would use a blank which we sourced from a t-shirt manufacturer or a paper supplier or an iPhone case supplier, then they would do the print onto the product and drop ship it to the consumer.

That allowed a diversified supply chain. When the world was disrupted by implicit trade wars, we had robust global manufacturing allowing the business to scale profoundly.

Does Redbubble negotiate directly with the t-shirt manufacturers?

Yes, there are three parts to the negotiation. The blank supply across its color ranges and sizes, and the negotiation with the fulfillers. In the early stages, fulfillers had better relationships with suppliers. I remember when we were using American Apparel, it turned out during Christmas we were slightly more than 10% of their total production. We realized we were becoming significant and that it was time to start having direct conversations.

Did you get better unit cost from leveraging your power there?

Without a doubt, and we'll get onto it, but the advantages of scale you get on that whole supply chain makes the Redbubble business model very hard to disrupt. That is one of its core competitive moats. The immense number of designs which keep on selling make it hard to replace, as does the diversity and robustness of its supply chain.

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Redbubble: A Three-Sided Marketplace(August 5, 2021)

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