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:0:00:30} How would you describe the typical Redbubble customer in the early days?

{audio:0:00:39} The early days customer was a geek buying t-shirts. I do not mean computer geek, but someone who is into a thing and wants to express that, so they put it on a t-shirt.

{audio:0:01:15} Is the age demographic much younger?

{audio:0:01:20} The skew is younger and male, mostly in the 25 to 35 demographic.

{audio:0:01:44} Did that demographic change as they introduced more products?

{audio:0:01:52} Products were aimed at different markets, so the shape became less peaky.

{audio:0:02:10} What is the main reason geeks buy these products?

{audio:0:02:21} They are expressing their uniqueness and love for a thing through a public display. It is related to why people get tattoos. It could be a TV show, knitting, cats or cycling, but it is a core part of their identity, which they define by cloaking themselves in it. It is more about the artwork than the product. Obviously, there are customers who want a pretty cushion, but the artwork is a big driver. That could be for themselves or gifting, but gifting remains a side show.

{audio:0:03:46} What would you estimate gifting to be? An old data point I have shows around 40% is gifting?

{audio:0:03:54} 40% seems high to me to be honest; I am surprised it was that high.

{audio:0:04:08} Would that change by product?

{audio:0:04:14} Yes exactly, and to be super clear, gifting is an estimate because you do not know. It is not a science to know the exact number, and it differs per product and period of time. During Christmas many are bought as gifts, so behavior changes over the course of the year.

{audio:0:04:49} If gifting is relatively large on Redbubble versus other platforms, could that be a reason why customer retention is relatively low?

{audio:0:05:13} Yes, that is a sub-reason, but the bigger reason for customer retention being low is the purchase origination because the trigger does not happen on the platform. You decide you want a thing and then you go look for it. You end up at Redbubble because it offers that thing and then you purchase it, rather than sitting on your couch and thinking what Redbubble has to offer me today. It differs from fashion retail where you do not think about what you want; you simply go to ASOS or whatever Net-a-Porter and shop. With Redbubble, more often you have already searched for something, the genesis of which was not inspired by the platform. You could have searched for something and then decided to buy something else on the platform because it was a suggestion. The trigger is not Redbubble itself.

{audio:0:06:59} It’s the design and artwork that really is the trigger which means when the user searches on Google for fluffy cat t-shirt, you get Redbubble?

{audio:0:07:19} Fluffy cat t-shirt, fluffy cat cushion, yes.

{audio:0:07:24} So the advantage of Redbubble is the long tail of artwork content and SEO pages which drive the traffic?

{audio:0:07:34} Yes, a big strength of Redbubble is their corpus of content. In some ways, it is like the world's biggest shop. If you multiply the artworks by amount of product variants, you are in the billions of SKUs. They have the biggest range offered, in an effective way, to get each SKU to the person who is looking for it. Google is quite effective at crawling and figuring out if someone wants a cat t-shirt, and Redbubble has most of them.

{audio:0:08:20} On the point of products and market size, management claim the TAM is $300 billion; effectively apparel, clothing and homewares are all in that market. Are there products which do not fit the user journey of customization and printing?

{audio:0:08:57} Yes and no; it depends. If you fired everyone at Redbubble today, you would only need people to fulfill the orders without doing any product, marketing or website innovation. The high fashionista buying a little black dress cannot find that on Redbubble, so no in that sense. But yes, from a perspective of, they have some of the ingredients which could build a successful offering to fashionistas, but they have not reaped that yet.

{audio:0:10:03} It is possible to print on anything but customers may not want it, so how do you look at product market fit for customized print on demand? It obviously works well for t-shirts, stickers, duvets, homeware and art, but could Redbubble expand to 200 to 300 products and materially improve the size of the market?

{audio:0:10:50} You have to get the products right and stop thinking of them as canvasses for art. An example is a jacket which has fashion elements to it. You have to buy it because there is a bit of a cool print, but if it does not fit what you need from the zip or shoulder pads, you will buy it from the fashion house instead.

{audio:0:11:43} You need to meet the table stakes in the product game, and then your edge on top is if you can change the colors and design. Redbubble has only succeeded in product areas where the product construction is fairly generic, such as a hoodie or t-shirt. There are different areas to compete in jackets, whether it is the pockets or bomber versus leather jacket. I would never see a right to play in those markets but it needs product innovation. It cannot simply rest on a magical print. They need to go deep in the supply chain to work with both the product manufacturers and the cut and sew houses, to figure out which products to print on. They need to refresh the design every two years instead of using the same t-shirt for 20 years.

{audio:0:12:58} I signed up to Redbubble, uploaded some images and signed up as an artist; it is not as easy as it sounds to upload a picture and simply get it to fit on a product.

{audio:0:13:19} You would need to take your time to choose exactly where on a particular jacket. So I agree, you would also need to make that easy.

{audio:0:13:32} You need to integrate deeper in the supply chain and have experienced professional artists who will spend their time designing for complicated products?

{audio:0:13:43} You do not need professional artists. Amateur artists can do it; there are enough artistically minded freelance graphic designers who are just getting into the whole visual field. They can create great stuff so you do not need professional artists on your payroll.

{audio:0:14:14} No, but it requires people who are willing to spend the time?

{audio:0:14:22} What are potential limitations for the market size of Redbubble?

{audio:0:14:37} It is a step forward from the current business model. They need to pick generic products where the product acts as the canvas, with no deep thinking on product innovation. If they do not put in that work, the market size is limited to a portion of those products. There is a section of the t-shirt market who care about the cut of the cuff, the seam used and the type of cotton. They will be more restricted to those who do not care what the t-shirt looks like and instead overwhelmingly care that it has a cat on it. The total addressable market is restricted by the willingness to invest in all the other parts that make a product for a consumer, beyond what is printed on it.

{audio:0:16:01} If you add more products, the range increases exponentially but it is difficult to add incremental products both in the supply chain and from a design perspective?

{audio:0:16:20} Having a cushion does not mean the cushion market becomes your playground. You have to think about short and long cushions so there is an element of sub-products.

{audio:0:17:18} How can Redbubble build a brand which drives traffic directly from users?

{audio:0:17:40} That is the million-dollar question. It is not insurmountable. You have a bunch of people transacting on or coming to site and becoming customers. You simply have to figure out how to get them to buy something else from Redbubble without prompting. It is about having a good reengagement strategy.

{audio:0:18:38} We know 70% of fluffy cat people are into fluffy dogs, so we introduce the idea that should they want a fluffy dog, they could come right back. That is how you get retention. You still have to reach downstream and figure out what they want. That is a viable strategy compared to figuring out how to make Redbubble as famous as ASOS or Zara.

{audio:0:19:15} Is that more about reactivation?

{audio:0:19:19} It is reactivation down the same buying pathway, instead of brand affiliation.

{audio:0:19:31} What are the risks of changes to Google's SEO?

{audio:0:19:48} It is a short-term risk because Google prioritizes content which is best long term. They may change their algorithms and suddenly you get a 10% to 20% decrease but they could make another change which results in a 10% to 20% increase. SEO is not a quarter-by-quarter predictable thing, but rather a 10-year bankable thing.

{audio:0:20:56} Which Google changes hurt Redbubble in the past?

{audio:0:21:03} They used to tell you that they made a change, but they no longer do. You simply imagine they must have made a change because you see a difference in the traffic. Essentially, it is a black box, but there are a million snake oil salesmen who will tell you otherwise.

{audio:0:21:30} Which other paid channels work for Redbubble?

{audio:0:21:48} Organic search such as text ads or Google Shopping. One tries to serve up reliable results to searchers, but once Google monetized it, you have to pay to be in that slot. However, you cannot pay to be in that slot if you do not deserve it. Without fluffy cats, I have no authority to tell Google that someone searching for a fluffy cat has to come to our website. Paid channels are ultimately amplifiers, but they remain very search like.

{audio:0:22:56} It always come back to the user journey, which is descriptive word driven. That is an SEO advantage for Redbubble, but does it drive brand retention?

{audio:0:23:23} The challenge is to convert that one shot win into an ongoing relationship through email or Facebook remarketing, but the remarketing world is super strong now.

{audio:0:23:43} Why have they not already done that?

{audio:0:23:46} They have; remarketing exists.

{audio:0:23:51} Why have email reactivation campaigns not been front and center?

{audio:0:24:03} If you check your Facebook after going to Redbubble, you will see ads for products. I unsubscribed from the Redbubble email list a long time ago, so in short, I do not know.

{audio:0:24:49} Do you think Redbubble will achieve brand recall and move more direct traffic, away from SEO?

{audio:0:24:59} There is no reason why they could not; it is always down to management's focus and ability to execute. There is nothing stopping BMW from pivoting into electrical vehicles, but if they are able to do it is a super complicated question.

{audio:0:25:39} Could the user journey be so peculiar or specific, that it simply does not lend itself to having a high repeat product or use case in the long run?

{audio:0:26:05} It is not too peculiar; they could do better and there is still upside in retention. It is simply a matter of executing against it. There is no reason someone should not buy five times a year from Redbubble, and to achieve that, the proposition needs to be well-established and there needs to be targeted, well-timed hooks to recall. Modern marketing technology can help but it requires remarketing management and data engineering to figure out when and what someone is likely to buy, given what they bought the first time.

{audio:0:27:26} What was the marketing infrastructure like at Redbubble when you were there?

{audio:0:27:36} They had complex, sophisticated IP, which was definitely not off the shelf stuff.

{audio:0:27:55} Was that for SEO or sophisticated reactivation and paid infrastructure?

{audio:0:28:09} All of that is already sophisticated and you do see results from it, but the point I was making is that they did not start from zero. They have the right data platforms to do this.

{audio:0:28:36} How does the Redbubble journey in the product use case compare to Etsy?

{audio:0:28:59} It was similar, but what is Etsy's retention like today?

{audio:0:29:13} Etsy have 50% repeat purchases and the average sales per buyer increased from $100 in year one, to $200 four years later.

{audio:0:29:38} That seems much stronger than Redbubble. Which aspects of the customized print journey and product experience are different from handmade goods on Etsy?

{audio:0:30:01} Etsy is a marketplace so it has a wide range. You cannot buy a wedding dress on Redbubble, but you can on Etsy. I said you could buy five times a year from Redbubble, well you could buy more than five times on Etsy because they have more categories.

{audio:0:30:44} Yes correct, use cases. When you are looking for a fluffy cat t-shirt and buy it from Etsy, on the way out you notice they sell wedding rings and suddenly you need to propose. That comes back to my earlier point around supply chain product innovation. Etsy outsources that to the sellers because it is a managed marketplace, whereas there is less breadth and speed to release new SKUs on Redbubble.

{audio:0:31:53} Etsy spending a billion dollars on marketing also obviously helps, but even if Redbubble spent that building a brand, what would that brand be today?

{audio:0:32:35} The brand could be, come to Redbubble for unique goods which speak to who you are and what you are about. There is a proposition there.

{audio:0:33:07} They all speak to what a customer wants to define; something not mass produced. You want to rep your fluffy cat t-shirt because, one day at a party, someone loves your t-shirt, and you can bond over it. There is a lot of that uniqueness, independent person kind of idea. That is the brand you would build if you could spend a billion dollars on it.

{audio:0:34:26} But you have to be careful building a brand because the use case is similar to Etsy and, therefore, needs to be different?

{audio:0:34:37} Yes, or you compete head-to-head. Etsy has the breadth, but not the depth. They have more use cases in terms of different life events to buy certain products, but you will not find a fluffy cat t-shirt on Etsy. When you think about Etsy versus Redbubble, you would probably think about how unique people are and how long does the tail goes.

{audio:0:35:29} Redbubble is about the art work, both subjective and descriptive, whereas Etsy is about the actual product and use case. It is all around customization for brand recall for Redbubble. How did you improve the platform discovery with infinite SKUs?

{audio:0:36:13} It is similar to Google in many ways; the generic category of search problems. You design UXs which allow for discovery, and use fundamental data science to figure out what the customer is looking for, based on the signals you gave them.

{audio:0:36:53} Does the number of images uploaded per day make it a much more difficult technical challenge to ensure they rank well on SEO?

{audio:0:37:09} SEO is slightly more on auto-pilot because the Google crawler does what it does. It is definitely not a human intervention and has to be based on data science. You have to set up the algorithms to automatically do what they do.

{audio:0:37:38} Even Google has problems with freshness of content. They have a powerful AI to figure out what you are searching for, but five minutes after a bomb goes off in some city, Google has no idea you are talking about the related news; it takes a while to digest that. The good thing at Redbubble is that you do not need that immediate freshness, as long as within several days of something being uploaded, it is well-understood in the search algorithm, so that when someone is looking for it, they can find it. That is good enough.

{audio:0:38:39} What is the typical artist, in terms of age, personnel and demographic?

{audio:0:38:50} The psychographic is they call themselves illustrators, graphic designers and artists. They are creatives who make image-based art. Some of them like calligraphy but they are all part-time artists. The fact that they can monetize some of it is great, and then as they begin to monetize some of it, they realize they could get more if they went with this theme. People seem to like these cats, so maybe I will make a series of cats. Very few of them spend 40 hours a week thinking about Redbubble.

{audio:0:40:11} Are the vast majority of them simply putting up one or two designs and then see how it goes, and most are probably not successful?

{audio:0:40:22} Many artists have multiple artworks, but not many devote their lives to it.

{audio:0:40:38} Etsy released a 2021 seller survey recently, in which they revealed that 30% of Etsy sellers were pursuing their creative business as their sole occupation.

{audio:0:40:51} Wow, interesting. Was that 30% of sellers by revenue or by number of sellers?

{audio:0:41:02} I believe it was by number of sellers.

{audio:0:41:07} That is super high, almost to the point that I do not believe it.

{audio:0:41:19} 81% identify as women and 70% consider their Etsy shop to be a business.

{audio:0:41:35} Yes, they would see it as a side hustle, but not many will make enough money.

{audio:0:41:40} How does that compare with Redbubble?

{audio:0:41:45} I believe it a bit more from the point of view that an Etsy seller keeps most of what they sell.

{audio:0:42:00} The Etsy sell also makes products?

{audio:0:42:02} Redbubble artists do not need to spend 40 hours because, once they upload their art, they do not print the t-shirt. Whereas Etsy artists get paid for pouring a hundred hours into their business because they make the stuff and get paid a large chunk for it. Redbubble artists only get 20% of the $30 t-shirt, making it a slightly different proposition.

{audio:0:42:47} Does the platform have a different relationship with the artist?

{audio:0:42:52} Correct, because of the take rate.

{audio:0:42:55} What are the main reasons that artists churn from Redbubble?

{audio:0:43:06} Artists churn in terms of they stop uploading new artwork, but they do not delete their artwork; they leave it up because there is no cost. You cannot leave your shop on Etsy; you have to fulfill your goods and ensure you ship them, and sometimes you are not bothered. The main reason for churn is they stop feeling that it is worth it and have other things to get on with.

{audio:0:44:03} Does it simply come down to the sales and earnings?

Redbubble: Market Size, Product Quality and Customer Acquisition

Redbubble user acquisition and challenges to build a brand

How Redbubble can penetrate the $300bn TAM

Moving from generic to more complex SKU's 

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. 

Redbubble: Market Size, Product Quality and Customer Acquisition

Former Product Manager at Redbubble

inpractise.com/articles/redbubble-market-size-product-quality-and-brand-equity

Why is this interview interesting?

Redbubble

Why is this company interesting?

Executive Bio

Former Product Manager at Redbubble

Interview Transcript

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