Having a cutting-edge model where RedBubble acts as a conduit for a community of artists rather than as a traditional retailer, also has its drawbacks. Hosking again underlines the importance of formulating a strong purpose for a business and communicating that.
“Start-ups need to be very clear on their value proposition,” he says. “What are you delivering and how does your business model flow from that?
“We have a clear proposition but it’s hard to communicate sometimes. Our model is very rare. I can’t think of anyone else who is doing it the way we are.
“That’s a good and bad thing. A good thing in that we’re out on our own, a bad thing in that it can be hard to communicate that.”
Going global
RedBubble’s growth has been exceptional, and not just in Australia. Hosking says that from “very early on” he didn’t want to be part of an Australia-only business.
RedBubble has established a foothold in the US and UK markets, with Hosking travelling to both countries to arrange local logistics and manufacturing. RedBubble’s strongest growth is now in the US, where, according to Alexa, it is among the 3000 most popular websites in the country.
RedBubble now commands an audience of two million users a month, with more than 100,000 artists submitting their work to the site. Hosking is reluctant to reveal financial figures, but says that Christmas 2010 was 40% up on the previous festive period after RedBubble managed to iron out troublesome supply chain problems.
Doing something different
Hosking isn’t afraid to admit that RedBubble could be squeezing a few more dollars out of such an impressive international customer base. Most notably, the site has shunned the opportunity to sell advertising space.
However, for Hosking, the RedBubble opportunity was about doing something new that he was passionate about, rather than ruthlessly monetise it.
“There would’ve been a lot of easier ways to make money than build RedBubble but there aren’t nearly as many interesting ways to do something as compelling,” he says.
“RedBubble as a site, as a company, creates an enormous amount of value and we capture just a small portion of that.
“RedBubble has two million unique visitors a month, which makes it one of the largest websites in Australia. If we were purely an eCommerce company we’d turn over several more million dollars than we do, but a lot of what we do creates value for the community as a whole.
“I’m comfortable with that, doing good in the world and monetising it later. There’s a well-trodden path for Australian entrepreneurs where they see what works overseas and replicate it.
“It’s worked for real estate agents, employment companies and travel agents – it’s created a lot of wealth and done a lot of good. (But) that wasn’t nearly as interesting to me as doing something genuinely compelling and new.
“If I’m a t-shirt designer in the UK, I can now get my designs to a global audience in a way I could never do before.
“That’s a very different model than getting a few designers, getting their t-shirts printed in China and selling them off in Target. It’s a very different model and I don’t think a Target would think about the online experience in a sufficiently different way to their offline experience.”
Slumbering giants
Hosking says he’s surprised that the major retailers haven’t devoted more “resources and energy” to online shopping, but points out that their reticence has allowed start-ups like his to flourish.
“Gerry Harvey has had a lifetime of understanding what makes shopping in-store work and that experience is only partially relevant to selling online,” he says.
“That’s a hard shift for a company and I don’t think they’ll make those shifts easily. They are moving quite slowly and that allows start-ups, including ourselves, to move quite quickly.
“Companies often try to replicate what works offline online and that very rarely works. It’s only when you get a distinctive online experience that you get something compelling.
“eBay is a classic example – it wouldn’t have come to the attention of any of the major retailers to have a strange auction model like eBay.
“If you get a good offline experience, you look at online and say ‘well, look at all the things you lose’ – the interaction, the human touch and immediacy and so on.
“But, at the same time, you gain a lot and in the case of RedBubble, we are constantly looking at what the gains are and how to create a compelling value proposition for customers.”
Future plans
Hosking says that RedBubble will look for an IPO in the “foreseeable future” but insists that he will never walk away from the business. His goals remain lofty – a community of 100 million globally is achievable, he claims.
“The goal remains to create a sizeable community of artists that is reaching out to a global audience,” he says.
“That goal remains undiminished. It’s an important, enjoyable experience for people. And me. It’s incredibly challenging and incredibly rewarding.”
