- Tech & Gadgets
- BRW. lounge
Published 06 August 2012 06:43, Updated 08 August 2012 02:02
Expansion: Zibbet co-founders Andrew Gray, left, and Jonathan Peacock Rob Homer, Styled by She Designs Events
Compared with the 800,000 sellers and 15 million customers shopping for crocheted tea cosies on the Etsy website, Zibbet’s 19,000 sellers and 28,000 customers may seem insignificant. But the two men running the Sydney-based start-up have stumbled onto a problem, which if solved could challenge the might of the New York-based vintage and craft colossus.
“We started to hear through our own community section that users love the [Zibbet] marketplace. But if there’s any weakness, it’s the fact that they work so hard to get traffic to their items but once a user is in a marketplace, there’s the distraction for buyers to go here, there and everywhere,” says Zibbet co-founder Andrew Gray.
“A seller can feel like they’re working hard to get attention for their shop but they run the risk of customers going to other sellers. Our research says close to 90 per cent [of Zibbet sellers] would love to have the opportunity to have the marketplace and their own [website] running simultaneously.”
In response, Zibbet’s two engineering staff are working furiously on building an e-commerce platform for vintage and handmade sellers, to help drive sales through their own websites, as well as selling on the marketplace.
Such back-end platforms already exist and there are dominant players, including Shopify and Australia’s BigCommerce. Etsy is the dominant vintage and handmade marketplace. But Gray and his co-founder, Jonathan Peacock, are not deterred. They see a need to combine the two services and crucially they plan to offer software that will monitor both sales channels on a single dashboard.
If they can pull it off, it will not be the company’s first pivotal point of change. Zibbet has been through a number of iterations since it was set up in February 2009. The mates, who met through a church group in south-west Sydney, initially wanted to create a marketplace for fine art. So they set up an “eBay for artists” and charged 7.5 per cent commission. The site’s handmade category was most popular.
“We found that category started filling and sellers were asking us to include more handmade categories and that spawned the idea to go more towards crafting,” Peacock says.
“We didn’t know about Etsy or about how big the market was because we were so focused on the fine arts market.”
After tweaking the website to give it a more handmade focus, two months later the pair scrapped their commission model. Their rate was too high (Etsy charges just 3.5 per cent on each sale) but crucially the pair wanted to be a seller-focused marketplace.
“Etsy is really marketplace focused and buyer focused,” Peacock says. “They look out for their [buyers’] best interests as a marketplace because that’s their bread and butter. That’s how they make their money: through commissions.”
Zibbet moved to a “freemium” monthly subscription model. Sellers can either list up to 50 items for free or pay $9.95 a month for unlimited listings, the ability to customise their stores and access to more detailed data reports.
The marketplace and software combo will “scratch the itch of getting better results as a seller and reduce the complexity [of running a website],” Gray says. This is particularly pressing for the core Zibbet seller demographic, who are based in the United States (80 per cent of sellers) and aged 35 and over – different to Etsy’s young, hipster scene.
Now that Gray and Peacock are confident in their business model, they’ve taken their first steps on the capital raising trail. “It took us longer than it should have to come up with the realisation that we wanted to get investors on board,” Peacock admits. The business has survived on early revenue, which passed $100,000 last year.
“We could bootstrap it but it would take a lot longer. With the online space you’ve really got to move fast.”
They have pitched to the Sydney Angels and are also looking overseas for angel investors to pull together $600,000, which should last 12 months before a follow-on round is needed. The cash will be spent on the e-commerce platform, development and marketing, which until now has only word of mouth.
“We want to pour money into the customer acquisition funnel and start to accelerate the growth,” Peacock says.