Editor’s note: This story is part of a special report focusing on the impact of COVID-19 on retail and ecommerce.
DURHAM – Spoonflower is another ecommerce startup that is winning big at the moment during a global pandemic.
Starting in early April, this Durham-based custom digital printing company says it had started to receive a surge in orders for its fabrics. Stuck at home, people needed material for new home projects, or to make masks or blankets.
“You name it,” said its CEO Michael Jones in a recent video call. “We were doing about 33 percent year-over-year growth in March, and it went from [that] to literally tripling in less than a week,” he said. “It’s been a really, really big change for us,” he added, “not only from a supply standpoint, a demand standpoint but then also how we have to manage and operate our business.”
Spoonflower is having to scale quicker than expected.
Within 30 days, the startup doubled the size of its factory to 50,000 square feet and added three new industrial printers – one flown all the way from Israel. It’s also hired 45 new employees.
“We can’t hire them fast enough,” he said, adding plans for another 50 hires in coming months.
“It’s been really unbelievable how quickly we’ve had to make these changes,” said Jones.
WRAL TechWire’s Chantal Allam recently had the chance to chat with him by Zoom call where he took the call from his home in the Triangle. This interview has been edited and adapted for the space. Here’s what he had to say:
- How long have you been CEO of the company?
Not very long, I started in January. In 20 days, or so somewhere in that range, the pandemic hit.
- Then what happened?
If you look at the first quarter of the year, things are doing great and growing, a very healthy year over a year. Then the pandemic hit. We do a lot of business in Asia because that’s where the fabric comes from. So the pandemic kind of hit us much quicker from a supply chain side, so we had to really manage that and get in front of it. We got as much fabric pulled forward into the US as we possibly could. We also have a European operation that’s based in Berlin, Germany. So obviously, COVID-19 went from sort of Asia into Europe, and we started to see some impacts on the business there. Then obviously it hit here in the US, and we saw the impact here. What was interesting, we saw a one-week period where there was a little bit of dip in the business from an overall revenue standpoint, and then after that week, a massive surge.
- Where did it come from?
You’ve got a ton of people working from home. They’re either redoing their home office because now they have the time, or you’ve got our maker community that buys fabric from us to make, baby clothing, blankets, you name it; and they’re seeing a surge in their business. Of course, there is also mask-making that’s happening. So it’s been a really, really big change for us, not only from a supply standpoint, a demand standpoint but then also how we have to manage and operate our business.
In Durham, specifically, we now have an additional 25,000 square feet of operation space; we’ve essentially doubled. We took over a new space, but then we also took our office, and that’s now 100 percent factory and warehouse base for us. It’s been really unbelievable how quickly we’ve had to make these changes.
- Can you give me numbers?
We were doing about 33 percent year-over- year growth in March, and it went from 33 percent to literally tripling in less than a week.
- So how does ChannelAdvisor fit into all this? Obviously you’re one of their clients.
They’re a great partner for us. We’ve actually used them for years to sell via marketplaces like Etsy and Amazon, and obviously Etsy, has a large number of people that are buying our fabric, wallpaper, and home decor because we have our own store there. ChannelAdvisor allows us to you know get all of our products out in front of millions of consumers on Etsy, Amazon, eBay, you name it. Most recently, we’ve started to use ChannelAdvisor for our Google shopping feeds, as well as our search engine management, which has been critical for us. Over the last month, we actually just made that transition. It was actually almost right at the beginning of the pandemic.
- So how are you managing this, scaling so quickly?
It’s been pretty crazy. Honestly, it’s sort of good old-fashioned, roll up your sleeves and really make things happen on a weekly, daily, hourly basis. I’ll give an example: transitioning to 25,000 extra square feet for the factory, adding three new printers to our entire print fleet, then adding up to 45 people starting next week. We’ve done all of that in less than three weeks. So it’s essentially taking every single person at the company to be all hands on deck, and then working closely with our partners, like ChannelAdvisor, and some other critical players.
Another example: the printers. These printers are like the size of an apartment. They’re huge. And we had to get them airlifted in with our partner coordinate, and they actually had to be brought in from New Jersey, China and other parts of other parts of the world and they got it done in less than three days.
Then from a hiring standpoint, the one thing that’s been really great — for the Triangle, in particular — is a lot of these people we’ve brought on board have been friends and family; and many of them made unemployed recently. So we’re able to, give them jobs, which has been great. I think we’ve done a really good job, under the circumstances, to manage those. It’s most certainly been extremely chaotic getting to this moment.
- Do you see yourself as part of this larger surge towards e-commerce?
So what we’ve noticed in the e-commerce and retail world is there’s a separation that’s pretty drastic on the “haves and the have nots,” right? If you’re in an area that’s really impacted by COVID-19, anything related to travel, fashion, things that are not a priority or just can’t be done, consumers are not buying and, in many cases that revenue is zero. In other cases, for us and others, anyone in essential products, the Amazons the Walmarts, the Targets of the world, they have seen a huge surge in their e-commerce businesses because stores are closed and so people have been buying those essential items from them.
And other companies, like us, where the products that we are selling directly impact what consumers are doing today — staying at home, redoing rooms, making masks, etc. — and when there’s nowhere offline for you to go and make those purchases, then very quickly they transition to online. In our case, we’ve been lucky enough that they see the 1.8 million designs we have from artists across the world, and they start to fall in love with them, and as a result, we’ve seen about 50 percent of new customers come to us.
It’s been quite an amazing trend and what will be interesting to see is, as things ease and open up a little bit, as we eventually get back to normal, how many of those people stay for e-commerce offerings? Quite frankly I think it’s going to be higher than some people think.
We really don’t know what’s going to happen in the next six months and unemployment could be a high as 25 percent. Aren’t you worried of scaling too fast. Every day, we’re sort of managing our business and being conservative from what we think overall growth will be for the full year. We’re being conservative on our expenses. And then, the way that we’re leaning on and investing is, we’re trying to be as flexible as possible – month to month leasing, leasing our printers versus buying. We’re doing temporary employees that could go permanent if things continue to hold.It’s very hard to tell where things will go in the future. I’m cautiously optimistic and managing our expenses accordingly.
- Do you think this event has fundamentally changed our shopping habits?
What we’re seeing is a rapid transition of people using new products and services in this environment. If they have a good experience, they will use more even after the pandemic. So will there be a drop off? Probably some. But I do think that there could be a new normal that is set for some businesses and obviously I really hope that we’re one of them.
- What does it mean for a company like Spoonflower to have its roots in the Triangle and get this kind of surge?
I’ve been here for 20-some plus years and I’m from Chicago and the Triangle to me always had great talent, great companies. But what we lacked is sort of some breakout successful companies that become public to help kind of create more and more startups and a flourishing startup community. That’s really what I want to see happen. To be able to have companies, like ours and others, be successful during this time, I think it’ll shine a spotlight on the Triangle. There’s a lot of great things happening here. Hopefully we see more companies, being successful through this, and once we do get back to new normal, the Triangle is stronger; that’s what I would hope to see.
- So are you looking over your shoulders at other startups? What’s your view on the ground?
You have a lot of what I would call the “haves and have nots” during this timeframe. A lot of the CEOs I’ve talked to locally, they’re either doing really, really well — like we are — or they’re unfortunately on the other side of it, where they’ve seen a massive overall revenue drop off, really at no fault of their own. What I hope and pray for is that companies like ours, which are doing well, can hopefully help others in some way, shape or form by partnering together during these times, which we’ve tried to do.
There’s advice I can give startups or companies out there, which is it’s easy to panic during a time like this, and it’s certainly understandable. But the best thing to do is to kind of take a step back, take a deep breath, look at your business and your customers, and their need during this timeframe. Maybe readjust your business to to survive. Who knows? Maybe you end up finding a better part of your business long term. You’ve seen companies doing it with the protective gear. You’ve seen restaurants doing it with how they’re handling delivery and pickup. My hat goes off to those folks that have really done an amazing job pivoting because it is not easy to do.
- Where you before you took on this role?
I was actually the chief revenue officer of a company called Amplience. They’re based out of London, and they’re a software as a service company so more of a b2b company. It’s been a whirlwind 120 days, but I’ve got to be honest with you, I wouldn’t want to be anywhere else. I love the company; I love the business, and I’m having a great time.
- It sounds like you’re in the right place at the right time.
It’s funny, in my entire career, I’ve been in businesses that have great ideas but you’re kind of clawing for every ounce of revenue that you can get. And now we have this massive surge of demand here, and so now it’s really more about managing this overall growth in a really responsible way for the business, and being able to deliver on behalf of customers. I will never forget this time of my life, I can say that with lots of certainty.
It was just super hard to manage through all of of this. There’s a lot of bad things happening in the world, and I hate to see all of it. But for us to be able to help, as well as be successful, managing through the chaos that we have, I would much rather be on this side of it.