Campaign of the Week: Wedo

By AltFi on 19th September 2014

Equity Crowdfunding

This week’s winning campaign is a furniture provider listed on ascendant equity crowdfunding platform Seedrs.

Campaign of the Week: Wedo

Wedo is no ordinary high street store. The company has taken the bulk of its offering online, in an attempt to streamline the sale of furniture through an elegant, ahead-of-the curve e-commerce system. In the style of a true disintermediator, Wedo provides massive savings for its users by cutting out the middleman – and having furniture delivered directly from the supplier to the home of the purchaser. In other words – there’s no need for a retail outlet. There’s a clear symmetry, in fact, between what Wedo and platforms like Seedrs are doing to traditional high street infrastructure.

The highly fragmented UK furniture market is worth approximately £11bn a year. Wedo is hoping to attract a significant proportion of that by relieving ordinary purchasers of the hassle of high street shopping. Previously structured as a catalogue based supplier and distributor, Wedo believes that its revised model will give it a clear edge over traditional retailers in terms of scalability and operating leverage.

Wedo grew from around a £50k revenue amount in 2011, to a run rate of £6.3m per year for October 2013. But how does the company plan to make use of the £700,000 (if secured)? Wedo is aiming to reach profitability shortly after the Seedrs round. In pursuit of that goal, the funds raised will be used to:

  • Open up additional advertising channels
  • Invest in “Just-in-Time” stock direct from manufacturers to enhance availability, throughput and gross product margin
  • Expand the range of products on offer
  • Pay salaries

Campaign Breakdown

Investment sought: £700,000

Amount funded to date: £419,050

Equity offered: 8.63%

Tax relief: EIS

Valuation (pre-money): £7,410, 985

Days left: 50

“The Tech-Take” by Oli Batchelor

We're starting to see this more and more in the retail sector: A new product or brand looks to enter into a marketplace which is no mean feat. To distinguish themselves they use the benefits of new technology combined with modern consumer habits - namely to provide an online shopping solution where products can be shipped directly to the consumer without having to be placed on a high-street or be re-routed through a distributor. The savings compared to a traditional manufacturer’s method are then passed on to the consumer making the new product competitive. A great example of this is the Dollar Shave Club that launched a couple of years ago. They took a razor, streamlined their distribution process by solely selling online and hey presto, their customers made a great saving. This method can only be applied under a specific set of circumstances – something that the Dollar Shave Club example highlights. It's important to have some great digital marketing. Their viral video (which is well worth a watch if you didn't see it the first time round!) brought them so much web traffic that even the lowest conversion rates would yield massive revenue. Also, their product is one that consumers don't need to preview in reality to know precisely what they're getting. And ultimately they provided a product people are happy with and would recommend.

So how does this apply to Wedo? Well, firstly they need to get traffic to their site. There's no option of pulling people in off the high-street with an attractive shop window so online conversions are crucial. Their marketing strategy seems solid but is mainly based on targeting keyword searches and reliant on profit moving forward in order to increase this and explore other methods. There is always the possibility that someone else will come and steal the traffic away from them with a huge campaign. Next you've got to think about whether you'd buy a bed or a chair or a dining set without seeing it in the real world first. Certainly, it's more likely than buying a suit, but it's not as ubiquitous as a disposable razor. Looking at the success of the furniture catalogue giants there's definitely potential but it starts to limit those who still want to know exactly what it is that they're buying.

Ultimately it's going to come down to the quality of the product and service and the competitiveness of the price at which it comes to determine whether consumers keep coming back and recommend the brand to others. And to look through their online catalogue it seems that they've got every chance. But you've got to hope that they'll grow fast enough to be able to defend their marketplace from other brands following the online-only trend and trying to pull the rug from under them.

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Companies in this Article:

Seedrs