The B2B and B2C merchant of fabric, wallpaper and home décor doubled its factory and fulfillment space, imported triple the amount of fabric supplies from Asia and cold called everyone at its building’s natural gas supplier to get more energy into its building.

With triple-digit sales growth, Spoonflower’s manufacturing and fulfillment facility was bursting at the seams. During the height of store closures and shoppers flocking online because of the COVID-19 pandemic, Spoonflower’s online sales increased 107% in the U.S. in Q2 compared with Q1, CEO Michael Jones says. Overall, global sales increased 101% quarter over quarter and increased 162% year over year from the first six months of 2020 compared with the first half of 2019. Plus, Spoonflower’s new customers increased 281% quarter over quarter.

CEO Michael Jones

CEO Michael Jones

Spoonflower is an ecommerce merchant for on-demand printed goods, such as fabric, wallpaper and home decor. Artists upload a design, consumers or makers purchase the product, and then Spoonflower manufactures the product on-demand and ships the product to the end customer. The site offers more than 1.8 million designs from nearly 30,000 artists, Jones says. Artists receive a commission for each product that a customer purchases with their design, up to 15% of the product’s price. Artists who sell more per month receive a higher commission.

The majority of its sales are to consumers, however, a healthy portion of sales are from small businesses, such as interior designers or independent craftspeople that buy the fabric from Spoonflower to make something to sell on the Etsy marketplace. Spoonflower declined to share its breakdown of sales to consumers vs. businesses.

Another way to look at how much sales increased for Spoonflower during the coronavirus pandemic is from the artists’ perspective: Spoonflower paid more commissions to artists in the first half of 2020 than in all of 2019, Jones says.

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Why sales surged at Spoonflower during COVID-19

Spoonflower’s sales increased during the pandemic for several reasons, Jones says. With its store-based competitors closed for a period, Spoonflower benefited from more consumers shopping online, he says. It also saw a surge in do-it-yourself shoppers, as many at-home consumers decided to embark on creative projects. Plus, Spoonflower was already growing prior to the pandemic, Jones says, and the recent trends give him confidence that Spoonflower can maintain some level of this surging growth in the future.

But, likely the primary reason why sales increased, Jones says, is that Spoonflower had the products to meet the demand. Because it manufactures the goods when customers place orders and is not reliant on importing goods, it’s main challenge was to ensure it had the supplies and equipment to manufacture its products. The company had the inventory to meet the demand because of several critical decisions that paid off, he says.

Spoonflower typically orders its supplies two to three months ahead of projected demand. But in April Spoonflower made the decision to double or triple its normal fabric orders from Asian suppliers. Spoonflower sells globally, so in the early months of 2020, Spoonflower saw how the coronavirus was shuttering many businesses in Asia and Europe for a sustained period, Jones says. Although it was a risk to import so much material, he was worried that suppliers’ mills would shut down and Spoonflower wouldn’t have enough supply, Jones says.

It turned out to be a good decision, Jones says, as some of those mills did shut down and its website sales volume tripled. If it hadn’t imported so much fabric it would have had gaps in meeting the demand, he says.

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This boom in demand is also apparent in its website traffic, which increased by triple digits year over year.

 

Increasing production

Besides having the materials it needed, Spoonflower also had to ensure that it had the capacity to manufacture the goods customers ordered. That meant it needed more printers—which Jones says are the size of a small house—and additional space to house the printers. Spoonflower purchased three new printers in the U.S. and one for its office in Berlin.

Spoonflower converts its office space into a warehouse.

Spoonflower converts its office space into a warehouse.

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At its headquarters in Durham, North Carolina, Spoonflower operates a 25,000-square-foot printing and fulfillment facility. Across the parking lot is its 25,000-square-foot office. Because of the pandemic, Spoonflower’s office employees started working from home in March. The retailer then put the office furniture in storage and transformed that office space in April into another printing and fulfillment facility.

That required bringing in a new gas line, as the printers use double the natural gas than what typically is supplied into its office building. Installing a new gas line doesn’t happen overnight, Jones says. “It was a fun challenge, but not fun in the moment,” Jones says.

To speed up the process, Jones cold-called anyone he could at the building’s energy supplier to help get the gas line installed in a few weeks’ time, compared with the 14 weeks it normally takes, he says.

Spoonflower had to quickly double the natural gas supplied to its office building.

Spoonflower had to quickly double the natural gas supplied to its office building.

These decisions paid off by providing Spoonflower with the capacity to meet the growing demand for its products.

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Spoonflower’s new and future shoppers

With a surge in new customers, Spoonflower is proud that it acquired these customers profitability. Jones says its customer acquisition costs decreased 48% in Q2 compared with Q1.

The decrease in acquisition costs, in part, stems from a reduction in marketing spend. Spoonflower reduced or stopped advertising in some channels, such as certain marketplace ads, and by only advertising for certain products on search engines, Jones says without sharing more.

Spoonflower expects its sales increases only to continue and not just fizzle out after the pandemic, Jones says, citing the product categories where sales increased and conversations with its business customers about consumer demand. When Jones looks at which product categories increased the most in sales, fabric to make face masks was only a portion of the increase. “No one buys home decor for a mask,” Jones says.

Even when there is a vaccine and consumer return to stores, Jones says the accelerated shift to ecommerce is here to stay. In fact, he’s betting on it: Next year, Spoonflower plans to move into a 100,000-square-foot printing and fulfillment facility, doubling its current capacity.

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