Printful is a 600+ employee e-commerce company in the print-on-demand (POD) sector that prints, packages and ships products for online stores.
The business is part of the Draugiem Group, which is based in Latvia, but Printful has a presence in the United States as well as Mexico.
Printful was born in 2013 after one of the company’s founders, Lauris Liberts, became frustrated at printing, packaging and distributing posters for his business, Startup Vitamins. Since then, Printful has printed more than 12.5 million items for customers across the world and will surpass revenues of $100m in 2019.
Over the past 5 years, revenues have grown nicely:
2014: $1m
2015: $10m
2018: $70m (5m items printed for total GMV of $240m, Printful takes 30% to get $70m)
2019: $100m
Nathan sat down with the company’s CEO, Davis Siksnans, to talk about the company’s capital, customers, and potential billion-dollar price-tag.
Printful’s Helps E-Commerce Brands Save Money on Inventory
Printful works as a print-on-demand (POD) service.
The merchant only pays for an item once it’s been ordered by a customer, so it minimizes their risk as opposed to having to make a bulk purchase on platforms like Alibaba.
Keeping in mind that the company is now printing tens of thousands of orders every single day, Siksnans says most of their order sizes are two products or less. He says the company has made it possible for customers to sell products without having to commit to bulk orders by using innovative technologies.
E-commerce merchants don’t have to pay an upfront subscription or user fee, and they can use the mock-up generator to see how a product will look once it’s printed without paying a cent.
“It was important to have a free product that’s free to use, and encourage them to get their first order,” Siksnans said.
“There are multiple players in our space, but there are very few companies that actually do their own printing.”
Despite having 1.3m sign-ups to date, customer LTV is hard to calculate
Printful currently has more than 100,000 “active” customers, meaning customers who have fulfilled at least one order with the company over the past 12 months.
But Siksnans admits calculating the lifetime value (LTV) of their customers is tricky. The company must look at a customer’s order history and take a look at their historical orders throughout their lifetime.
“We have customers who have an LTV of millions because they’ve been around for a long time,” he says.
The company is currently training its account managers to drive more usage from customers by encouraging them to run sales and campaigns in their stores.
“That is more impactful on increasing customer LTV than any other thing,” he says.
Printful is 100% bootstrapped
Printful has three founders, and before they started the company, they had been building online businesses themselves for 15 years.
It was the profits from these businesses that gave the founders their initial capital to start Printful. After pouring in over $100,000 of their own money, Siksnans says the founders initially wanted to outsource orders to printing warehouses, but they found all of them lacked a technology-first mindset.
So, they decided to invest in the technology themselves.
Prinftul sources state-of-the-art printers from Kornit Digital so they can do digital printing at scale, without having the roadblocks of traditional screen printing. To date, the company has invested more than $17M in 50+ digital printers, some of which cost up to $500,000.
How Has Printful Has Grown Revenue From $1m in 2014 to $100m in 2019?
When GetLatka interviewed Siksnans, the company’s ARR was sitting at $86m. And over its last 12 months, Printful had doubled its gross sales to a total of $540m since 2013.
But how?
It seems Printful entered the e-commerce market at exactly the right time in 2013, just before the industry started to see hyper-growth, and it was able to cement itself as a key player in the world of POD.
And according to Siksnans, a lot of the company’s growth has come over the last 12 months. Prinftul grew almost 70% in 2018, and over the past year, the company has doubled the number of items produced for their customers (to 12.5 million and counting.)
Their growth mirrors the e-commerce industry as a whole. In 2020, e-commerce sales are set to surpass $4T worldwide—more than double what they were in 2016.
Now, let’s look at how the POD sector fits into that growth. Over the last five years, POD has become an industry of its own, with more and more merchants searching for POD solutions on Google.
Printful has combined POD with dropshipping, so they’re essentially targeting two core customers with one product. In 2017 alone, dropshipping was accountable for $85.1 billion of e-commerce sales worldwide.
And a good chunk of future e-commerce sales are set to come from custom printing services, in particularly the t-shirt market (one of Printful’s flagship items.) A report by Credence Research found the global market for custom t-shirt printing industry alone is expected to cross $10B by 2025, so the demand for POD services is surging.
Printful acquires most of its customers organically, the rest through $150/CAC
Most of the company’s customers are acquired organically through direct marketing, PPC on Google, or through partnerships the company has forged.
“We have listings on Shopify App store, on BigCommerce App store, it’s a lot of word-of-mouth among Etsy sellers that speak to each other,” Siksnans says.
Interestingly, more than half of Printful’s customers are acquired without any marketing spend. For the customers they pay to acquire, the company has found most of its success using direct targeting through Google Ads, and more recently, using Instagram advertising.
The company spends roughly $10 to acquire new leads through its paid advertising channels. But Siksnans says it needs between 10-15 of these sign-ups before one will place an order, so its customer acquisition cost (CAC) is effectively $150.
“We’ve seen a bigger decrease on Facebook, and Facebook metrics all seem to be going down, and I believe that’s kind of the case for many businesses, but Instagram is definitely booming,” he says.
The advice echoes a woeful 2018 for Facebook Ads as well as the businesses using them to advertise. A study by We Are Social and Hootsuite found there was a 20% drop in Facebook Ad interactions in Q3 of 2018. So, moving away from the platform and putting their marketing budget into other paid avenues seems like a smart move by Printful.
Will Printful Have Trouble Expanding To China?
One problem that Printful may face is its fulfilment times and international shipping costs, especially in the world’s largest e-commerce market, China, which is expected to grow 70% over the next five years.
And by 2023, retail e-commerce sales in the Asia Pacific (APAC) are projected to be more than the rest of the world combined. More than 85% of new middle-class growth is now in the Asia Pacific region, and with B2B manufacturing in APAC and China booming, is Printful’s fulfilment times and shipping costs a profitable model?
With their closest fulfilment centre to the Asia Pacific being located in Latvia, it means the expected turnaround times for fulfilling orders can be anywhere from 10-20 business days.
And while 97.66% of Printful orders are shipped within 5 business days, there’s no escaping the geographical gap between their fulfilment warehouses and the world’s largest e-commerce market. Not to mention their international shipping costs, which aren’t included in their fulfilment price.
It’ll be interesting to see how Printful’s customers will approach these costs if they attempt to broaden their sales into the Asia Pacific market. Will they be able to pass on the expensive international shipping rates to customers, or swallow them while maintaining a profit? Time will tell.
The POD space has already produced multi-billion dollar companies
Printful will surpass $100m in revenue this year, Siksnans says, and the founders believe the business is now worth a billion-dollar valuation tag.
Several companies in the POD space, like Shutterfly (acquired by private equity firm Apollo Global Management for $2.7 billion) and Cimpress (currently worth $3.48bn), have now gone public.
However, Siksnans is hesitant to attach a potential growth percentage to the business as investors write them down, along with predictions, and hold companies accountable when they go into meetings. He says although Prinftul doesn’t need investors, the company could look to exit at some stage in the future, so he’s mindful about attaching a figure to its growth.
“Although we’re not actively raising money, at some point our company will have some kind of liquidity event, and we try to run the company in a way like we’ve had investors,”
The company has already been approached by several investors, but they’ve yet to find a fit.
Our prediction? Printful will surpass $100m in revenue this year, and if they hold off investor acquisitions and figure out a way to crack the booming Asia Pacific market, they could be in a position to hold out for a billion-dollar acquisition of their own.
