The topic of cooking is nowadays much more than the mere preparation of food. The German financial magazine DER AKTIONÄR talked with Springlane CEO Marius Fritzsche about how he is using this trend for his company.
Alongside photos of their food, an increasing number of people are also sharing the cooking process on social media. In an interview with DER AKTIONÄR, Marius Fritzsche explains what kind of chances this creates for brands and why his company prefers to develop kitchen appliances in-house instead of just selling them. Furthermore, he talks exclusively about Springlane’s plans to go public.
DER AKTIONÄR: While Springlane started as a food blog and online retailer for kitchen appliances, you changed the business model to own brands after six years. For what reason were you doing this?
MARIUS FRITZSCHE: The reason for me was the consistent implementation of our vision “to fuel People’s Passion for Cooking”. By completely integrating the value chain, we can achieve this much better. It is not only our intention to just sell products, but to accompany people in the cooking process. We also want to be the first point of contact when it comes to the topic of cooking and food.
Thanks to our digital data sets, which we create from the work with our products, but also from the feedback of our community and thousands of touch points with our customers, we are continuously improving our products and our content. We simultaneously monitor all distribution channels (direct-to-consumer model) and ensure that the customer experience is good. Our customers are not satisfied by just buying an ice cream maker. They want to work with it, produce ice cream, enjoy the taste, receive appreciation, and share their results with others. For an increasing number of people, cooking is more than just preparing food in order to be satisfied. Today, cooking has become an absolute trend topic that is talked about, photographed, and shared with other people on a daily basis. If you are a pure online retailer, you do not use 90 percent of this potential.
In 2017, before you switched to the direct-to-consumer model, you generated around ten million Euros in sales per year. What is your position today?
Prior to the conversion, we had about 20,000 items. Within a few days, we then reduced the product range to around 40 items. The team was very familiar with the market, the target group and every single one of these items and was able to immediately start with the optimisation. We now offer more than 200 items. Thanks to this focus, in combination with the integration of the value chain and the involvement of the community, this has quickly been reflected in the turnover: We broke through the 10 million Euro mark again in 2018, grew to 18 million in 2019 and 36 million in 2020. Nowadays, we sell a five-digit number of ice cream machines per year under the brand of Springlane and just as many gas grills under the brand of Burnhard. In the case of the so-called Burnhard Fred “Black-Series”, we generated half a million Euros in sales on the day of the product launch of the series model. Due to the great rush, our servers went down for a short time – with a product that we had only positioned via social media, without a customer being able to touch it or try it out at that moment. Nevertheless, we are still at the very beginning: The market is enormous and there are constantly new food trends emerging – from vegetarian to vegan to Paleo and fitness.
“LAST YEAR, WE ACHIEVED A POSITIVE RESULT DESPITE THE STRONG GROWTH.”
You had announced for 2020 that you would reach the break-even point. And did you achieve that goal?
Yes, despite the high growth, we achieved a positive result last year. The product-market fit is strong – this is especially evident in the Unit Economics: from gross margin to customer lifetime value to customer acquisition costs. Now, we have to scale up this recipe for success. For this purpose, we will invest in product development, in the enlargement of our community and in new markets.
An important key figure in the D2C segment is the gross margin. Which gross margin does Springlane achieve?
Well, I cannot provide precise figures, but over the last few years we have been able to continuously increase our gross margin. We have exceeded the important 50 per cent mark. Furthermore, our returns rate is well below ten per cent.
You built up one of the most successful German food sites with Springlane Magazin. Are you successful in acquiring new customers by means of that medium?
We generate about 100 million brand impressions per month with the Springlane brand. In the case of Burnhard, the figure is significantly lower. Therefore, we have a huge opportunity to reach potential customers, which we also do with a very strong focus on marketing.
You have raised around 40 million Euros in venture capital so far – including from Heliad, whose major shareholder is Bernd Förtsch – plus one million via crowd investing. What kind of further financing roadmap do you have? In more detail: Do you have plans for an IPO?
That is true, although a major part of this sum went into building up the food blog and online trade before 2018. Thanks to our profitability, we are able to finance our ongoing business relatively well through third-party capital. Of course, the question is where we want to go and what is the deadline for that goal. If it takes us 25 years, we can develop ourselves as global leader from cash flow. We have to continue to grow at double-digit rates every year and develop one product after the other. This could also be achieved more quickly with the appropriate capitalisation. Therefore, an IPO is definitely a scenario we are currently dealing with.
“PURE ONLINE RETAILERS DO NOT USE 90 PER CENT OF THE POTENTIAL.”
In 2024, according to studies, a good half of kitchen appliances and utensils will be bought online. Where do you see the differences between Springlane and the online activities of long-established kitchen brands?
We have a much closer relationship with our customers. We belong to the community and invest a lot in it – support, entertainment, inspiration, recipes, and even complete YouTube shows (for example, “BBQ Madness”). So, we achieve that our customers become fans and support us to become better and better, no matter if it is in product development or aftersales. In the development of our plant milk maker, for example, vegan bloggers from our community participated. This results in products that are directly aligned with customer needs. We can challenge other products on the market in this way.
In addition to selling own brands, you are also active as an agency in the food sector. What was the reason for that?
We simply had magnificent contents that we wanted to share – on our blog, on Pinterest, on Instagram and on Youtube. As time went on, more and more big food brands contacted us to see if we could integrate them into our content and feature them in our community. For them, we created a team, developed recipes and native advertising campaigns, and worked out content strategies. From a strategic point of view, however, we clearly focus on our own brands Springlane and Burnhard!
Note on conflicts of interest:
The CEO and majority owner of the publisher Börsenmedien AG, Mr Bernd Förtsch, has an indirect and direct stake in the listed investment companies FinLab AG and Heliad Private Equity Partners GmbH & Co. KGaA to such an extent that he can exercise a controlling influence over them. These holding companies are directly and indirectly involved in the company named below and the development of the respective share price could be positively influenced by the publication: Springlane GmbH.