A Canadian furniture e-retailer zooms toward $100 million in annual sales
January 23, 2017 05:32 PM
(Bloomberg)—Article, a Vancouver-based online furniture seller, expects to make more than $90 million in revenue this year, adding its name to a growing roster of Canadian technology startups running public company-sized businesses.
The three-year-old startup is profitable and made around $50 million in revenue in 2016, according to CEO Aamir Baig. It’s expecting to go into 2018 making $50 million a quarter.
Article’s growth puts it in league with other fast-growing closely held Canadian tech companies like social media manager Hootsuite, marketing tech firm Vision Critical and real estate data provider Real Matters. Canada’s startups have taken in record venture capital investment in the last two years, along with a commensurate amount of hype. Few have gone public yet as they work to get their financials in order.
Baig said Article doesn’t have any near-term IPO plans, but if it does go public, it’ll be within spitting reach of the top 10 tech companies on Canadian exchanges, by revenue.
Article designs and builds furniture, and has only 450 items available for sale, a similar model to U.S. companies like Thrive Home Furnishings and Interior Define. The narrow focus on its own brand is different from fellow Vancouver online furniture company Cymax Stores Inc., No. 200 in the Internet Retailer 2016 Top 500 Guide, which operates like a marketplace for thousands of products built by different companies, similar to Amazon.com Inc. (No. 1 in the Top 500).
Article works with in-house and contract designers to come up with new products. It makes a few, tests how well they sell on the website and only orders large numbers when they start getting traction online. The furniture is shipped from factories in Asia to one of three U.S. warehouses and a network of dozens of delivery companies bring the pieces to customers’ homes.
"We’re trying to figure out what products have pull," Baig said.
The model isn’t new, and figuring out how to do it better than the competition is hard. Article delivers for a single fee of $49, no matter how big or small the order (it’s more if you want the furniture assembled for you). Returns, which are accepted within 30 days and require customers to pay the shipping costs, are rare, Baig said. The company spends heavily on online marketing but because it makes its own products, its profit margins are higher than marketplace sellers like Amazon or Cymax, he said.
In a previous life, Baig ran Etilize Inc., a company that provides product data to online retailers. He used some of the money from selling Etilize to found Article with Andy Prochazka. About $3.5 million in seed capital went into the company, most of which they put in themselves.
“We’ve been able to build and run a profitable business,” Baig said. “We don’t see a need for any more equity rounds.”
An initial public offering isn’t on his radar yet. “At the end of 2017, with the numbers we’re forecasting, it might become a lot more serious," he said.