The brands Spreadshirt Create Your Own, Spreadshirt Marketplace, Spreadshop, TeamShirts as well as SPOD (Spreadshirt Print-On-Demand) came under one roof in the Spread Group. The company has invested heavily in production capacity. Does the business model still work and what has the pandemic done to the Shooting Star of merchandising? CEO Philip Rooke talks openly about the future of the company and has quite a few bold ideas up his sleeve. Bernd Zipper talks to the successful strategist, Rooke, about the background to the renaming of the company.
Bernd Zipper: The printing industry was hit hard by the pandemic. But Spreadshirt has only had positive news, right?
Philip Rooke: Yes, mostly. Consumers who had to stay at home because of the lockdown or are unable to go on holiday, have been treating themselves to a lot more clothes and other nice things. With so many video chats, it’s important what consumers wear above the waist and so printed t-shirts and hoodies have done very well. The business areas that offer individual orders or special gifts increased by over 100 percent compared to the previous year.
Bernd Zipper: So mainly end customers?
Philip Rooke: Yes, but also our short merchandising system, which encourages fans of influencers to buy from social media, has increased by 50 percent compared to last year and is developing very positively. Other parts of the company, such as our TeamShirts brand, are declining. Club events and other events are simply not taking place. However, business is gradually recovering. Now it is simply smaller events with five or six participants and not with sixty or one hundred people.
Bernd Zipper: You have currently exceeded the sales target by 60 percent.
Philip Rooke: Yes, and that was before Christmas. We invested several million in new high-speed printers from Kornit and built a new factory in Poland. At Christmas we are operating two factories in Poland.
Bernd Zipper: Regarding the further market development in 2021, what are your expectations for Spreadshirt?
Philip Rooke: I expect large orders to come back with the development of vaccines. We all want to meet again in larger groups or go out together. The athletic events, team events and corporate events will come back. But I’m not just thinking about sales, I’m thinking about the role of print products and customized products for individuals. People have gotten used to it and have become our customers, that will not disappear once again. Consumer behavior has changed.
Bernd Zipper: That’s right and it also applies to household printed products, such as canvases and the like. As one can gather, Spreadshirt is facing big changes. You are investing heavily in new printers to handle large orders. Is your business model changing?
Philip Rooke: The original Spreadshirt brand was all about individuals making and buying their own things and maybe selling to other people through the shop system and marketplaces. Without Covid we would have made half of our sales with teams and social groups. For us these are the big orders. We also offer embroidery for them, but here we have to invest further so that we can display not necessarily a print type, but a stage type. We also have partnerships with screen printers to be able to fulfill these large orders. We have also invested in the processing of yarn and polyester. Here, too, we are primarily targeting sports clubs. We expect growth here to be several hundred percent year-on-year. Of course, we will have to expand our product range massively.
Philip Rooke: We currently have about 300 products. We are planning to increase our stock to 5,000 items. Our intention is to expand to two to three thousand products in the next two to three years. For sports teams or corporate events, you need a huge range of colors, sizes and fits in a wide variety of products. So, we are investing not only in printing technologies, but in the entire supply chain and storage systems.
Bernd Zipper: There are a lot of competitors in the market. Even smaller companies use social media to spread their product ideas.
Philip Rooke: We have literally thousands of competitors. There are no exact numbers. In the USA there are about 18,000 print shops and 24,000 distributors, in Europe it is probably similar. Every small business that sells print products, every specialist that focuses on a particular sport, is a competitor. However, we believe that we can keep up with a very wide range of products and types of printing here and be extremely competitive. To a certain extent we have to differentiate our demands, which is why we have the original brand Spreadshirt and now TeamShirts as a secondary brand. Maybe we need to introduce more specialized brands. That’s why we have renamed our business into Spread Group, because we already have Spreadshirt, TeamShirts, Spreadshop, the shop system and SPOD, our sport fulfillment business. They all use the same processes to achieve good scalability, quality and customer service. No matter if you order one or thousands of items, they are all processed through the same back end.
Bernd Zipper: You will have more products in the future. Does that mean that you will do other things like clothing or printing clothes? Maybe something towards packaging or paper?
Philip Rooke: We are introducing stickers and we have improved our ability to do posters. The important thing is that we have just started to cooperate with specialized printers. We are apparel specialists and yes we can also produce posters, stickers and other printed items. But we have sellers who are looking for even more diversification. For example, home textiles and print cuttings. Here we lack the experience. That’s why we’re testing a number of integrations with third-party suppliers, i.e. fulfillment companies. In order to relieve ourselves, we plan to expand our cooperation with suppliers over the next two years.
Until six months ago, we produced everything we sold. I think we will continue to produce most of it ourselves, but there are specialists. The requirements range from high-volume screen printing to individual shower curtains, neither of which we know how to produce.
Bernd Zipper: That is a great plan. I have always wondered why you don’t do packaging. If you’re designing an individual T-shirt as a gift, you would want to have a matching box to go with it.
Philip Rooke: In some business areas we offer this. The difficulty is that this can become quite extensive. Stickers fit in an envelope, but for hoodies we need a big box. Extending this to all our production sites in sufficient quality is complex. It is not such a high priority for us. Most people order directly to their home and then give it away.
Bernd Zipper: Can you go back to your construct, are there now five companies or five parts of one company?
Philip Rooke: Spreadshirt is what we call the core business. Consumers, groups and clubs choose from millions of ready-made ideas and use them. This market is determined by the artists and designers who upload their designs. Even though we work together, we have to run the business with separate teams. There are very different seasonal dependencies, different product requirements and different, technical requirements. Three businesses have evolved from the original Spreadshirt brand: Spreadshirt Create Your Own, Spreadshirt Marketplace and Spreadshop. We have added TeamShirts. Last year we added SPOD (Spreadshirt Print-on-Demand). There most people are on Shopify and not on our platform. But they have access to our factories. Specifically, we have four brands, but in reality there are five companies.
Bernd Zipper: You have been with Spreadshirt for eleven years now and have developed the company very successfully. You have achieved more than 600 percent growth in five companies and still have new ideas. Why are you leaving after eleven years?
Philip Rooke: I think that in the development of an organization, each manager comes in and brings a certain value to the organization. I have been able to contribute a lot, from the culture, to the way we do things, to the growth of the company. However, at some point you get the feeling that the added value you are able to add is becoming less and less. In all these years, I have also had to make compromises in terms of leadership or the way we manage processes. I came to the conclusion that a fresh, new leader would tackle some of the old problems we had and which I left unsolved.
I witnessed how the CEO under whom I had initially started left. She had done a great job on which I could build. Our Chief Operations Officer also left, after having excellently established our production network of 5 factories. He was followed by Hanne, and she continued to both change things and take over customer service when I became Chief Customer Delivery Officer. I see how our new CTO came and did the same. My logical conclusion is that a new CEO can take the business to the next level. I have created a foundation on which my successor can build.
Bernd Zipper: Have you already completed the search for your successor?
Philip Rooke: Someone new will start in the first quarter and I will stay on for the first quarter in order to introduce them to the business or transfer the responsibility to them. We expect to announce this in the coming weeks.
Bernd Zipper: You are currently developing more concepts for major customers. What is planned in detail?
Philip Rooke: We are not only looking for suppliers, but for companies that work for us. For example Spreadshop. We have started a big partnership with YouTube. There we are directly embedded in the YouTube platform. Social media influencers can open a store on YouTube and list products that they have placed in their Spreadshop directly under their videos and in the YouTube channel. This is a good example of the future partnerships we are working on.
We have been looking at retail partnerships. We are currently testing a partnership with Lidl. Spreadshirt will be embedded in the Lidl app. If it weren’t for Covid, we would have launched our first offline store in April. There are completely new ways to do business. More than advertising on Google and Facebook. We try to bring our business to where our customers are. So, when the customers and the sellers are on YouTube, we partner with YouTube. We’re working on a number of major partnerships with other platforms, other retailers and other organizations. Last year we entered into a partnership with the Frankfurt Book Fair.
Bernd Zipper: A partnership with Microsoft would be really big.
Philip Rooke: We haven’t yet, but how cool would it be if you could not only change your background in Microsoft teams, but also change your t-shirt. And if you like the t-shirt, you can buy it.
Bernd Zipper: Yeah, that would be really cool. So if you have these big partnerships in mind, it shows me that even the big brands have understood that mass customization is really there and people are using it. How do you see the perspective of Mass Customization?
Philip Rooke: Well, I think a lot has changed. When I arrived at Spreadshirt, we saw ourselves as a mass customization portal. People who were interested in personalization came to us. Today the choice of products is crucial. The customer may not even be aware that it is a mass customization product. He sees a T-shirt on the YouTube channel of the European Space Agency ESA, which is available in many colors and sizes. Consumers are not aware that the print is on demand. They don’t need to know that the print is on demand. The customer assumes that there is a warehouse somewhere with all these choices. We’ve seen the same thing with 3D printing. In the early days, we were all excited about 3D printing. Some even had a 3D printer at home. There was a lot of experimentation. As of now, my wife has just had dentures. It came from a 3D printer. Nobody said it was a 3D printing tooth. It’s just her new tooth. Products are embedded in everyday life. You don’t know that it’s a customization, it’s just a decision of the individual. This is where the business has evolved over the last decade to become a mass market.
Bernd Zipper: Thank you very much for the interview and best regards to Leipzig. Stay healthy and I hope to see you soon.