ambico | Overview

Following a private house move, the founder, Klaus Attenberger, busied himself in 2012 with the theme of decor and garden design and was amazed at how many areas only offered very little choice. Frustrated by the available supply of certain home accessories, he came upon the idea of how to fill this gap in the market himself. The goal was to offer customers in-depth product know-how and thus to occupy specific niches as an online retailer.

More than a year of research and preparation were necessary before the first online shop started up in March 2014. The shop, pflanzkübel-direkt.de, initially started with a small selection of planters; we further developed the range and the online shop over the course of time on a step-by-step basis. With this shop, ambico is today one of the market leaders in Germany in the online sale of planters. The product range now comprises more than 3,000 different items.

The business model has developed out of this success; further lucrative product niches have been identified in the area of living space and furnishings and these gaps have been filled by theme-specific online shops. In this way, the company is positioning itself as a specialized online retailer in various areas and is dominating the niches with its own brand items, which are mostly purchased from contract manufacturers in Asia and Eastern Europe. This allows the company to offer its customers attractive prices, comfortable home shopping and swift delivery.

The furniture and decor market is changing dramatically towards being an online market, the strong growth of the last few years of some online retailers such as Home24 and Westwing illustrates this impressively. The sector is, however, highly fragmented and the product range is very extensive. Niche areas are often not fully covered by either the established participants such as furniture stores, DIY stores and garden centers or by emerging online providers.

In addition to this, the furnishing market is still playing catch up compared to other sectors of the economy in terms of online trade and thus has above-average growth potential in the coming years. Due to limited space capacity, traditional stores are often unable to offer a great choice in individual product areas. This is exactly where the ambico online shopping concept comes in: the positioning as a specialist retailer for selected niches with tailored and themed online shops.

In the field of mattresses, this strategic approach has prevailed massively, something indicated by the many start-ups and the massive investments in their business models. In terms of strategic alignment, these are very much comparable with the ambico business model: Focus on a specific living environment theme area, establishment of own brands, a strong alignment of marketing activities for search engine optimization. The first niche, which ambico identified in 2014, includes planters for internal and external areas made of various materials, such as fiber glass, plastic or stainless steel.

Within a period of two years, ambico achieved a market-leading position in online sales for this product sector. In 2016, the company generated sales of over Euro 1.5 million with this product range.

Two further niche online shops, www.feuerschalen-shop.de and www.tierhaus-shop.de, were placed on the market in 2015 and 2016 and are already delivering a six-digit contribution to total sales.

Until now, ambico GmbH was very restrained in terms of public relations work, in order to not bring the business idea to the attention of any imitators. In the meantime, the company has now achieved such a stable market position in the occupied niches that the crowd funding has been quite deliberately selected as part of a PR campaign.

In the upcoming expansion phase, the financial resources will be used to extend the already successful and profitable theme shops into further international markets and to expand the inventory for new areas of the range. With the help of the Companists, the already established product ranges will be translated into English, French, Spanish and Italian with a view to serving an international clientele. In parallel to this, further online shops around the theme of home ambience will be rolled out.

As a niche shop operator, ambico occupies lucrative segments in the field of residential ambience as a specialist internet retailer and thus caters for the needs of the customer and of the market.

In the area of living space and furnishings, customers strive for individuality and the design awareness is increasing. Based on this, expenditure for interior and garden ambience has developed enormously over the last few years.

Since 2014, ambico has continuously expanded the range of the first online shop www.pflanzkuebel-direkt.de. Trusting partnerships have developed with manufacturers, designers and design engineers, which form the foundations of the business activity. The product range in the area of planters now covers a wide variety of materials such as fiber glass, stainless steel, plastic and polyrattan.

Right from the beginning, the company has followed a clear marketing strategy: The focus on only one product area per shop and search engine optimization (SEO) based thereon, allows it to grow rapidly and with relatively low online advertising costs. In this way, the most relevant search terms of the product range are anchored in the name of the shop in order to achieve an efficient online appearance from an SEO perspective.

This facilitates placement in the organic results of search engines such as Google, Bing and Yahoo. So customers, who are searching for the respective products online, can quickly find their way to the ambico shops.

As a result of the narrow focus on a defined thematic area and the large selection, customers take the online shop for a specialist retailer, which is reflected by high customer confidence. The company adapts the user-friendliness of the online shop to the specific range. This creates a positive shopping experience, resulting in a relatively high conversion rate of just below 3%.

On the basis of these positive findings, in 2015 ambico occupied two additional themes in the area of garden environment with www.feuerschalen-shop.de and www.tierhaus-shop.de . In 2016, both contributed six-figure sums to the total turnover. In the meantime, ambico now operates a total of 7 online shops in the area of garden and living space.

The internationalization of the various business areas will now follow. The first steps have already been implemented in the UK, France, Italy and Spain via online marketplaces; an online shop already exists in the UK. Meanwhile, more than 20% of the items sent out from the ambico logistics center go to other European countries.

By means of substantial investment in IT infrastructure, the occupation of further key positions in the company by experienced professionals and the implementation of new online shops, in 2016 ambico created the pre-requisites for extending its success story to further range areas. The introduction of a new goods management system coordinated with the online mail order business, was one of the greatest challenges for the company last year. This almost unlimited freely scalable, web-based ERP solution now enables logistics partners and suppliers to have real-time access to specific data and thus provides for a perfect flow of information.

ambico GmbH currently operates 7 product-specific online shops and achieves its revenue by means of the sale and distribution of these products. The individual product areas are stocked with own brands in order to facilitate tapping into as large a part of the value chain as possible.

By identifying lucrative business fields, ambico adopted a very analytical approach from the outset. So even to this day, all potential new business areas are put through a three-level examination. In this, the following criteria are decisive:

• Market volume - the amount of monthly search queries in search engines offer suggestions as to how relevant a theme is for consumers.
• The competitive situation - the number of direct competitors and their online activities indicate how much effort is required to occupy the top spots in the search engines.
• Procurement & range - the margins to be achieved are reviewed by means of initial enquiries with manufacturers and suppliers, barriers to market entry are scrutinized and the potential risks are evaluated. The required average shopping cart plays a very decisive role in the decision-making process of the management.

ambico aspires to dominate the internet sales channel in the business areas concerned as a market leader. The individual online shops will develop this in 3 phases:

Phase 1 Initialization (6-12 months)

• Start of the online shop with a range of goods from wholesalers and importers
• Customer acquisition from paid forms of advertising, such as Google AdWords
• Search engine optimization (SEO) of the online shop
• Creation of the web page contents
• Public relations work for the shop and the contents

Phase 2 Establishment (18-24 months)

• Incorporation into the range of own brand items
• Intensification of search engine optimization
• Achieving the first significant sales targets
• Optimization of web page contents

Phase 3 Dominance (after 36 months)

• Extensive range with own brand items
• Top position in the search results in search engines
• Reduction of advertising budgets to 10-15% of turnover
• Achievement of profitability
• Start of internationalization

As early as 2017, five ambico online shops will reach the third, and profitable, phase.

www.pflanzkuebel-direkt.de
www.feuerschalen-shop.de
www.tierhaus-shop.de
www.minikuechen-direkt.de
www.planters-online.co.uk

Own-brand strategy

An integral part of the ambico business model is its own-brand strategy, that is, about 95% of the turnover is now generated by products from the in-house trademarks DECORAS, Ambience Living, TIMBO and Fabio Design. In this way, the products escape direct comparison with the competition and can thus also be marketed exclusively via market places.

Procurement expertise

Even while it was still a young company, ambico built up a wealth of expertise in the procurement process, from the searching for products, via the import of goods from the Far East, to supplier management in Asia and Eastern Europe. Now, the ambico team is strengthened by two purchasing employees in Shenzhen, China. This allows the company to accelerate the implementation of new projects and the effective management and control of the flow of goods from the Far East.

In this context, optimization of the value chain is a top priority for ambico GmbH. Its own planter and fire bowl product creations are now being manufactured for the company by exclusive contract manufacturers.

Logistics know-how

From its location in southern Germany, ambico manages a logistics center with a floor area of over 4,500m² and is therefore able to constantly review the quality of the imported items. Upstream processes such as container unloading and inventory storage are set up on demand via external logisticians. In this way, the company always has access to the flow of goods and is able to respond quickly to any problems and to eliminate risks.

With over 100,000 distributed items, more than 30,000 customers, over 3,000 own-brand items and almost EUR 5 million of turnover since the company was set up in April 2014, ambico has made an impressive start.

Lean structures as well as an intelligent IT infrastructure make it possible for us to process and send orders within 24 hours, even during seasonal peak periods.

In 2016,

• more than 100 sea containers with goods from the Far East were imported and handled.
• more than 200 truck loads with packages were transferred to GLS and DHL.
• more than 500 large orders were distributed by freight carriers to B2B customers

eCommerce Expertise

The company also covers the areas of online marketing, web development and market place control with specialists from its own team, with a view to being independent of external partners and being swifter in the implementation of new projects.

The established stores now dominate the search results in Google, Yahoo and other search engines. The optimization of the shops and the contents is a continuous process that, from the point of view of the company, is significantly more effectively covered by internal staff with product knowledge than by agencies or service providers. 

The market for living and furnishings is still a growth market, which has a huge number of sub-sectors to offer.

ambico is not pursuing the goal of catering for as many themes as possible in the area of the garden and residential ambience as a full range provider. Rather it clearly has the strategy of occupying those product areas, which

• offer a lucrative > 45% margin
• display, as a defined niche, an attractive sales potential of > EUR 500,000 per annum
• allow a high > 50% level of own-brand share within the range

These occupied ranges are heavily processed and covered by a large variety of products, in order to appear to customers as a specialist retailer for the respective area. The priority of the corporate strategy is not purely sales growth, but also yields potential and thus the profitability of the individual areas.

Investment Level I: from EUR 100,000 Internationalization

Following the successfully implemented internationalization of our niche shops, we now aim to increase the number of international customers by means of targeted marketing activities and the optimization of the content of the website. Therefore, we plan to optimize the contents of our site, just as with our German online shops, in such a way that we are listed in the search results from Google and other search engines as one of the first results (search engine optimization (SEO))

Investment Level II: from EUR 300,000 Expansion into new product areas

In addition to the expansion of our existing markets, we would like to win new customers by means of new online shops in specific thematic areas and product categories. Upon achieving this level of investment, we therefore plan to pre-finance the inventory for new products. Furthermore, we are planning investments in the editorial preparation of the content of the new shops and in comprehensive online marketing campaigns for the new projects in order to take up a significant position in the market as quickly as possible.

Investment Level III: from EUR 500,000 Market entry in the USA

At the points noted in Levels I and II, we will, upon achievement of this level of investment, plan the expansion of our online shops into the USA. Initial market tests suggest that certain niches in the area of living and furnishings are under-represented here also. Therefore, we are planning to build a stock with a logistics service provider on site in order to be able to service the North American market.

In the meantime, we have a pool of new ideas that we would like to occupy with themed shops in the coming years. But to get even bigger, even faster, we are grateful for suggestions of the Companists directed towards market gaps in the area of living and furnishings.

So if you are not satisfied with the existing offer of goods in any area - write to us! We will analyse the market and give you feedback if we accept the theme.

In the meantime, we have a pool of new ideas that we would like to occupy with themed shops in the coming years. But to get even bigger, even faster, we are grateful for suggestions of the Companists directed towards market gaps in the area of living and furnishings.

So if you are not satisfied with the existing offer of goods in any area - write to us! We will analyse the market and give you feedback if we accept the theme.

Kompetenz in allen Bereichen: das Team der ambico GmbH

v.l.n.r.: Daniel Bäuerle (Customer Service), Simone Luy (Accounting), Gerlinde Kleemann-Rolny (Customer Service), Gregor Trunk (Operations Manager), Armin Trunk (Head of Sales and Marketing), Ulrike Attenberger (HR and Administration), Klaus Attenberger (Managing Director), Fabian Wendt (Online Marketing), Canan Akbas (Online Marketing), Anselm Scherer (Logistics), Martina Wiederspohn-Hauser (Accounting), Markus Trübenbach (Web Developer)

ambico GmbH
Deutschordenstrasse 38
73463 Westhausen

Telephone: +49 (0) 7363 40 990-0
E-Mail: investor-relations@ambico.de

Website: http://www.ambico.de
Facebook: https://www.facebook.com/ambicoDE