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OWJ, Do they? Do you mean they go to boots and buy more stuff from boots, or having bought an air freshener for £4 go and onto the Eve website and buy an £800 mattress?
Honestl;y I am not knocking this because any positive revenue stream is very helpful to tip the balance into profit, so as long as they do lose money on it then its a positive but....
What if these cheap nick nacks are perceived as over priced tatt? could that not harm the brand? (Just a thought throwing it out there as a different point of view)
@wyndrum
Of course it makes a difference - It might not make a difference on that one sale, but an increasing number of EVE customers return to buy something else again - that's the point.
OWJ,
If its about £1 per item then it makes little difference. And what about unsold stock? But I agree with lemms that it is a good marketing ploy to help push the brand
@Lemming99
I accept that but I'm using that as an example, and the number of sales they make isn't really my point. The point I'm trying to make is that this would have to be a spectacular failure not to have a significant positive effect on sales for the period. E.G if they sold half that figure (40,000 units) for the period it's still significant new sales. I agree the main point is marketing here and this is basically free exposure which will increase brand awareness and drive traffic to the site which is what we want right?
@wyndrum - We don't know exactly but I'm certain they did mention that it was at profitable rates in the RNS/update? either way its a significantly cheaper marketing exercise than previous attempts, especially when added to the the 25% sales increase in Q2.
Hi OWJ,
I suspect that each store won't sell 2 Eve products a day; however what does excite me about this arrangement is that a) these products cover a good range of Christmas present options (who hasn't been to Boots looking for Christmas presents?) and b) it's a fantastic way to improve unprompted brand recognition from 17% upwards.
Frankly, after Boots have their 20-50% cut and costs are taken into account, I'm not that fussed about the revenue. to equate to the £200-£300 margin on a mattress sold off a website, they'd probably need to sell 200 to 300 items of £6.
However, if 10% of those 200 to 300 people read about Eve, you've got 20-30 potential buyers that are warmed up to Eve. Once you've got 200, you might strike lucky and make an extra sale.
These numbers are all plucked out of the air, but I think the strategy is a good one, and of course long term nurturing of future customers. How many years had you seen adverts for MFI before you bought something at MFI?
Someone will ask what's MFI shortly. (are they still trading? Might be showing my age..)
Fair enough OWJ, but how much profit do you think EVE will make per item?
@wyndrum - Respect your view point but disagree.
EVE have several new product lines entering 446 boots stores (+ online) over the next few weeks. The prices ranging from £6 to £25 (on my research). if each store sold an average of 2 products a day for the next 3 months you'd be looking at just over 80,000 units, but don't forget they sell on the boots website as well.
These are pretty rough numbers, but I think it's unrealistic to expect these new retail partnerships to push sales up by quite a bit.
Hi Dg,
Well, if that's what she wanted, then yes, of course it may not have been what she wanted in which case she screwed up! Ha! who knows. My point is though, I don't see this as the rapid growth stock that I did a month ago. I know lots here are happy and want to hold for the longer term and obviously that fine, but I think the expectations of 10p-25p are a long ways off presently.
(I also think there is a greater risk now of a more protracted downturn in the economy with a V shaped recovery seemingly less likely with every day that passes. If I am right then all retail stocks online or not, will have a harder time than they perhaps were forecasting even a couple of months ago.)
So we have a smart cookie in charge at Eve with CC; 'she deliberately wanted to take the steam out of the growth expectations.'
Hi rag,
I don't think we are in any disagreement are we? I think the Sp rise over the last few months reflects the turnaround so far.
I don't see it as a bargain yet because of the reasons you state, ie mature market.
It may well be a bargain, IF eve actually make money but for the SP to really motor, ie up to 10p, something a bit more dramatic has to happen and based on the latest results, assuming all goes well, which in this climate is not a given, does not look likely. Therefore in my view this is a 12-36 month project and as a result I don't see this stock as the rapid growth that seemed likely earlier this month. (I don't think CC issued the 3rd Sept update without thinking about it. I think now in hindsight, she deliberately wanted to take the steam out of the growth expectations as the SP was running too far ahead of reality.)
Hi Wyndrum, I would never base any investment decisions on websites like Trustpilot but as a private investor I need to use all the tools available to me to try and get ahead of the pack
Sales have indeed fallen however gross profit is flat and the return on marketing spend is much improved. And you really can't downplay the impact on covid. The number of business with rising sales this year is a tiny minority.
If you're after a start-up relentlessly acquiring customers to growing sales then EVE isn't for you. The mattress market is mature so without taking huge chunks of market share by undercutting your competitors on price you're going to struggle to grow revenue. I for one am pleased sales are stabilising and the company is entering the next stage of its journey towards actually making a profit and free cash flow by improving its business focus. I think a £6.5m reduction in marketing costs for a £700k reduction in revenue and no gross profit impact is a fantastic result (and an indictment on previous management!)
I think its a pretty decent bargain that for £13m you get a business with a leading eCommerce proposition with £22m in sales and a good chance to achieve £2m in profit/FCF per year and a shedload of cash for free.
Very well done on your investments wyndrum! Should be a fab day for you! (Boo) Shame I only had small change but I followed your tip so will be happy in a small way :-)
End of off-topic for me.
All true Wyndrum but now the bank balance seems to be going up rather than down, so revenue leading to a profit each month rather than loss (as you say, the effect of reducing overheads). As our old friend SamKK used to say, "the more they sell (sold), the more they lose" was true but now the opposite is definitely the case.
Hi DG, I have an open mind on this but so far my objection is that these type of websites are easily manipulated so would not put much store on the results they produce.
The thing, reading through some recent posts,is the general acceptance of how strong sales are. You do all realise that after the better then expected update on 3rd sept indicating sales would now be in the order of £22m for the year, that is about 10% LESS than 2019? I mention this for perspective. This not great sales, far from it, what it is, is a reduction in overheads
As I keep banging on, its about margin and can EVE actually turn a profit.
With all that in mind the SP looks ok to me. (it could move 20% up or down from here but this turn around really is at an early and still I think, critical stage.)
It's a shame wyndrum doesn't believe in any of this hokum pokum! It's looking as though the good times should continue into the autumn for Eve. (And I guess we get a bit of a warning on the very / fairly off-chance that they don't..)
I was just doing the same thing DG
Eve have been on Trust pilot for just over 5 years
They have 6051 reviews
2,101 or 34.7% from the last 12 months
Looking at Simba they've also had a metioric rise and have done 39% of their total reviews in the last 12 months.
As you say though their last few months don't look too good.
I wouldn't underestimate them as they have gone stratospheric, probably as they kept spending money on clicks (I think you even get Simba ads when searching for Evesleep)
What I take from this is: get the marketing mix right and there's a good market out there for you. Not sure about Simba's financials, but Eve is in good shape to start winding up the ad spend if that makes sense. (Google or TV)
Both companies had stellar May + June, and it looks like Eve is winning the more recent battle on a relative basis.
I just inserted simbasleep.com into your link Ragnor and got this, https://uk.trustpilot.com/review/simbasleep.com/transparency which worked. Simba got more reviews (over 6000 compared to Eve's 2000) and while I'm not a statistician, to me it looks like simba reviews are declining in number month-on-month while eve's are catching up.
Hi Ragnar, many thanks for the nicely formatted reports link from TP, I might be out of a job gathering the data which is no bad thing. Some food for thought on the analysis; looking at the last 12 months and ignoring the February spike, which I've tended to do anyway (must have been some catch up emails to people reminding them to place a review), the trend looks good.
From about 100 per month for the first 4 months to about 230 a month for the last 4 months. As the DG says; it gets us one step nearer to breaking even for the year. Good job Eve!
No problems Lemming and thanks for the numbers... Looking at adding an Eve bed to the mattress we already have!
Whilst I'm not expecting an update, news can drop any moment. I remember that the Simba proposed reverse-takeover merger came on a Sunday! This was where I first read it, 'Sunday August 11 2019, 12.01am, ' and then the Eve shares were suspended on the Monday.
All it would take would be a TR1 or similar..
Ragnor, your figures from TP for September are very interesting. The more months that sales go well, the nearer we are to profits for a year.
Hi Bermondsey, yes of course. I like to see the bank balance like all of us. Eve seem to have updated us on that every couple of months or so. It is afterall quite an easy thing to do, as opposed to a full trading update which inevitably will give the accountant some extra work. It would be good to see in the next few weeks to validate the hypothesis.
@Greg thanks for the tip on CCZ will check them out
Hey Lemming, thanks for sharing, that's some interesting data. I have used the below link and punched the reviews each month into a spreadsheet. I have then subtracted the number of bad and poor reviews (assuming that these are going to be returned) to arrive as a proxy for net sales (ie total reviews - bad/poor reviews= net sales). If I assume that the % of customers who leave reviews remains constant then I can draw some conclusions:
- sales has been steadily increasing this year and September looks to be a record
- the % of total reviews which are bad or poor has been steadily increasing to 13% from around 6% in the beginning of the year. This could indicate an increasing return rate, which may in turn indicate lower margins
It’s a big guess but from this I would say that sales are growing strongly, but the return rate may be growing more quickly. I’m going to do a similar comparison with some other competitors when I get a chance and do a little benchmarking.
https://uk.trustpilot.com/review/www.evesleep.co.uk/transparency
Hey lemming. Wouldn't it be nice to see a trading update to validate your line of research. Eve seem to release these when the going is good.
Mar-Apr In the 46 days between 20 Mar and 30 Apr there have been 164 reviews which is 3.56 a day on average
Apr-May In the 43 days between 30 Apr and 4 June there have been 165 reviews which is 3.84 a day on average
May-Jun In the 32 days between 4 June and 6 July there have been 216 reviews which is 6.75 a day on average
Jun-Jul In the 20 days between 6 July and 26 July there have been 178 reviews which is 8.9 a day on average
Jul-Aug In the 34 days between 26 July and 29 Aug there have been 241 reviews which is 7.09 a day on average
Aug-Sep In the 31 days between 29 Aug and 29 Sep there have been 265 reviews which is 8.55 a day on average
I think the data speaks for itself and doesn't need any commentary. Oh go on then, I have to say something...
We know that sales between 30 Apr and 6 July were massive from the trading update (not from potentially dubious Trustpilot data). Let's hypothesise that the May/June trading period then reflected 3-4 weeks later in the figures above that show 6.75 a day and 8.9 a day.
Following this logic the figures for July/Aug/ and potentially Sept are also looking very interesting indeed. I'm fully invested / up to the hilt with Eve and quite comfortable with that. We may not get an update until January, as the company has already updated the market saying something like trading is above expectations.
Where to next? Some quiet time after the sale ends tomorrow, and reviews will naturally drop back. Actually that might be more interesting if they don't, as margins will be up again.
I'm seeing adverts online for Eve; it's good to know they've got the marketing mix on multiple cylinders again. Some nice (often small) changes starting to appear on the website too; good for Conversion Rate Optimisation.