After selling his digital scrapbooking company ScrapHD to Michael’s in 2010, Ross Petersen moved from his hometown of Chicago to Dallas to work for the huge arts and crafts company.
But two years into his new job as Director of Digital Infrastructure at Michael’s, Petersen started feeling a bit disenfranchised.
“I was struggling to get Michael’s to consider launching their crafts supplies online for sale,” he recalls. “During my entire two year stint there they were doing $US4.6B annually and they were selling zero dollars online.”
So in early 2012, he packed up his things and left Dallas, moving back to Chicago with his sister, Katy Weade. Along with their brother Ryan Petersen and their former business partner Ab Fadel, Ross started working on a new company: Blitsy.
Blitsy is an arts-and-crafts retailer — it’s a digital rival to longstanding brick-and-mortar companies like Michael’s, Ross’ former employer, and Hobby Lobby. For the first 14 months, the four cofounders bootstrapped Blitsy with their own cash. “We were able to generate over 7 figures in revenue in under a 12 month period profitably,” Ross says.
We were able to generate over 7 figures in revenue in under a 12 month period profitably.
From there, Blitsy decided to pitch Chicago Ventures, and he received $US1 million in seed funding in February 2013.
On Thursday, Blitsy announced a new $US3.6 million Series A round of financing led by Greycroft Partners, with support from Data Point Capital. Existing investors including Chicago Ventures, FireStarter Fund, Lakewest Venture Partners, Incisent Labs, FOMO Investments, and angel investor Brian Spaly of Trunk Club.
Since launching in March 2012, Blitsy has grown from 4 to 30 employees. The company has launched over 600 brands on the website and categorically expanded from paper crafts, like scrapbooking, into every art category. For customers, Blitsy offers discounts on craft supplies, as well as a growing “inspiration” section. Blitsy also allows users to upload their own projects and content to share with other crafters. DIY videos sit next to items for purchase, which Ross says encourages sales.
Blitsy’s audience is 99% female, and though they see all ages on their website — “everyone from teens up through women in their 60s and 70s,” Ross says. The average customer is between 35 and 55 years old. Both casual crafters and people who sell their wares on websites like Etsy use Blitsy to buy the materials they need to put together crafts. Ross says Blitsy sees lots of organic traffic from Pinterest, where people find a finished project and then use Blitsy to buy the raw materials to get that project done.
Ross says Blitsy’s central, Chicago location is strategic. “What’s really special about us is we’re not taking on inventory risk. We’re able to basically work in real time with our suppliers,” he says. “Once customers place an order with Blitsy, we file an order with our suppliers. Being centrally located in Chicago, all the customer orders come to us here in Chicago and then we consolidate that order into a single shipment, which brings additional savings to the consumer.”
Blitsy is averaging 120% year-over-year growth so far. One Blitsy gets a customer to buy once, they’re “about 53% likely to buy from us again. And if they buy from us twice, they’re more than 70% likely to come back,” he says. “What we’ve been able to do is calculate the lifetime value of a customer, which far exceeds the acquisition costs of a customer.”
And though he cites Michael’s, AC Moore, and Hobby Lobby as Blitsy’s main competitors, Ross doesn’t see any of them as a clear leader in the arts-and-crafts ecommerce space right now.
“Our vision is to become the new category leader and attack it from an online perspective,” he says.