Cafepress IPO Filing Gives A Glimpse At A Crowdsourced Business Model

Another day, another tech company is filing for a public offering. This time it’s Cafepress, which allows users to design, buy and sell merchandise such as t-shirts, hats, bags, mugs, bumper stickers and more. The company just filed its
S-1 today, and aims to raise as much as $80 million in an IPO.

Cafepress, which launched in 1999, essentially crowdsources designs from its community and allows users to sell these designs on products. Users can customize and design their own stickers, coffee mugs, and other tchotchkes and Cafepress will they manufacture them for you on a one off basis. In 2010, Cafepress had 2 million customers, 2.7 million orders, with the average order size around $47. The site currently has 325 million unique products offered for sale.

In terms of financials, Cafepress posted $128 million in revenue in 2010 and $2.7 million in profits. But if you take a closer look at Cafepress’ financials in the last 5 years, they were almost the same as in 2008, then the company got hit by the economic downturn in 2009. In 2008, revenues were as high as $120 million but dropped to $103 million the next year.

The filing says revenues were down in 2009 and 2010 because it was aggressively focused on order and customer growth, which included increasing sales and marketing expenses as well as acquisitions.

Sales seem to be climbing back up; the company posted $32 million in revenue in Q1 2011, but it is back in the red with a $831,000 loss.

In the filing, Cafepress says: A key differentiator of our business model is our ability to profitably produce customized merchandise in small quantities on a when-ordered basis. So, the company isn’t operating a booming business, but it’s pretty decent considering that transactions are so small and in such small volumes, considering the customized nature of the products being sold.

Right now, CafePress is a $127 million business, and it’s got some growth ahead of it obviously. But is it ever going to be a $1 billion business?