In October 2018 SevenVentures announced a third investment and media partnership with smarthome marketplace tink. With estimated smarthome revenues in Germany worth only €3,58 billion this year, the market is still relatively small. Why did our investment make sense?
Every month Oliver Dietrich, Director of Creative Ideation, offers his feedback on recent marketing campaigns and what growth companies can learn. This month he takes a look at the all new Nike campaign „Nothing beats a Londoner“
The smarthome market might be small but is growing at pace. 63% of Germans are said to be interested in the subject and according to predictions the market is set to turnover almost €7 billion in 2023, a predicted annual revenue growth of 18.1%.
Worldwide the market is predicted to grow to €87 billion by 2021. The market may be small now but the potential for growth is huge; tink is well positioned to capitalise on this growth.
But surely any small online marketplace like tink will need to compete against the mighty Amazon, so dominant it recorded worldwide sales of $233 billion in 2018 (Statista(a), 2019)? tink has an advantage over Amazon: rather than providing an endless selection of products, experts at tink carefully curate the products the site offers. This means that even smart-home beginners can visit the site and – assisted by tink’s expert ratings and precise installation instructions – start to equip their home with smart technology. At Amazon the experience is somewhat more diffuse. When searching under a keyword Amazon might return 50,000 results, which is fine if the customer knows exactly what they are looking for, or if they are happy to wade through endless user reviews or manufacturer descriptions. At tink a search under the same keyword will only yield say nine results, and the customer can be assured of their high quality.
tink is another in SevenVentures’ growing portfolio of online shops which are successfully competing against Amazon. When Zalando launched in 2008, for example, SevenVentures’ most successful investment in history, they recognised early on that Amazon focused purely on converting sales. Thiswould work for a subset of customers but a still uncertain customer would often fail to find sufficient support in the form of individual advice and high-quality product descriptions. Zalando took advantage of this by selling products where the customer is usually not looking for an explicit product but wants to be inspired – firstly shoes and then they quickly added fashion and beauty products to the range. Zalando is now Germany's third-largest online mail order business and has an annual turnover of $5.4 billion (Statista(d), 2019).
As technologies become ever more complex and consumers more demanding in their tastes, online shops need to catch up with their offline counterparts in terms of a personalised, guided service. We saw this potential in tink. So have others - in 2018 they were named one of the five fastest growing start-ups in Europe at the Tech5 Award. Together with the growing smarthome market, tink is excellently placed to achieve even greater success in coming years.