Flubit is seriously shaking up e-commerce but, as CEO Bertie Stephens reveals, it hasn’t been the easiest of journeys
Before becoming one of Britain’s brightest entrepreneurs, Bertie Stephens, Flubit’s co-founder and CEO, was more familiar with blockbusters than business. During his first year of university – where he studied film production – he was drafted in by Warner Brothers to play Neville Longbottom’s stunt double in Harry Potter and the Order of the Phoenix. “I negotiated with my university to let me do all of my work remotely,” Stephens says. “I basically did it from the set of Harry Potter.”
Soon after graduating in 2007, Stephens embarked on a production career. He created his first film, a 16th-century period drama about the first British settlement in the United States, and founded production company MWS Media with two of his friends.
Yet despite his passion for production, one of the frustrations Stephens encountered was sourcing stock from the internet. “I would go online and it was very inefficient,” he says. “I went on eBay, Amazon and all of the other sites and while all of their merchants were selling at very similar prices, I knew that they all had different underlying margins. So if I was to buy from one, it meant somebody else would lose that sale.”
Stephens realised there was something fundamentally flawed about the e-commerce market. “I was calling people and saying, ‘I’m about to buy this. Would you price match? Would you beat it by 5%?’ and they’d always say, ‘Of course we will,’” he says. “That showed me that there was an inefficiency in the market. I thought, ‘What if you could actually scale this up so you wouldn’t have to pick up the phone but instead do it through automated technology?’”
The seed was sown and Stephens set about putting his idea into motion: a friend with whom he had been building an online radio station created an initial prototype. “It was rough round the edges but from that we started Flubit,” says Stephens.
While Stephens had some money left from his Harry Potter gig, it barely scratched the surface of what he needed to get Flubit off the ground. Fortunately, he had been introduced to Adel Louertatani – Flubit’s co-founder and head of business development – when on the set of the film. He had helped Stephens raise money for his second film in the space of four weeks so Stephens turned to him again to find somebody who would back his new business idea.
Stephens ended up with £50,000 of seed funding from a French businessman he’d been introduced to by Louertatani. But that’s not the whole story. “I said £5,000 would be great but at the end of our conversation he said £50,000 isn’t that much,” says Stephens. “It was very awkward trying to decide whether I should own up and say ‘I never said £50,000’ but he seemed comfortable with that amount so we went for it.”
Within a month, Flubit had raised a further £950,000 in angel investment but the business struggled to pick up any traction in its first few months. It quickly became apparent that the platform was not fit for purpose. “One of the things I completely forgot about at the very beginning was the sellers, which is weird considering that’s how I came up with the idea in the first place,” says Stephens. “A merchant had to manually take a product from their website and upload it to Flubit. Today, I have thousands of merchants and some of them have 100,000 products. One of them has one million products. It was just totally unscaleable.”
There was also a group buying element to the site that had similar problems taking off. “That could eventually work one day but it’s simply not feasible until you’re a massive company,” says Stephens.
The company that Stephens had invested his life into – not to mention a lot of other people’s money – suddenly found its future hanging in the balance. “It was a very tough time for myself and the team,” explains Stephens. “We were in a situation where backers had given us cash, they had believed in the vision we’d sold them but we hadn’t executed it properly. We were sat there thinking, ‘What do we do?’” The only option was to build the correct technology for the merchants, which would mean shutting down and rebuilding the website’s back end. And it would be six months’ work.
Thankfully, Stephens’ belief in his team – and the technology they had built – was enough to convince his investors to support the pivot. “I don’t know how we managed it but they gave us a bit more capital so that we could rebuild it,” says Stephens. “If they had said they couldn’t give us any more capital – which they had every right to do – that would have been the end of it.”
Suffice to say, ‘Flubit 2.0’ is a far more attractive proposition. Customers simply copy and paste the URL for an item they have found elsewhere online into Flubit – it accepts URLs from 15 different sites including Amazon, John Lewis and Argos – and the company will negotiate with its merchants to deliver customers a cheaper and totally unique price for the product. “Our goal is simply to come back to you as soon as we can with a price that is lower than the one you were about to pay,” says Stephens.
And, unlike Flubit’s first iteration, it’s a sweet deal for sellers too. “If you’re a merchant selling on Amazon, you will on average be charged around 15% commission; so you will net about £85 if you sell a product for £100,” says Stephens. “We say, ‘Why don’t you just come along to us and give us £85 as your base price? We will then negotiate a price above £85 to sell it for.’ So if we sold it for £92, the seller will still have their £85 and we will just take £7. We basically make sure our merchants don’t lose anything that they wouldn’t have lost to Amazon.”
It’s safe to say the decision to pivot paid off: Flubit now has 35 million products in its database – only Amazon has more – and it last year completed a series A funding round, taking its total investment to date to £8.9m. “Watch this space,” says Stephens, hinting at further investment to come.
This rapid growth has seen the Flubit team double in size in the past year. As one would expect, the company goes the extra mile to ensure it keeps hold of its most valuable assets. “We spend close to £500,000 on making sure our team are incentivised beyond their payroll every year,” he says. “We are trying to scale this thing up very quickly; it’s going to take a lot of hours and hard work but we also want our team to enjoy it at the same time.”
For now, Stephens is enjoying the rollout of BeFlubit, the company’s newest product that’s allowing other e-commerce platforms to take advantage of Flubit’s groundbreaking technology. A partnership with Barclays has seen the banking giant add a Beat My Price feature – powered by Flubit – to its bespoke offers service, while a deal is also in the pipeline with an as-yet-unnamed messaging app that boasts 300 million users worldwide.
Stephens believes partnerships like this will make it easier for other companies to monetise with an e-commerce offering. “A lot of online companies use affiliates, which are messy,” he says. “If you are a computer game review site, there will be a link to a game at the bottom of each review, which will take people to Amazon and you might get 3% back if they buy on Amazon. But why can’t you keep that customer and turn your site into a web shop too?”
The world certainly looks to be Flubit’s oyster – and Stephens has his sights set suitably high. “The great thing is that it’s just such a big market to play in,” he says. “If we get to 1% of the market we’ll be transacting £1bn a year and if we get to 20% of the market we’ll be a £20bn company transactionally.”
But while Amazon might be running scared, Stephens isn’t looking to topple the e-commerce giant just yet. “We just have to build the biggest company possible,” he says.