Founded in 2015, The Blue Space is Australia's largest dedicated online renovation retailer. The Sydney-based brand claims an expansive and curated collection of high-quality products from leading brands, coupled with competitive pricing, innovative solutions, and exceptional customer service to transform every corner of their customers’ homes.
After The Blue Space ran into supplier difficulties in the wake of the COVID-19 pandemic, they decided the best way to avoid stock shortages and missed sales was to order in bulk well in advance. To find the funding needed to create this inventory buffer zone, The Blue Space turned to Shopify Capital. With four rounds of funding through Shopify Capital under their belt, The Blue Space has bolstered their stock position, boosted sales, and shored up customer experience.
Since using funding through Shopify Capital, The Blue Space has seen:
- 20% year-on-year increase in sales revenue
- 8% increase in gross profit margin
- 6% increase in average order value
- 60% less time for order fulfillment
The challenge: Supply chain issues lead to lost sales
Before the COVID-19 pandemic, The Blue Space had a business that could get by without needing to load up on large volumes of inventory. However, consumer behaviour has changed in the wake of the pandemic, with the business’s customers now wanting assurances before purchase that they can receive their products quickly once they’ve paid for them.
In the aftermath of the pandemic there were shortages of supply offshore, and our suppliers in Australia had similar issues. Whoever had stock would win the sale at that time; our customers are really time sensitive, and they need to know when products will arrive.
Given the global supply chain disruptions during and after the pandemic, it proved difficult to ensure products would be immediately available upon purchase. The only way to fulfill orders immediately was to buy early and buy in bulk, which also helped to protect profit margin as shipping costs soared.
But given their limited working capital at the time, The Blue Space didn’t have the necessary financial resources to order items early, and in large quantities, to bolster consumer confidence and drive sales.
The solution: An easy alternative to traditional lenders
The Blue Space turned to Shopify Capital in March 2023 for funds to invest in high volumes of new inventory. For Joshua Mammoliti, Founder and CTO of The Blue Space, Shopify Capital presented a much simpler proposition than trying to borrow funds via a traditional lender—something the brand had done previously and found cumbersome, due to elements such as extensive paperwork and complex terms.
Having switched from Adobe Commerce (formerly Magento) to Shopify in 2017, accessing Shopify Capital was quick and easy for The Blue Space once they became eligible, with the process beginning directly via the Shopify platform. Once the initial steps of the application process were completed, The Blue Space received a call from the Shopify Capital team within a day to finalise the loan amount and terms.
The Blue Space was able to apply for a custom funding offer through Shopify Capital, which allowed them to repay based on a percentage of their daily sales. This structure meant that they paid more on higher sales days and less on slower days, helping them maintain a stable cash flow and profit margin despite fluctuating sales cycles.
Since first turning to funding through Shopify Capital for inventory in 2023, The Blue Space has made use of Shopify Capital on three additional occasions, each time to invest in inventory that they would not have been able to afford, without a substantial loan or line of credit. With details of each Shopify Capital loan easily accessible via the Shopify dashboard, the management of funds and repayments was quick and simple.
Shopify has all the data to make a quick decision on payment terms. The Shopify Capital application process was really simple compared to a loan that we’d requested in the past from a different source, which was a cumbersome project. Payments are based on a percentage of sales, meaning that on a big sales day you pay back more, on a slower sales day it’s less. That is very useful because it’s helped us manage cash flow efficiently.
The results: Capturing sales early equals swift revenue growth
The advantages of using funding through Shopify Capital to buy inventory early and in large volumes have been immediately evident. With more inventory on hand, The Blue Space’s customers have been more confident to make purchases, knowing the items they want to buy are in stock and will be delivered quickly. This has led to an increase in sales, with topline revenue rising by 20%, year-over-year, and a higher customer retention rate.
Moreover, Shopify Capital has given The Blue Space the confidence and means to further expand their product range, appealing to more people and boosting the business’s customer base. The ability to buy more inventory on better terms has also driven up the brand’s profit margin, with the business seeing a 13% boost in gross profit margin since first using Shopify Capital.
The Blue Space has also launched two new warehouses in Brisbane and Melbourne to support its main distribution centre in Sydney, made possible by funding through Shopify CapitaThe business has additional plans to open more warehouses for greater coverage in Australia and, eventually, New Zealand, and is set to tap Shopify Capital once again to fill them with stock.
Shopify Capital has helped to improve our margins and improve sales by empowering us to buy more stock in bulk. We’ve seen strong sales performance in a declining market. It’s a key strategy for our business and we believe this will help to grow our market share.
