Australian startup snapshot: Bluethumb

Bluethumb is an Adelaide startup that is taking on bricks-and-motor art galleries with an online marketplace that connects Australian artists to potential buyers.

The pitch

Bluethumb set out to solve two major problems in the art world, according to co-founder Edward Hartley.

For artists, it’s difficult to find distribution outlets to sell artwork, and physical galleries can only sell a small selection of their work to a small number of potential buyers each day, he said.

For buyers, it’s inconvenient to discover art and find time to visit physical galleries, he said.

“Very few people from Generation X and Y really go to galleries regularly to buy art, but they’re always online and they’re always shopping and discovering new things they’re interested in.”

Hartley described himself and the startup’s other two co-founders—who include his brother George—as art lovers. While he has worked as a chartered accountant, Hartley studied art and is a painter himself. Hartley’s father is also an artist.

“What we saw was a real gap in the market. We thought that the art world and the art industry was years behind the rest of retail in an online sense.”

The idea behind Bluethumb was to take the gallery experience online, selling artwork 24 hours, seven days a week through a national website and, more recently, an iPhone app.

Credit: Bluethumb

To sell art, artists set up a profile and upload images of their work with a price and description. When a customer buys a piece of artwork, Bluethumb notifies the seller and pays for a courier to handle shipping to the buyer.

The buyer gets a one-week evaluation period to decide if they are satisfied with the piece. If the buyer decides not to keep it for any reason within that period, Bluethumb will cover the shipping costs of returning the artwork to the seller.

Buyers pay for art using a credit card or PayPal, and then Bluethumb pays the artist after taking a 30 per cent commission.

Hartley described that commission as small compared to the 50 per cent that is frequently taken by physical galleries. In addition, he said Bluethumb reinvests most of the money in the technology and enhancing the business.

Next: Developing in Adelaide

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Development

Rather than start from scratch, Hartley and his two co-founders used their own money to buy an existing website called Bluethumb at the end of 2011.

“We were deciding [whether we should] build it ourselves,” Hartley said. “But then we found Bluethumb on the market. We took it on and basically completely redeveloped it and improved the technology and the buying experience.”

A major focus for development was reducing the number of customers who backed out of a purchase at the last minute.

“We saw that people would go to buy a painting and they would click buy and then for some reason they would drop out,” he said. “We saw people would be charged unexpectedly for insurance and they really didn’t like that.”

To address the problem, Bluethumb decided to absorb all the additional costs, including shipping, so that the price listed on the website would be all the buyer would pay. “That makes the decision to buy much simpler.”

Bluethumb followed the revamp with a mobile app for iPhone and it has been wildly successful since its launch in November last year, he said. It has been downloaded 6000 times and was featured in the Apple iTunes store. “Now 50 per cent of all our sales are through the app.”

Bluethumb plans to release iPad and Android versions of the app in the second quarter of this year, Hartley said.

Selling it

Bluethumb has paid for everything itself, said Harley. It has not sought, nor is it seeking, venture capital investment, he said.

“We like to run the business responsibly. All of our developments ... have been based on revenue that we earned. Rather than pay ourselves, we just reinvest it in the business.”

“I like the aspect of building within your means,” he said. “Innovation comes from having scarce resources and [making] the best of what’s in front of you and using your imagination and your skills to build a good business or a good product.”

A closer look at the iPhone app. Credit: Bluethumb

In 2012 after taking over the website, Bluethumb increased sales by 900 per cent, he said. Sales doubled in 2013 and Hartley expects them to double again this year. The website now lists more than 5000 paintings from 500 artists, and Hartley estimated that the startup on average sold 30 to 40 paintings a month in 2013.

“We’ve had really positive feedback,” Hartley said. “Quite a few of our artists have said to use we are the only online site that they have sold artwork through.”

While the current website has a focus on Australian artists, Bluethumb seeks to expand to international markets in the future, with the UK first on its list, Hartley said. “It’s just a matter of time until we do that.”

Startup scene

Hartley praised the startup culture in Adelaide, noting that South Australia's capital “has always had a great focus on the arts and creativity and has a lot of support from our state government.”

He added that it’s cheaper to do business in Adelaide compared to Melbourne and Sydney.

However, Australia in general remains a more costly place to do business than other countries due to high taxes and other costs of doing business, he said.

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“Australia is going to have some serious infrastructure and employment issues going forward because we’re just not geared up to deal with the global change that’s happening. We’re too expensive and we’re not competitive in a world sense.”

A major cost for Bluethumb has come from sending paintings by traditional freight networks, he said.

“They haven’t kept up with the rate of change of the tech world, and it’s quite expensive and complicated to get a parcel from [or sent to] a remote location.”

Asked about recent talk by Amazon and others of using drones to deliver parcels, Hartley laughed.

“If we could start using that it would make our jobs so much easier.”

Previous startup snapshots:

CoinJar
Kicktone
Bluedot
WeTeachMe
Drivelist
Showgizmo
Health.com.au

If you’ve got a startup or know about a cool new Australian business, please email Adam Bender at adam_bender@idg.com.au or on Twitter (@WatchAdam).

Adam Bender covers startup and business tech issues for Techworld and is the author of a dystopian novel about surveillance. Follow him on Twitter: @WatchAdam

Follow Techworld Australia on Twitter: @Techworld_AU

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