Made.com boss Ning Li has claimed the etailer is “way too small” to be concerned about profits as it presses ahead with global expansion.
The online furniture retailer is yet to enter the black, five years after it was founded in March 2010.
Its sales rocketed 63.4% to £42.8m in the year ending December 31 2014, but losses widened to £5.3m after it ploughed cash into its Netherlands launch.
“We have decided that, at this point in time, the best way to create shareholder value and value for the customer, is to prioritise growth over the bottom line.”
Ning Li, Made.com
In the current financial year it has invested more cash into overseas operations, launching in Germany and Belgium. As well as the UK, Made.com also trades in France and Italy.
Li admitted the etailer’s international growth has been “cash-consuming”, but insisted the expansion strategy was the right one.
“We have decided that, at this point in time, the best way to create shareholder value and to create value for the customer, is to prioritise growth over the bottom line,” Li told Retail Week.
“The change in customer behaviour only happens once, from offline to online, and we are one of the few players who are able to capture this demand at this moment in time. We still think we are way too small to start focusing on the bottom line today.
“We have grown the business, but we have not grown the business at any cost. Although the losses slightly widened, mainly due to investment in international markets, we will not continue to open as many markets as we have in the last few years.
“What really is cash-consuming for us is the international efforts. Depending how aggressively and quickly we enter those markets, the business model has a path to profit for the coming years.”
Li said he has not set a target for Made.com to turn its first annual profit and reaffirmed that the “priority” was to build a “very strong European brand.”
He added that sales were on a “similar trend” in its current financial year, having grown around 50% since January. Li said this was down to “more people making the switch to shopping online.”
Li believes the ability to trade online in several markets gives Made.com the edge over some of its furniture rivals.
“The goal we’ve had here, almost from day one, was to build a brand that’s meaningful in international markets,” he added. “We are an online pure play and it makes sense to consider international markets.
“If you look around in our industry there are very few brands that have managed to break through the international barrier. The only brand that is international in our industry is probably Ikea.
“All the others, like John Lewis, are national or local because they have been restrained traditionally by the real estate component.
“We have the opportunity to sell internationally very quickly and gain the scale that gives us the edge to compete.”
Li said Made.com’s move into bricks-and-mortar showrooms in London and Leeds was fulfilling the needs of a “segment of customers [who] need to see and touch the product before they purchase.”
He said 90% of the etailer’s customers will continue to make purchases without going to a showroom, but added that “one in every three or four customers” has bought goods on Made.com “as a result of a showroom visit.”