Inside Roots IPO filing: How the online plant retailer grew its revenue and customer base
Roots, the online plant retailer that sells a variety of indoor and outdoor plants, succulents, pots and accessories, has filed to go public on the Nasdaq under the ticker symbol “ROOT”. The company, which was founded in 2017 by two former Amazon employees, has seen a surge in demand for its products amid the pandemic, as more people turned to gardening and home improvement activities.
In its S-1 filing, Roots revealed some impressive numbers that show how it has grown its revenue and customer base in the past few years. Here are some key takeaways from the document:
- Roots reported $142.4 million in revenue for the year ended December 31, 2020, up 151% from $56.7 million in 2019. The company also improved its gross margin from 29% to 35% over the same period.
- Roots had 1.2 million active customers as of December 31, 2020, up 237% from 356,000 in 2019. The company defines an active customer as someone who has made at least one purchase in the past 12 months.
- Roots had a net loss of $15.3 million in 2020, compared to a net loss of $22.3 million in 2019. The company attributed its losses to increased operating expenses, such as marketing, fulfillment and general and administrative costs.
- Roots said it has a large and growing addressable market, estimated at $48 billion in the U.S. alone. The company cited data from the U.S. Department of Agriculture that showed that spending on plants and flowers increased by 12% in 2020, the highest growth rate in over a decade.
- Roots said it has a differentiated business model that leverages technology, data and logistics to offer a curated selection of plants and products, personalized recommendations, fast and convenient delivery, and customer service. The company also said it has a loyal and engaged customer base, with a repeat purchase rate of 50% and a net promoter score of 76 in 2020.
Roots plans to use the proceeds from its IPO to fund its growth initiatives, such as expanding its product offerings, increasing its marketing efforts, enhancing its technology platform and infrastructure, and exploring strategic opportunities. The company has not disclosed how much it intends to raise or the price range for its shares.
Roots will join other online plant retailers that have recently gone public or are planning to do so, such as The Sill, Bloomscape and Horti. The IPO market for e-commerce companies has been hot in the past year, with notable examples such as Airbnb, DoorDash, Wish and Poshmark.
Roots was founded by Ben Smith and Laura Jones, who met while working at Amazon as software engineers. They shared a passion for plants and gardening, but found it hard to find quality plants and products online. They decided to start their own online plant retailer, with a focus on providing a convenient and personalized shopping experience for customers.
The company operates a network of fulfillment centers across the U.S., where it sources, stores and ships its plants and products. The company also partners with local nurseries and growers to offer a wider variety of plants and ensure freshness and quality. Roots said it has developed proprietary algorithms and software that optimize its inventory management, order fulfillment, delivery routing and customer service.
Roots faces competition from both online and offline players in the plant retail industry, such as Amazon, Home Depot, Lowe’s, Walmart, 1-800-Flowers and ProFlowers. The company said it differentiates itself by offering a curated and diverse selection of plants and products, tailored to customers’ preferences, lifestyles and locations. The company also said it has a strong brand identity and community, with over 1.5 million followers on Instagram and over 500,000 subscribers on its email newsletter.