The pandemic has only served to accelerate this trend, as personal and public health sit on the forefront of everyone’s minds.
When combining conscientious consumers, governmental advocation for the prioritization of health, and an economy that favours online to in-person, it’s clear that health & wellness brands that utilize eCommerce are well-positioned for the future. Concurrently with this trend is the growth of the plant-based food and beverage industry, which is expected to grow to reach $80.43B by 2024, with a CAGR of 13.82% between 2019 to 2024, according to a 2019 report from BIS Research.
Better Plant Sciences’ (CSE: PLNT) most recent acquisition, JUSU, is a full spectrum wellness brand with a mission to enlighten consumers to the protective and effective properties of plant-based products. Its group of companies is committed to making pure, organic, plant-based products for consumption, body and personal care. The brand has fully built out the infrastructure for eCommerce sales, and even without digital marketing has achieved very promising results thus far, setting the stage for healthy growth in the online arena.
Below are the 3 key highlights contained in this press release:
1. Current eCommerce Sales (Without Advertising)
In Better Plant Sciences’ latest press release regarding JUSU, it was noted that JUSU had benefitted from a sticky customer base, who went out of their way to select and order JUSU products. According to the company, without advertising at all, JUSU has attained approximately $60,000 in monthly revenue. We don’t have enough data to dive deeper than that, but if we can theoretically annualize that number, over $700,000 in potential revenue from an all-stock deal should be quite interesting for shareholders.
CEO Penny White stated: “Our plan is to grow the Jusu business, which is currently generating revenues of approximately $60,000 per month, by optimizing sales through eCommerce channels, strengthening the brand and product offering, as well as expanding through a franchise model.”
In the world of eCommerce, demand strong enough to facilitate $60,000 in revenue without advertising whatsoever is a solid proof of concept.
2. Recurring Revenue & Attractive Margins
A very important detail was highlighted in a previous press release regarding JUSU’s online sales: that is, almost 30% of customers are recurring. So, what does this mean for JUSU and, by extension, Better Plant Sciences? Well, first and foremost this metric shows a loyal customer base, while also giving a nod to the quality of JUSU’s products.
With the intention of growing the eCommerce channel and acquiring more customers, repeat orders is critical for lifetime value, as the initial customer acquisition has a hard cost to the company (in the form of ads). Repeat orders, however, do not.
Based on historical sales data, the company has also shared that gross margins on their products sit roughly in the ballpark of 60%, a particularly eye catching figure. This gives seemingly ample room for advertising spend to acquire new customers on their eCommerce store, while still turning a gross profit on sales.
While the realities of the eCommerce world are much more complex than this, breaking down the basics of online sales is helpful to evaluate these kinds of companies and better understand their growth potential.
3. JUSU x PLNT Synergies
As a traditionally brick-and-mortar brand focused on R&D and product expansion, the competitive advantage of JUSU has been their commitment to making unique, high quality products for their customers. As the online world is extremely difficult to successfully navigate, it typically takes a team with extensive experience in eCommerce to capitalize on online demand, something that JUSU appears to be missing.
Instead of developing their own in-house team or spending aggressively to hire an agency, JUSU is going to benefit substantially from the resources of Better Plant in this regard. With expertise in branding, supply chain and as a result of their latest hire, eCommerce, this certainly looks like a 1+1=3 partnership. Gabriel Villablanca, the resident Director of eCommerce and Digital Marketing at Better Plant is already underway in his review and optimization of the existing eCommerce channels belonging to JUSU.
We think of this relationship as one similar to a skilled player and a skilled coach; while both can succeed independently, the potential for improvement when they come together is explosive.
With the completion of this acquisition, we can see a much clearer path forward for Better Plant Sciences, with true potential to grow the top line of the business in what is certainly a hot sector of the capital markets. To see JUSU’s products and learn more, head over to www.jusubar.com
Disclaimer: Better Plant Sciences is a communications client of Edge Investments. We also own shares and options in the company.