Through a year of business transformation, eCommerce and tech company Crowd Media (ASX: CM8) has delivered a $2.8 million financial turnaround which has seen major developments in their retail network and AI tech which is handling 60% of customers.
Cost cutting and streamlining of operations have been a focus for Crowd through FY20 with the Company executing $8m of operational cost reductions to return to positive underlying EBITDA. From $16.8m of revenue, Crowd reported $140k underlying EBITDA which represents a $2.8m improvement on the previous financial year which prompted a business transformation.
With the appointment of retail industry leader Steven Schapera as Chairman in 2019, Crowd embarked on a 3-year plan to advance their artificial intelligence tech with the view of integrating it into their network of more than 10,000 social influencers for the purpose of conversational commerce.
Although still in development, the AI is now handling 60% of customer interactions from Crowd’s Q&A division which alone delivered $8.9m of revenue despite regulatory headwinds which restricted the division’s EBITDA contribution to $200k.
“I am pleased with the financial turnaround of the business, albeit we still have much work ahead of us,” said Crowd Media CEO, Domenic Carosa.
“The new Crowd Direct division is slowly gaining some traction while we continue to work on our stated goal of changing the way products and services are sold via digital influencers.
“We believe conversational commerce is the future of ecommerce.”
Beyond the sizable cost reductions by using AI to serve 60% of Crowd’s Q&A customers, the R&D behind it is integral to Crowd’s vision of applying it to social influencers that can use it to interact with fans, creating commercial opportunities at an unprecedented scale. This in particular was one of the key drivers that led Schapera to form a Group which invested $2.7m in Crowd following his exit from BECCA Cosmetics which he founded in 2001 before selling the Company for $300m and joining Crowd.
“The influencer market is a highly competitive and dynamic one. As with almost any market, it favours the incumbent, but we have good reason to believe we can squeeze our way in,” said Schapera.
“We have picked a diverse assortment of products to identify and test the area of opportunity.
“Our real interest is to be at the table when technology shifts the market tectonically to conversational commerce. Then, we will be the incumbent, and hold a truly sustainable competitive advantage.”
Since launching the Crowd Direct division, which brings upon Schapera’s historic success in retail to sell high-margin products integral to the lives of European millennials, Crowd has secured exclusive distribution deals with five consumer brands. The Company expects to launch a further six new brands over the next 12 months which will further grow sales revenue from the division’s $350k generated under pilot testing as they continue advancing a major financial turnaround.
*Owners of this website are CM8 shareholders
- This app just beat 98% of dermatologists and MyFiziq are buying in - December 3, 2020
- Kogan surges on to New Zealand shores with $122m eCommerce acquisition - December 3, 2020
- Summer oysters trial tipped to increase Angel Seafood sales by 15% - December 2, 2020