AIB Featured Business RedBalloon
As “Australia’s most awarded online retailer”, experience gift merchant ‘RedBalloon’ has a fantastic success story to share. Founded in 2001 by Naomi Simson, the business began like many entrepreneurial ventures – in a garage and with a personal investment. The concept was to sell experiences and memories such as skydiving or rally-driving, rather than tangible gifts. While it was a unique concept at the time, Naomi had difficulties signing up businesses to list with the company. The first sale was two months and four days after inception, and this sale resulted in a profit of only $9.
Despite a challenging start, Naomi believed in her business concept and was prepared to be persistent in order to succeed. When talking to the Sydney Morning Herald, she explained that she did not go into business to make money, but because she saw a problem, wanted to change it, and it was something she was completely passionate about. The business model was simple – operators would list their activities on the website, and for every booking received, RedBalloon would take a commission of between 10 and 20 per cent based on the suppliers’ expected profit margins.
The company’s big break came when Fuji Xerox made contact about six months after its launch. Fuji was interested in using RedBalloon’s experiences as an incentive for its sale staff. After this multinational backing, organisations such as Commonwealth Bank, Telstra and Qantas followed suit, leading to the launch of RedBalloon Corporate in 2004. Aside from over 3000 experiences to choose from, RedBalloon has since branched out into gift cards, as well as thousands of tangible products for a range of categories such as ‘for him’, ‘for her’, ‘for them’ and ‘for kids’.
RedBalloon has not only experienced success by filling a gap in the market, it has also been praised for its fantastic working environment. According to its website, “Life at RedBalloon can be described in many ways, but ‘ordinary’ is definitely not one of them! ‘Collaborative’, ‘Inspiring’ and ‘Unique’ are words that our team members use to describe what it’s like to work here.” It has received a number of awards for the workplace including being named one of Business Review Weekly’s ‘Great Places To Work’ from 2009 to 2013. Perks for employees include a day off for their birthday, flexible working hours, a free wellness program, and plenty of healthy food.
To date, RedBalloon has a reported 2500 corporate customers and has sold over 2 million experiences. Naomi Simson has since taken a step back from CEO, with Nick Baker currently in the top seat. In late 2015, it underwent re-branding which saw a refresh of the website and logo. RedBalloon is considered a highly profitable company, and has been on the Deloitte Fast 500 list regularly since 2006. Naomi’s advice for those new to business – “[when] starting a business, you can’t be proud. You roll up your sleeves and you do whatever you can”.
What do you think?
What are your thoughts about the business journey of Australia’s RedBalloon? Like many businesses, it started from a relatively small budget and has gone on to generate millions of dollars. If you’d like to see another business profiled, please let us know in the comments section below.
This article was written by Laura Hutton on behalf of the Australian Institute of Business. All opinions are that of the writer and do not necessarily reflect the opinion of AIB. The following sources have been used to prepare this article: Business Insider; Wikipedia; RedBalloon; Sydney Morning Herald