Growth Model Design project | Catawiki

Problem statement:

Increase Catawiki's Revenue from $400M to $3.2Billion (8x) in 12 months

Step 1: Define NSM and leading metrics

Catawiki appears to be in the mature scaling stage. The company has established itself as a prominent online auction platform, specializing in unique and collectible items such as art, jewelry, and classic cars. It has a significant user base and hosts numerous auctions weekly. Additionally, Catawiki continues to update its technology and expand its offerings, which is indicative of a company that is beyond the early stages of scaling and is focusing on optimizing and expanding its market presence.

Given that the company already achieved early scaling without breaking PMF, the North star metric would be Revenue while the leading metrics would be

% Revenue retention
# of transactions
Frequency of transactions
# Average order value
#CAC to LTC ratio

Step 2: Building growth equation

Revenue = Total orders * AOV

Let us break this down further

Step 3: Product metrics & assumptions

Total monthly visits = 15.4 M

total unique visitors = 10M

Desktop visits = 36.81%

Mobile visits = 63.19%

Visit to signup rate = 53%

Pages per visit = 7.52

ARPU (yearly) = GMV/total users = 400M/(total unique visitors*signup rate*purchase rate) = $800

Avg session length = 5 mins

signup to purchase rate = 10%

AOV = $ 370

Number of yearly transactions = GMV/AOV = $1 M (monthly 83k transactions)

Retention rate- M3/M6/M12/M18/M24 = 30%

Definition of users:
Core users:

Engage regularly but not as frequently as power users.
They might participate in auctions and make purchases consistently but not as intensively.
they might be active on the platform a few times a week

Casual users:

Engage infrequently, often driven by specific needs or interests.
They might browse or participate in auctions occasionally, such as once or twice a month.
Casual users are those who access the platform less frequently and typically look for specific items.

Power users:

These users are often the most valuable, providing regular feedback and influencing other users.
They participate in multiple auctions, make frequent purchases, and are often early adopters of new features or services.

Activation metric definition: Placing a successful bid with a week of sign up

Retention metric definition: The percentage of buyers who return to make additional purchases on Catawiki after their initial transaction.

Top traffic source:

Social media traffic

Step 4: Nuke scenario- what happens if Catawiki doesn't acquire new customers for 12 months

If Catawiki doesn't acquire any new users, the total user base by M12 from retention and resurrection would be 3.02M

Growth Model - Catawiki - Google Sheets

Revenue (GMV) in nuke scenario = ARPU * total users in nuke scenario

= $40 * 3.02 M

= 120 M

Step 5: Revised Goal

Increase Catawiki's Revenue from $120M to $3.2 Billion in 12 months

Delta to be closed - $3.08 billion

Step 6: Calculate incremental growth

Incremental growth calculations -

Growth Model - Catawiki - Google Sheets

Step 7: Identify core levers

To close goal delta of $3.08 Billion, The core levers are

Engagement (This would bring in additional $2.75 Billion)
Onboarding (This would bring in additional $400 Million)

Conclusion:

Our revenue goal is $3 billion. Our current casual, core, and power users' percentages are 50%,30%, and 20% respectively. We need to increase proportion of core and power users by 5% each and double their transaction frequency to achieve 90% of our revenue goal.