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.

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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

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Step 2: Building growth equation

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Revenue = Total orders * AOV

Let us break this down further

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Step 3: Product metrics & assumptions

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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

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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.

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

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

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Top traffic source:

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Social media traffic

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

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

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Growth Model - Catawiki - Google Sheets

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

= $40 * 3.02 M

= 120 M

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Step 5: Revised Goal

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

Delta to be closed - $3.08 billion

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Step 6: Calculate incremental growth

Incremental growth calculations -

Growth Model - Catawiki - Google Sheets

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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.

Supporting arguments:

• Current user distribution - casual 50%, Core 30% , and power 20%
• Target user distribution - casual 40%, core 35%, and power 25%
• Current frequency monthly - casual 1, core 3, and power 4
• Target frequency monthly - casual 2, core 4, and power 6
• Incremental transactions achieved - 7.5 M
• AOV - $370
• Incremental revenue achieved due to incremental transactions- $ 2.77 Billion
• Current onboarding rate - 10%, Target onboarding rate - 20%
• ARPU yearly- $800
• Incremental impact revenue due to increased onboarding rate - $400 Million

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