Accelerated by COVID, the Australian e-commerce industry is on a rocket trajectory, having grown 57% YoY in 2021. Recent studies by McKinsey have shown that approximately 70% of consumers are worried about the environmental impact of packaging and would pay more for greener alternatives. Leading website provider, Shopify, had 1.75 million sellers on its platform in 2020, which is anticipated to be much higher in 2022. As a “mission critical” player in the e-commerce value chain, we are incredibly well placed to take advantage of these consumer and environmental trends. 

Australian governments, at both state and local levels, have various plans to implement curbside FOGO (food organic & garden organic) bins, which once rolled out, will provide a national infrastructure for the correct disposal of compostable packaging, including Hero Packaging’s compostable mailers. This long-term trend gives online retailers even more justification to switch to home-compostable shipping mailers. 

In just three short years we havegrown to service over 40,000 customers of all sizes from micro retailers to large online brands in Australia such as Beginning Boutique, Cue Clothing, Veronika Maine, Zanerobe, Piping Hot, plus Boom by Cindy Joseph and Studs in the USA. Revenue increased by 3x in FY21 to $2.5m and revenue is tracking ahead of the FY22 target with an annualised run rate of $5m. With a lean operating model, the company is already profitable with EBIT margins of 24% by FY24. With such high demand for HEROPACKs, a key driver of sales growth and a great customer experience has been strong execution in the areas of forecasting and purchasing. We have are also able to ensure minimal stock disruptions in 2021 despite the long COVID lockdowns between July and October.

We currently have over 600 customers in North America, over 2,000 US/Canadian email subscribers, a fully operational North American website, and a new US-based warehouse full of stock ready to sell. US & Canadian customers have thus far come from organic growth in the market (from non-paid marketing activity such as organic Google traffic and social media engagement). The real opportunity for us is to leverage our existing customer base and existing market demand, to rapidly scale the online advertising budget to increase website visitors, and based on a conversion rate estimate of 3-5%, achieve a strong foothold in the US market within the next 6 months. From learnings in the Australian market, newly acquired customers will provide recurring business to then continue growing the North American market. 

In terms of market size, the US e-commerce market is an $800bn sector growing at a compound annual growth rate (CAGR) of 14% to 2025. In the USA, where the sustainable packaging market is less mature compared to Australia, huge growth opportunities exist for Hero Packaging.

Both Anaita and Vik are deeply experienced across e-commerce and digital marketing having built and supported the growth of numerous companies. They have built a social media following of over 60,000 and a brand that is loved by customers and end-consumers alike. Their brand building experience is a key competitive strength that they will leverage as they expand.

The packaging industry is long overdue for a shakeup by challenger brands. Globally, businesses such as TIPA and Packhelp have seen strong interest from private equity for their vision to drive change in the sector. Another notable mention is the sustainable custom packaging supplier, Noissue, who raised $10m in funding in late 2021. 

With multiple approaches from interested trade parties already, Hero Packaging is well positioned to continue its growth and is open to exploring a trade exit to a party that shares its values and ethos.

Currently, Hero is Australia’s largest retailer of home-compostable shipping mailers, however we have our sights set on international markets. We entered North America at the end of 2021 and have gathered over 600 customers in a short period of time. With 3PL warehousing completely set up to service the region efficiently, and with the warehouse fully stocked and ready to sell, we are at the point of scaling up our operations and increasing market penetration over 2022.

We will replicate the Australian e-commerce business model that has enabled us to scale so fast, along with an increased focus on custom and enterprise clients which will drive large volumes.

At Hero, we are supported by businesses who value our ambitious goals of protecting the environment, one mailer at a time. GreenFleet, a leading not-for-profit organisation and Australia's first carbon offset provider, provides us guidelines to help us offset our carbon emissions. By partnering with Greening Australia, we also support environment projects in Australia.

Looking forward, Hero is currently in the process of becoming a Certified B Corporation, which will ensure transparency and accountability of our social and environmental impact. We will also aim to attain Climate Active certification so we can officially call ourselves carbon neutral. To facilitate gaining these accreditations, we recently hired a Social Impact Manager, who will be looking at the Climate Active certification and B Corp certification, which will encompass offsetting our carbon emissions.

We acquire customers primarily through online marketing channels, with a funnels approach which nurtures customers from the awareness stage through to being an active and loyal customer. We will continue to optimise our acquisition engine and will look to replicate our Australian success in the US and Canada.

Our product range is unique in that every new product/colour range that we have ever brought to market has been voted on by our engaged Hero community. This ensures that our products have a market demand prior to launch, significantly de-risking their introduction. We plan to continue this winning formula as we scale, and complement this with research into the best technologies that the market has to offer.

We are constantly looking at new products, materials and innovations from around the globe. With a customer-base of over 40,000 eco-conscious businesses, this provides us the opportunity to bring the best eco-friendly packaging solutions to our customer base, and have an even greater impact.

We currently have 5 new products in the pipeline that are on track to launch by September 2022. We also have plans to extend into new verticals (beyond pureplay e-commerce) in 2023. This will further strengthen our market leadership and position as a platform for all sustainable packaging needs.

A key focus of this raise is securing the funds to hire more staff to join us, and truly build a world-class team to jointly execute on our vision. We recently hired a Social Impact Manager, who will be looking at Climate Active certification so we can officially call ourselves carbon neutral. They will also lead our application for B Corp certification.

Importantly, our growth to date both from our SME’s and Enterprise clients has all been organic, without a dedicated Business Development team. As we look to scale and acquire a greater number of large retailers, we will use the funds to hire dedicated business development staff.

We also believe that our team culture has been a key ingredient to our success. All our team members embody the values and ethos of the company. Company’s with a strong culture can experience up to 4x more revenue growth than companies with weak cultures.