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Party City partners with Punchbowl, makes $4M investment

Party City will use the Punchbowl platform to launch its own digital invitation platform

Financial trends and news by Steven Loeb
July 17, 2017
Short URL: http://vator.tv/n/49d9

(Updated with the amount invested by Party City)

The world of offline and online retail are merging. Just look at Amazon's $13.4 billion acquisition of Whole Foods, and Walmart’s $3 billion purchase of Jet.com last year. You had the preeminent digital retailer diving in to brick and mortar, and one of the preeminent physical retailers scooping up one of the of the most popular up and coming digital retailers. The message is clear: having a presence in just one channel isn't going to be enough; in the future, retailers are going to have to be both online and brick and mortar to survive.

On Monday, there was another example of this shift as Party City entered into a partnership with Punchbowl, a technology platform for online invitations, which involved both an investment, as well as the launch of a new digital platform.

Though Party City chose not to disclose the amount invested, a filing with the SEC shows the amount to be $4 million.

In an interview, Matt Douglas, founder and CEO of Punchbowl, stressed that Punchbowl did not need this funding, as the company has been profitable for the last few years, but said that it would be put toward expanding Punchbowl's employee base. The 25 person company will be adding around a dozen new employees over the next couple of quarters across all aspects of the business, including business development, marketing and finance.

Another aspect of the new partnership involves Party City launching a digital invitation platform that allows its customers to make their own online invitations using the Punchbowl platform.

That means that those customers can make their own online invites using Punchbowl's licensed characters, which include Disney, Hasbro and Sesame Street, among others. Customers can also use the platform to track RSVPs, add a co-host to each invite, and create message boards to communicate with guests.

Douglas called this, "the most most important news in Punchbowl's history,” as it expands his company’s reach to all of Party City’s customers.

"For the last handful of years we have profitable, and that has allowed us to invest that cash into the future growth of the company. It's been a great growth story; we're not a rocket ship, we're not doubling revenue every year, but we've seen steady, solid growth," he said.

That has allowed Punchbowl to entertain "strategic alternatives for the company," which likely included acquisition offers, though Douglas would not confirm that. Ultimately, though, Punchbowl decided that partnering with Party City was what was best for the company and its shareholders for the long term, given Party City’s reach and scale, which include over 900 specialty retail party supply stores.

"Something like 90 percent of the population lives within 10 miles of a Party City. They are doing $2.5 billion in revenue, so they are are a sizable organization. To take our platform and apply it to the megaphone that they have will give us incredible reach. If I found out that any of our competitors were partnering with Party City, that would be a very bad day for me. There's no company in the entire universe that has a greater reach and megaphone than Party City."

As part of the partnership between the two companies, Ryan Vero, Executive Vice President of Party City Holdco Inc. and President of Party City Retail Group, has joined the Board of Directors at Punchbowl.

Vero, Douglas told me, has experience leveraging across both digital and physical retail channels, as he was behind the launch of Officemax.com. Working together, Douglas also discovered that he and Vero have a shared vision for the future of retail and what the world will looking like when physical and digital retail come together.

"In the world that we live in right now, everyone has a computer in their pocket. We have to figure out, as a society, how does the offline world and the world come together? We have to figure out when and where those worlds meet," Douglas said.

"Retailers that don't figure it out will die. Sears didn't do that, and now it's dying. Best Buy is a company that shouldn't exist in an Amazon world, but they were able to leverage digital, and offer great service. Party City understands that difference and knows that they will survive for the next several decades if they adopt digital rapidly. It's not just about when the store opens and the products on the shelf; it's how to get products and services to merge. It’s about providing a solution that is both digital and physical."

Marvel comes to Punchbowl

In conjunction with the Party City news, Punchbowl also revealed that it has entered into a new licensing partnership with Marvel Entertainment, and is launching The Marvel Online Invitation Collection. Through this deal, Punchbowl will provide online invitations starring

Marvel characters that include Spider-Man, The Avengers, and Guardians of the Galaxy.

Punchbowl was able to get in the door with Marvel through its parent company, Disney, which the company has been in partnership with since 2014. That only got the company so far, though, as Marvel operates separately within the corporation, Douglas explained.

"Marvel is picky. They have important assets, and they are careful about which kind of assets that they license and who they lincense to. We had to get them comfortable with what those invitations would look like, and bring those design ideas to life. We are the only site that can offer digital invites with Marvel characters. Those Marvel assets are also available at Party City, and is another example of the merging of these two worlds together," he said.

In the celebrations and social expressions industry, no company has bigger reach than Party City. If you talk to any mom who has children under the age of 12, chances are they’ve been to one of their stores not that long ago. They have a stunning amount of customers they see every year with a tremendous amount of reach. Being able to leverage our platform across their audience, and having Party City as an investor and Ryan as a board member, is a win for everybody.”


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Punchbowl.com
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Description: Punchbowl is a technology company that builds products for the celebrations market. We create best-in-class online invitations and digita...
Bio: Matt Douglas is an entrepreneur, investor and startup advisor with 20+ years of experience in product management, marketing and...

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