From shaving, making coffee or cutting up fruit for breakfast, listening to music on our soundbar, and sitting in a chair for work consumer products are woven into our everyday lives.
Each of them had to be bought and many after extensive research. Why wouldn’t you want the best coffee machine out there to start your day?
But these days, the growth of e-commerce has created a major problem for me. Every time I go on Amazon to buy something new for my home, the selection is overwhelming. I don’t have time to read every review and see all the flaws before I make a purchase.
Sure, you could just buy the first product that comes up, but based on how you search, it may not even be the product you are looking for. I am often led down a rabbit hole of reading reviews and trying to find out if I’ve found the best product for what I need.
That is where Mohawk Group Holdings Inc. (NASDAQ: MWK) comes in. You have heard of smartphones, now we have smart commerce. Mohawk, an under the radar consumer product company is using an artificial intelligence (AI) platform to identify product categories where there is no clear leader.
They improve the product by addressing user issues in negative reviews and automate marketing and logistics to become the leading seller within the category.
Now, this may sound like a mouthful, so let me explain.
At its core, they use an AI platform that takes millions of data points from product details to reviews and uses that to identify, create and sell what people need and want. There is a reason why they have some of the most popular home products on Amazon.
From humidifies, knives, containers, shavers, and even soundbars, Mohawk has a business line for it. They have taken out the research for me and already identified the best products on the market.
Unlike major corporations like GE, Procter & Gamble, and Honeywell that have seemed to slow down on the innovation side, Mohawk has jumped to the front of the pack as a nimble smaller player that is closer to the customer.
It’s living proof of the fact that the most successful companies are the ones that can keep up with the times and adapt to new paradigms. Here, that means Mohawk, but it’s a universal principle throughout the economy.
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Because, in the meantime, this market will continue to scale and along with the incredible growth in eCommerce, which was roughly $4.4 trillion in 2020 and estimated to be over $8 trillion by 2025. It could be a once in a lifetime setup.
This is the perfect opportunity for a company like Mohawk to continue to grow. They are quietly becoming a leading consumer product company that currently sells mostly on the Amazon platform. With 11 brands and over 280 SKU’s, Mohawk is on a pace for a record 2021 of around $300m in projected annual sales.
With Amazon as their main market for selling products, they are targeting a huge and growing platform. According to Marketplace Pulse, Amazon’s marketplace sold an estimated $295B worth of products in 2020, increasing their sales by $95 billion in a single year.
Mohawk does this all through its eCommerce Engine “AIMEE.” This proprietary software drives new product development, automates sales and marketing, and manages the product life cycle, all creating a highly scalable business model.
They understand that customers are data-driven and they take reviews, pricing, and social media all into account. This combined with the fact that over half of millennials have no real preference between private-label and national brands helps Mohawk to deliver the best products.
The best part is Mohawk has already proven themselves. They have used AI and data to identify product trends across e-commerce platforms. Their brands include vremi (home appliances and kitchenware), home (Window air conditioners to ice makers), xtava (hair products and tools), and many others.
Their brands have delivered exceptional revenue growth with 50% revenue CAGR since 2017 going from only $36.5 to an estimate of $290-$320 million for 2021. These numbers, while big seem very reasonable given the growth of the industry.
On top of organic growth, Mohawk plans to launch up to a dozen new products each month with targets of roughly $1m in annual sales per product. If they are able to continue to target the right industries, this could easily add $100 million to revenue.
While there is clearly risk involved with large corporation competition and the stock up more than 200% since late last year, if they can do $300m in revenue they could be worth much more than today.