BUSINESS FOCUS: GFC and strong dollar have led to the rise of daily deals

BUSINESS FOCUS: GFC and strong dollar have led to the rise of daily deals

How slow moving stock have found new lease of life on sites such as Catch of the Day

Catch of the Day director, Gabby Leibovich, speaks at the Online Retailer Conference and E-Commerce Expo in Sydney

Catch of the Day director, Gabby Leibovich, speaks at the Online Retailer Conference and E-Commerce Expo in Sydney

Is it possible to build Australia’s number one e-commerce group in less than five years, especially during a turbulent economy with no advertising? Catch of the Day director, Gabby Leibovich, thinks so.

In his speech at the Online Retailer Conference and E-Commerce Expo in Sydney, Leibovich spoke about how he set up his bargain hunting website, Catch of the Day, in October 2006 on the premise of “one deal, every day, midday.”

From its humble beginnings, Catch of the Day has grown to become the number one solution for suppliers to clear end-of-life (EOL) and slow moving stock, and Leibovich attributes the site’s growth to word of mouth, and not to search engine optimization (SEO) or Google AdSense.

While certain products, such as notebook PCs, sell out reasonably quick, simpler products such as pillows have a tendency to sell out almost instantly, as products such as these are always high in demand.

“There’s not enough time to put products such as these in the warehouse,” Leibovich said.

“The shipment is in on Tuesday, sold on Wednesday, and out on Thursday.”

300 people are joining Catch of the Day every day, and with 52,000 cosmetic products selling out in 24 hours, a significant proportion of the site’s demographic is also female.

According to Leibovich, 150,000 visitors go Catch of the Day every day and 5000 to 10,000 parcels are shipped out nationwide on a daily basis.

The business has experienced 100 per cent growth yearly since launch to now employ 300 employees, with revenue for Catch of the Day going from $8 million in 2007 to $120 million in 2011, with a projected level of $250 million in 2012.

“We recently sold 40 per cent of the business for $80 million to James Packer and friends, valuing the company at $200 million,” Leibovich said.

Off the back of this growth, the Scoopon site was launched 18 months ago to be the hub for entertainment and experience offers.

With 975 massages, 2500 cruises, and 4300 dinners sold, Scoopon has already carved out a niche for itself.

A more recent unveiling was Grocery Run, a site focused on grocery related bargains, and Leibovich mentioned that $1.5 million of groceries were sold in the first 48 hours.

“Every supplier is interested in joining and selling on it,” he added.

While companies have been affected the financial crisis and the worrying state of the Australian dollar, this has resulted in a lot of excess stock that needs to be sold, and that's where Catch of the Day comes in.

“If you are a retailer, online shops may be your enemy, but Catch of the Day can be your friend,” Leibovich said.

“If it’s good enough for JB HiFi, Breville, and Dick Smith, it’s good enough for you.”

When looking at what made his business a success, Leibovich narrowed it down to providing the best online shopping experience in the country, where the customers are acquired by word of mouth.

“We have five years experience in the daily deals space, and there are no politics involved,” he said.

Other key factors to success were to make quick decisions, not wear suits to work, and collaborate with suppliers for a positive outcome.

“Time limited offers were the differentiator, as browsing department store web sites is boring, repetitive and results in constant price comparison.”

Not content with three sites already up and running, Leibovich shared plans to launch a fashion and apparel deal site called Brand Street, as well as Wine Catch of the Day, a site entirely dedicated to wine deals.

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