Consolidation on Horizon For Big Aussie eTailers?
An interesting article was released today in the Financial Times.
It is titled “Australia’s largest online retailers could become combined PE target“.
This article discusses the possibility that VCs and Private Equity firms may find some of the big Australian ecommerce pureplays appealing.
“It is believed that in 12 to 24 months a PE or VC company that wants to get into the online retail space could buy two or three of the top sites, namely oo.com.au, DealsDirect.com.au and dStore, and combine their offerings.”
Although this is possible, (their numbers are starting to stack up quite nicely) I would think that a number of the big bricks and mortar retailers might see them as likely acquisitions in future to not only boost their own customer base, but more importantly, get an entry into the ecommerce market that they have so far shied away from.
Together, revenues from dealsdirect.com.au, dstore.com.au and oo.com.au were anywhere from $55mil AUD to $85mil AUD this year.
Not huge, but growing quickly. Dealsdirect in particular has been successful at moving their business away from the eBay platform which was their sole market (using the ‘Auctionbrokers’ name and 99c no reserve auctions) and onto their own website.
They had turnover of about $12mil AUD + at their height on eBay but when I spoke to Paul Greenberg at an Adsense seminar recently he did indicate it was tough to operate with that model in an increasingly competitive marketplace. eBay fees alone would have taken a big chunk of their revenues.
Now they have been able to grow their customer base and retail on their own website, leaving eBay altogether. They have high margins, they have more than doubled their turnover and the horizon is looking good.
Dstore.com.au is a stalwart of the ecommerce market in Australia. Now they have solid revenues of $10mil PA and growing.
oo.com.au (previously a supplier of products to Auctionbrokers/Dealsdirect) is using the dealsdirect.com.au model themselves to build their sales.
I tend to agree with the views presented in the article, but the buyer of sites like this may not be PE or VC.
How much would it cost someone like ColesMyer to enter the online retail space and build a business as large as dealsdirect and oo? Lots. and it would be hard work catching up.
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