CatchOfTheDay, the company behind popular Australian sites including Scoopon and more recently GroceryRun, last week revealed some interesting figures around the exponential growth it has seen over the past 5 years.
Scoopon co-founders Gabby and Hezi Leibovich (Credit: Scoopon)
The original CatchOfTheDay site which launched five years ago last week, has seen an as expected surge in memberships and visits as the site capitalises on the group and discount buying craze sweeping Australia right now.
According to the company, it now has more than 1.5 million members from all around Australia, and sells a product on average every 3 seconds.
This has led to an expansion of two new sites – GroceryRun, which launched late last month and offers discount grocery items 2 days per week, and Scoopon, which offers discounted group deals.
And early next year, the company will launch yet another discount site, BrandStreet, that will focus around offering discounted brand-name footwear and apparel.
The company says GroceryRun has pocketed the group more than $1.5 million in revenue per week for the past two weeks — on average, around 20,000 orders are placed over each week’s 2 day sales, with each order being made up of nearly 18 items.
“Sales growth has been very strong across all businesses,” co-founder Gabby Leibovich said in a statement about the incredible growth the company has met.
“Not bad for an online retailing site started five years ago by two brothers. Just goes to show that often the simple ideas are often the strongest.”
However the growth hasn’t come without teething problems – the company has outgrown its headquarters multiple times, moving to another, larger facility in September this year. The group’s GroceryRun service was also plagued by complaints about poor delivery times and missing items, though it appears most of these issues have since been resolved.
But according to analysts, the growth isn’t just limited to CatchOfTheDay and is being experienced right across the group buying industry.
“Telsyte expect the group buying industry to reach well above $500 million this calendar year 2011. That is just for Group buying alone,” Sam Yip, Senior Research Manager at Telsyte told iTech Report.
“If you add in flash deal sites (eg. Catch of the day, Etc) We can expect nearly 1 billion dollars turn over this year.”
Yip says CatchOfTheDay’s estimates of reaching $250 million in revenue over the current financial year, up from $120 million last year, are “absolutely possible”, but warns the company needs to closely monitor the movements of competitors in the rapidly crowding space.
“They need to keep a close check on what the multi-national players are doing (eg. Living Social and Groupon),” he said.
“These multi-national players have large marketing budgets and have the ability to convert traffic achieved into sales,” Yip continued, before noting that Groupon Australia grew 118% quarter on quarter and Living Social up 75% over the same time.
“These multi-national players have large marketing budgets and have the ability to convert traffic achieved into sales”
Whilst the first part of the statement is correct, I doubt the second part. Group buying sites are way over paying for their traffic, with an average acquisition cost of $6 per email subscriber. Revenues per subscriber are not significant enough to cover this cost, as evidenced by Groupon international’s massive losses.
It is falacious to track the growth of the group buying industry by revenue, sure the sector is getting bigger by revenue. What about profits? are they getting bigger? Well as seen in groupon’s IPO documents yes, profits are getting bigger, negatively bigger