Brekkie with the king of Online Retail

Nathan Huppatz

21st Jun 2010

Brekkie with the King of Online Retail

Paul Greenberg (of DealsDirect.com.au fame) and I catch up on a semi regularly basis at events and functions like the one he is about to speak at (Retail World in Melbourne). I have known him since his early Dealsdirect and Auctionbroker days.

Today we catch up in Melbourne; in an hour or so he is to speak at the Retail World conference. I am keen to find out how Dealsdirect are going as a business, what he thinks of the current online retail space, and what their plans are for the future.

Interestingly he is now talking at a Retail Conference sharing the stage with the likes of Wal-mart, Wesfarmers and IKEA. He points out as we stroll along past some of the halls that  it was ‘a mere 5 years ago’ that he was asked to leave a toy fair as ‘online retailers weren’t really welcome’. I laugh as many of our readers (and I) have been through these same issues but he mentions that many of the toy brands now are outstanding suppliers to DealsDirect. How things change!

We sit down to a latte and a muffin (‘you’re hungry, so the Jewish mother in me bought you a muffin Nathan!’) and start chatting about some of the big moves in the online space and the bricks and mortar players getting involved now. Paul’s talk at the conference is going to be about ‘multichannel retailing’, which is interesting given the feedback I heard about the conference from it’s first day; apparently not many people mentioned an online strategy at all. Day 2 was more technology focused though. I ask what multichannel means to Paul as most retailers think multichannel is simplified as ‘online and offline’. Paul explains, ‘Multichannel for us doesn’t involve offline of course, and won’t, but I will talk about  web sales, telephony, catalogue marketing, social media and more’.eBay fits in there too of course, as well as other online channels like affiliate marketing. We will meet our customers wherever they want to meet us, but that will exclude storefronts!”

So what are the plans for Dealsdirect for the next few years? ‘We are in a good place’ admits Paul. “We are making some profit, we have had consistent growth of 30% Y/Y now, but I think we have really focused our efforts. We have “picked a lane” and are pursuing our vision more clearly than we used to’. It is definitely a more relaxed Paul than I have seen in a few years. ‘Our core focus will be in the Home, Lifestyle& Family range of product – we are very strong in these core categories, and it is what our customers want. Some tough decisions have been made, for example broadly in computers and IT, TVs and electronics. These categories can provide huge turnover but very low margin. It’s not really our core, best left to CatchoftheDay and JB Hifi we think. Of course we will still do hot deals in these areas, but will not focus on building huge ranges in these categories. It’s just not our ‘our lane’ on the highway”.

I ask Paul about their company vision and direction and what has changed over the years, and he gives me a Soccer example. “I liken our early days to 8 year olds playing soccer. Everywhere the ball goes, the kids swarm around. The whole field is empty except for 2 teams crowded around the ball!’ he laughs. ‘These days we are more mature. We are more intelligent, we have a fantastic management team in place and have a great platform. We now spread out around the field, and employ much better tactics!’.

It certainly isn’t about ‘winning’ any more either. As Paul puts it, ‘we stopped trying to be #1 about 3 years ago. It’s a nice metric to have but we don’t chase awards. We maintain our customer focus and if awards come then that’s fantastic. Later in July we will be adding a customer call centre for example. Our customers have been asking for this for a long time now, probably too long, so now we are giving it to them.’

Asked if he expects sales to increase much as a result, he instantly adds ‘yes, of course. And we are looking at other ways to reach and meet our customers better too, hence my talk about multichannel today. You can’t stand still in business, no retailer can rest on their laurels.’

Not many would know this, but DealsDirect has a third party seller program too, much like Amazon. About 20% of the products on the website are provided by other retail partners who must meet strict criteria to ensure products are shipped quickly and to DealsDirect’s standards. And the third party program will be improved over time too, with an API for retailers to use to list product.

I ask how they will handle the concern that other retailers will have that Deals might discover profitable ranges and source product themselves in those categories (much like Amazon is claimed to do). ‘I think we will handle that differently’, he says ‘ and come up with an agreement that offers the retailer a good degree of comfort’. Our view is if it “ ain’t broke, don’t fix it” We are more than happy when a quality third party partner is doing great business. Takes the pressure off us and our buying team, who are already under the pump!” Should be an interesting space to watch…

It seems that much of DealsDirects success, apart from the two founders Paul and Mike, comes from the support they have from their investors; long time time retailers in the bricks and mortar world. ‘They pointed out to me a long time ago’, says Paul, ‘that retail is detail” . We are doing the same thing that has been done for generations, it’s just a different playing field. And without the support we have had, we wouldn’t be where we are today.’

So where too for the future then? What about competitors? “Are you happy to see Big W enter the online space, concerned about the competition?”

‘No, we love the fact they are online. Their online presence is headed up by a good friend of ours, Sally Anne Newson, and they will do a great job’. Paul disagrees with me that there will be a lot of competition between Big W and DealsDirect for customers. It will certainly be interesting to see how the online department store space turns out. Could be quite a battle I think.

One thing we do agree on is that Big W entering the online retail world is one of the major online milestones Australia has seen in recent years. It will change the way many other large Australian corporates view the web as a place for retail, and it will further attract regular bricks and mortar shoppers to the internet for researching and possibly buying product.

Also see: DealsDirect continues to sizzle

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About the author: Nathan Huppatz is a co-founder of Internetretailing.com.au, and co-owns Directshop Pty Ltd, an eCommerce services and development company.