Grays eCommerce Group sells DealsDirect
Less than 18 months after the merger between DealsDirect and online auction site, Grays Australia, the publically listed Grays eCommerce Group (GEG) is selling its fixed price retail (FPR) businesses.
MySale Group, the parent company of OzSale.com.au, will acquire OO.com.au, dealsdirect.com.au and topbuy.com.au and all associated customer databases, intellectual property, trademarks and goodwill, in a deal worth $5.2 million.
The sale does not include any sites operated under the ‘Grays Online’ business name, including its standalone online wine business, GraysWine.com.au.
Online auction site, Grays, merged with DealsDirect in August 2014, changing its name to Grays eCommerce Group and listing on the ASX under CEO Mark Bayliss.
For MySale, the acquisition substantially increases its potential active customer base. While GEG has the chance to exit the “challenging market dynamics” of FPR. In FY15, GEG’s B2C division recorded an EBITDA loss of $1.7 million, compared with a $471,000 loss in FY14.
“With success in online consumer retailing driven by scale, we have consistently said that our FPR business must continue to consolidate or be consolidated,” Mark Bayliss, CEO of GEG, said.
“With the FPR business facing challenging times, and having carefully considered all options available for the business, the board of GEG has determined that a sale was the best strategy to enhance shareholder value.”
Founded in 2007, MySale is an international online retailer listed on London’s stock exchange with established flash sales sites in Australia, New Zealand, South East Asia and the UK.
Carl Jackson, CEO of MySale Group, said the business has more than 16 million members globally, 8.5 million of whom are from Australia. “This acquisition increases our international member numbers to in excess of 20 million members internationally, 15 million of whom are Australian members,” Jackson said.
The three GEG websites have around 3.1 million average monthly visits, an email database of 6.5 million customers, and 512,000 unique active customers – of which only 50,000 overlap with MySale’s existing active customer base, in the ANZ region, of 682,000.
“With over 6.5 million customers and 512,000 unique active customers, and very little overlap of our existing member base, strategically this acquisition allows the MySale Group to substantially increase the size of our active base in Australia which fits with our strategy of widening our online proposition to leverage our existing assets, being OzSale and BuyInvite.
“The sites being acquired are all well-recognised brands in their own right, with a female weighted customer base so it’s a good opportunity to cross-sell our core fashion offering and expand our already successful homewares category by leveraging the excellent supplier relationships that these websites come with.”
The $5.2 million will be paid in two instalments: $3 million on execution of formal contracts on November 30, and $2.2 million on January 31, 2016 on the completion of the acquisition. Over this period the future of the acquired sites will be mapped out.
“As there is considerable brand equity – for both suppliers and consumers – in each of the websites being acquired, we are currently reviewing the opportunities for each of the brands,” Jackson said.
“We expect to exchange contracts with the Grays eCommerce Group on the 30 November 2015 and during this period we will be working together on the integration plan and jointly managing the websites on a business as usual basis.”
Jackson said that as well as continued growth in Australia and New Zealand, MySale is very focused on southeast Asia.
“We currently operate in Singapore, Malaysia, Hong Kong, the Philippines and Thailand and are very excited by the long-term potential of this region,” he said.
Once the sale is completed, GEG will focus on its Grays brands and its B2B business.
“Following completion of the sale, management time and company resources will be freed up to increase the focus on growing the key auction businesses of Industrial B2B, Grays Wine, and the remaining consumer auction categories,” Bayliss said.
“These businesses generate strong returns on capital, have strong market position and differentiated offering.”
Grays launched a dedicated wine site www.grayswines.com.au, which the company said is the third largest online wine site in Australia and in FY15 sales exceeded $31 million.
This story first appeared in Internet Retailing’s sister site Inside Retail, click here to subscribe.