Catching the Catch of the Day
Gabby Leibovich started out selling items on eBay from home - now he's Australia Post's biggest customer.PT0M0S 620 349
If you run a women’s fashion business be on guard. Gabby Leibovich, pioneer of daily deals sites CatchOfTheDay and Scoopon, has plans to launch three new sites soon, one of which will incorporate an online fashion component.
The new sites will be the latest in a string of initiatives by the enterprising Leibovich, who in 2011 founded online grocer Grocery Run, which is giving Woolworths and Coles some stiff competition.
When Grocery Run opened in September 2011 consumers could only access deals on Wednesdays and Thursdays. But customer demand – within 24-hours of the site opening Leibovich says it had achieved $1 million in sales – means that since November deals have been on offer seven days a week.
The market is unforgiving of dinosaurs, says online giant Gabby Leibovich.
“We realised people want to shop when they want to shop and you can’t force them to shop only two days a week,” he says.
Grocery Run has notched up some pretty big wins. According to data from online information provider Alexa, Grocery Run receives more web traffic than the two major grocery chains, Coles and Woolworths.
Leibovich says the business ships up to 10,000 orders per day and, combining CatchOfTheDay’s mailings with that of Grocery Run, the group is now Australia Post’s top parcel customer.
“It’s fantastic to see Australian-grown online retailers like CatchOfTheDay continuing to grow and innovate … we are very excited by the role Australia Post is playing to enable one of our great customers to grow,” Australia Post chief executive Ahmed Fahour says.
Grocery Run operates on a simple premise. The site offers 300 products for sale on any given day, but there are no guarantees that, say, the consumer will always be able to buy shampoo through the site.
Leibovich’s businesses dominate the online retailing space. According to research by Experian Hitwise in 2011, CatchOftheDay is the top online department store in Australia, while Scoopon is the number one group buying site, according to the Telsyte Australian Online Group Buying Study 2011-15.
Launched in October 2006 with five employees and a 200 square-metre warehouse, CatchOftheDay now has 300 full-time staff and its main distribution centre in Braeside, in Melbourne's south-eastern suburbs, covers 16,000 square metres.
According to Leibovich, on average an item is sold through the site every three seconds. A highlight was an offer for a Samsung LCD TV, which produced sales of $1 million in an hour. The site has more than 1.5 million registered members and is on track to achieve $200 million-plus revenue in the 2011/12 financial year.
“New sites are always trying to compete. Imitation is the sincerest form of flattery, but our loyal customers mean we are leading the market and we don’t see them as any real threat,” Leibovich says.
“The key theme for 2012 is growth - 2012 will see us launch new sites, grow our member base and continue to invest in the business to ensure we have the people, process and infrastructure in place to support our increasing scale and provide a solid platform to support our expansion. Expect to see more partnerships with major brands for national promotions, such as our hugely successful Scoopon deal with Hungry Jack’s.”
Leibovich says although CatchOfTheDay had a good Christmas – he claims it achieved a 100 per cent increase on sales compared to 2010, and in one week in December it did $10 million in online sales – his business isn’t driven by special occasions.
“We’re not focused on events, the high Australian dollar or a potential recession,” he says.
Asked how he’s been able to structure the business to cope with its incredible growth trajectory, Leibovich says since it received an $80 million equity injection from a consortium of investors in May 2011, CatchOfTheDay has implemented an increasing number of operational disciplines that have helped keep the enterprise on track. For instance, it has implemented a new warehousing system to streamline ordering and distribution.
The consortium - which included Tiger Global Management, James Packer’s Consolidated Press Holdings, Andrew Bassat of Seek and Glenn Poswell of Gannet Capital - bought 40 per cent of the business in May 2011.
Leibovich says he inherited his entrepreneurial streak from his father. “He was also in business, but on a much smaller scale. During dinner my brother and father and I would talk about business and how to make money – we never discussed sport or what the latest Love Boat episode was about. And that rubs off.”
Leibovich’s brother, Hezi, co-founded CatchOfTheDay and Scoopon.
Gabby says his father, who was an electrical goods retailer, is not involved in his business.
“He’s from an older generation that did not grow up with the internet and like Gerry Harvey, he just doesn’t get it,” he says.
Leibovich’s five secret tips for success
1. Invest in great people. “Your staff are your biggest asset and an investment in good people is an investment in the future success of your business. No leader can be an expert in all aspects of their operations. Smart leaders know their limitations and when to engage the expertise of others to support their vision."
2. Maintain a start-up mentality when it comes to costs. “No matter how big you get, maintaining a ‘start-up’ mentality when it comes to cost control is important. Remember cash flow is the life blood of your business.”
3. Don’t let perfect get in the way of better. “Make a decision and move forward. The market is unforgiving of dinosaurs. Today’s leading businesses are agile with structures in place that support quick decision making and action. Bureaucracy does not breed innovation.”
4. You get more in life with honey than a stick. “Be nice to people, be nice to suppliers, treat them with respect and they will repay it all back.”
5. Never close a door. “Even if you are angry with someone, keep the relationship going. It’s not a matter of life or death, after all. Doors close and other doors open, and chances are that you will meet that person again in the future under different circumstances."