Two websites backed by media mogul James Packer are now moving into the online grocery space, with department store giant DealsDirect announcing a new site dedicated to groceries and perishable products in an attempt to challenge the dominance of Coles and Woolworths.
The announcement comes just after online retail giant Catch of the Day announced it would unveil its own supermarket site, GroceryRun, within months. Both Catch of the Day and Deals Direct have received investments from James Packer and associated entities in the past two months.
Greenberg says the site, which is already running under the brand name SupermarketDeals, has been fast-tracked after the investment from the Packer-backed Ellerston Capital.
“A few months ago this was just kind of a thought, and we’ve jumped it up as a priority. Supermarket Deals is now a live site up and running, and we think this is going to be a very long journey of offering supermarket goods.”
“We’re not doing perishables, but for goods like hair colouring, shampoo, cosmetics and other types of foods, we will be offering that. And unlike Coles and Woolworths, which don’t deliver outside of metropolitan areas, we’re shipping parcels at a significant discount.”
Greenberg says the money received from the Ellerston investment provided much of the cash necessary for the endeavour, and says this is one of a few projects the company is working on.
He also says the company has “beaten Catch of the Day to the punch”.
“There’s healthy competition here, and Catch of the Day have been doing exciting things in this space. And really, I think the consumer is the winner.”
“We’ve got some great supply points here, and we’ve done the number crunching and we’re able to provide goods at a sustainable margin and yet still offer a significant discount.”
But Catch of the Day co-founder and chief executive Gabi Leibovich commented to SmartCompany that “imitation is the best form of flattery”.
“This is a huge area of growth for us, and we will be focusing on daily deals and time limited offers. We have shown that whenever we get into a web space, we will sell a lot more than anyone else.”
Telsyte senior research manager Sam Yip says the idea of online groceries has gained traction within the past year, especially as the two major supermarkets have embarked on a price war and consumers are more conscious of their weekly budgets.
“There is a great opportunity here, and the market is wide open as the supermarket enclaves have not moved in yet.”
Coles announced several weeks ago it was investigating an initiative that would allow the company to deliver goods purchased on the internet to nearby petrol stations, where customers could pick up their purchases at their convenience.
While Yip says these sites have the opportunity to gain significant traction, he points out neither Catch of the Day nor DealsDirect have done much marketing outside of their own culture.
“The challenge is getting people who aren’t on these mailing lists and so on onto these sites. I expect we’ll see a lot more marketing, as right now a lot of their databases are from email lists, online, social media and referrals.”
“Targeting the grocery market really means these online companies need to move out of their comfort zones. They’ve had success in the online world, now they need to emulate that with an offline audience.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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