Australia’s largest online department store Deals Direct will launch a one-deal-a-day site later today that it says will only sell well-known brands such Panasonic and Revlon to give the site a point of difference in the saturated deals and group buying market.
Deals Direct founder and managing director Paul Greenberg has also told SmartCompany that the DealMe site will be designed around offering a limited number of deals, rather than using the group-buying model of selling as many as possible – a strategy that he argues cannot be sustained.
“Groupon was launched in America for America. There is no harm in taking a concept and applying it here, but I just don’t think the group buying site is suitable for Australia. We have only seven or eight capital cities, and I think the model may not work here.”
DealMe is planned to launch later tonight, but Greenberg says some technical details could possibly push it back a day or so.
Greenberg points out the group-buying craze depends on selling as many discounts as possible, but he says DealMe will be capped so merchants won’t have to deal with financial loss if too many people take up discounts.
“Our deals are capped. In group buying, it’s a bit weird because you call your buddies using Twitter and Facebook because you want the deal to tip – but show me one that hasn’t tipped already?”
“We’re not going to patronise our customer base. There’s a group buying frenzy right now, but we’ve capped the deals so merchants don’t oversell, which I think is going to be a problem for some group buying sites.”
SmartCompany has previously reported that some merchants have taken a loss despite selling thousands of coupons through group-buying.
DealMe will take advantage of Deals Direct’s experience in warehousing and supply, with Greenberg saying each product will be a brand that everyday consumers will recognise.
“It’ll be tier-one brands, national brands. No house brands, not secondary brands – you’re going to see brands like Panasonic and Revlon,” he says. “It’s deeply discounted because we’re going out and buying things in big quantities.”
Greenberg would not say if the company has set any financial goals for the new site. DealsDirect currently turns over about $100 million every year.
Shipping will be another “pillar” of the site, Greenberg says, with every product to be sent out at no cost.
“We looked at the group buying sector, and we do like it, but we have to think – what’s our strength here? We are strong in product sourcing and distribution, we know how to buy good deals, we know how to ship stuff on the same day, or the next day.”
“We’re calling this the home of free shipping – which I’m trying to get trademarked. “
The new site comes at a time when group buying is exploding in both Australian and international markets. Over a dozen sites now operate here on the group-buying model, and several more are finding their way through Europe and the Middle-East.
But Greenberg’s new site is more akin to sites like Catch of the Day, and he says that ultimately, sites like Woot.com are essentially the same thing with a different brand.
“It’s really not rocket science. If you look at a site like Scoopon, we have admiration for that brand, and Catch of the Day, we have respect for that. But we think they are both essentially the same thing – a deal a day site.”
“It’s a 24-hour model. It’s only listed for 24 hours, and by then it’s gone. But with our database of close to a million customers, we think it will be success.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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