DealsDirect buys corporate shopping and reward site Shoppers Advantage in its biggest ever acquisition

By Patrick Stafford
Friday, 14 October 2011

Online department store DealsDirect has upped the ante on its string of acquisitions, purchasing the corporate shopping group Shoppers Advantage in a deal that will add around $25 million in revenue per year and a member database of over three million.


The move comes during a particularly active year for DealsDirect, having acquired two smaller businesses earlier in the year, along with receiving an investment from a fund backed by billionaire James Packer.


Executive chairman Paul Greenberg says the company has spent "several million dollars" on Shoppers Advantage, and stresses that unlike the previous two acquisitions, this buy is all about the infrastructure and potential for growth rather than being purely about talent.


"I've been up front about the fact that our previous acquisitions were being rolled into our business. But this is a sizeable purchase that is a standalone company, and they are bringing a lot to the table here."


"This is not a clone of DealsDirect. It has its own database and business, but I think what it's missing is distribution. Certainly, we know how to get product out the door, and we think we can take these guys and build it even bigger."


Shoppers Advantage started in 2006, and is more of a private shopping program than a traditional retailer. It also provides reward and recognition programs for businesses, including larger names such as American Express.


Chief executive Grant Lee said in a statement part of the attraction to a DealsDirect acquisition was the ability to access the company's product base and supply chains.


Although Greenberg wouldn't reveal a solid purchase price, he confirms the company has paid "several million dollars", and stresses this is a major acquisition that has taken several months of planning. With revenue growth already at between 40-60% per year, Greenberg says this latest move will add $25 million per annum.


And in a big win for the company's inventory, Greenberg argues having a corporate site like Shoppers Advantage – which has a database of over three million customers – will open doors up to brands that wouldn't have necessarily sold on DealsDirect before.


"Over the last month we've been going to our corporate clients and telling them what we can bring to the table. And there is a lot of enthusiasm there, as we can provide a lot more variety now."


"We've had quite a few conversations with tier-one brands, and they think this is a great move. The contact with corporates at a directorship level is there, and so we've got a lot of scope to grow in this space now. The enthusiasm from that area is great."


Greenberg has been close to the heart of the current debate regarding online retail, and how a shift towards digital shopping will affect Christmas sales. But while he's a big proponent of having a multi-channel offer, he notes the bigger issue at the moment is a distinct lack of reliable customer service among digital retailers.


"We've just popped the Champagne on a new customer service centre, and going through a whole rebranding exercise. Good pricing is just taken as a given now, what customers want is more and more sales service."


"One of the good things about Shoppers Advantage is their culture there regarding that. More and more we're going to see a need for good and reliable customer service online."


This article first appeared on SmartCompany.

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