The Australian online retail industry has continued to grow, with auctions group GraysOnline snapping up department store Oo.com.au in a move which the company claims makes it the largest eCommerce business in the country.
The acquisition not only represents a key turning point for GraysOnline as it diversifies into consumer-facing opportunities, but is also a maturation point for the local online retail market.
Telsyte senior research manager Sam Yip told SmartCompany this morning the acquisition is another sign the online market in Australia is beginning to evolve.
“Consolidation is not just a sign of a maturing, but also an evolving market. There’s a lot of opportunity here,” he says.
Although a purchase price has not been disclosed, Grays says Oo.com.au will add $50 million in sales to the group. Together, both entities will turn over $350 million.
In a statement, Grays chief executive Cameron Poolman said it had acquired the Oo.com.au brand, website, customer database – with over three million names – and “staff expertise”.
Both companies will share the same infrastructure, with current Oo.com.au managing director Rolf Krecklenberg set to manage the business.
“Both businesses have been leaders in the online retail space for over nine years, and have profitably operated on proven business models,” Poolman says.
“Importantly, the extra scale provided by this acquisition will ensure our ongoing profitability using a sustainable business model.”
Both Grays and Oo.com.au were contacted by SmartCompany this morning, but neither were available prior to publication.
Oo.com.au was founded with a focus on electronics, and like many other eCommerce businesses such as DealsDirect and Catch of the Day, started selling on eBay. Krecklenberg joined in 2008 when the business was beginning to take off.
Over time, the business has diversified into a variety of different categories typical of any department store – which is why Yip believes the acquisition with GraysOnline has taken place.
“The opportunity here for Grays is to move away from just a B2B service into tapping into the consumer market,” he says.
“This is an example of the company diversifying into new areas.”
GraysOnline has primarily been focused on auctions, although in 2011 the business sold a 25% stake to Caledonia Investments. At the time, the business said it was even considering whether the company could be floated.
The business was founded in 2000, and is perhaps most well-known for its wine business. At the time, Poolman told SmartCompany the business was considering a number of different growth options.
In its latest statement, Grays said it believes the online retail market “will continue to grow strongly over the next five years”.
Yip says the acquisition is yet another sign the online retail industry is performing well.
“The online retail space is not a winner-takes-all market. There are not one or two players taking everything. There are so many categories (that) there is enough space for lots of players to be in this space.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
