Catch of The Day has a simple strategy. It’s all about time-limited sales. The result: high volumes are sold in short time periods. The company, for example, has moved 4,300 Toshiba laptops in three hours. “Every couple of months, we do an event on shoes and during that we will sell 10,000 pairs of shoes,’’ he says. “This week we sold 6,000 sleeping bags. If you want to see something obscure and different, we can sell 17,000 pillows in a day and in the past we have sold $1 million worth of Samsung televisions in one hour.”
Suppliers are happy to clear their inventory. It also ensures the group doesn’t incur high costs relating to stock on hand.
The problem, says Leibovich, is managing the growth. About 10 months ago, the company moved from a 4,000 square metre warehouse to one of 16,000 square metres. That was a mistake.
“When we looked at it, we said this is our home for the next three to four years. As of today, the warehouse is completely full, we cannot move inside and we are considering our options and looking at where else we can go from here.”
“We should have gone for a warehouse that was 40,000 square meters and not 16,000 and that’s what we mean by growing pains. You can only learn on your skin and we are making those little mistakes along the way. Most people would love to swap places with us but it’s slowing us down in areas where it shouldn’t.”
“Our problem has always been growth, it’s so fast. How do you manage it? There’s no easy solution, it’s difficult, it’s working hard every day but as someone once said, if it wasn’t hard, there would be 100 Catch of the Days running around now.”
Even the local suppliers are struggling to keep up with the group’s spectacular growth. As a result, it is now getting more of its gear from overseas.
“A year ago we sourced about 10% from overseas and 90% locally,’’ he says.
“This year it has changed completely and we find we are sourcing 50% locally and 50% overseas. We find that local suppliers whom we approach for end of lines and clearances cannot give us the volumes we need. A local supplier might have 1,000 pillows in stock to offer but we know we can sell 17,000 pillows.”
“So what’s been happening over the last 12 months is we are approaching the local suppliers, all the big brands, and we have said: ‘Guys we love your brand, we love your product but you just don’t have enough. Why don’t we go to your factories in China or the US or wherever they are and bring exclusive lines especially for us that are different to the ones you are currently selling to the retailers?’”
“What we are finding now is that we are no longer considered by the suppliers as just another eCommerce company, we are considered by them as a mainstream retailer simply because we can match the volumes of big retailers.”
He says GroceryRun, which sells dried goods from shampoo and tinned products to chocolate, also has the support of suppliers who are angry about the way they are treated by Coles and Woolworths. “The suppliers are very much rebelling against the supermarkets as they are getting less and less shelf space as the supermarkets are growing their private offerings. We are hearing from a lot of frustrated suppliers about their problems, which opens the door to companies like GroceryRun because the consumer wants to buy the brands they recognise and not the home brands.”
Leibovich is not worried about the big retailers like David Jones and Myer getting into online sales. As he sees it, they have their work cut out for them and if they increase the online retail market, it can only be good.
“They have a problem and I wouldn’t like to swap places with them. It’s not an easy solution and I understand what Myer and David Jones are going through. They have been non-discounters for all their lives. Discounting is not in their DNA and the online consumer expects two things: they expect convenience and discounting.”
“They do expect a better price so I expect the retailers to keep fighting in the variety and discovery space, but they will certainly lose the discounting space. At the end of the day, the consumer wins and that’s the most exciting part.”
But isn’t Leibovich worried about the enormous resources that the retailers could use in the battle for a bigger share of the consumer’s wallet? No, he actually welcomes it.
“A lot of people say it’s early days so it’s very exciting for us to hear that. In terms of the market growing, bring on Myer, bring on David Jones, bring on Bunnings, bring on Amazon.”
“All that it means to us is that more and more money will filter down to online versus retail. All that it means for the consumer is that more and more people will continue and start shopping online and what it means to my group is that people will discover the market leaders and very soon will start shopping with Catch of the Day, Scoopon, Grocery Run and the rest of our sites.”
“It’s very much ‘us versus retail’ so bring it on. I want to grow the market from 5% sales online to 30% sales online. That’s really our mission.”
The other key to the company’s success has been keeping a lid on costs. The company has a workforce of about 300 and it’s growing, but Leibovich says the talent and ideas of his team keep the company growing.
But one cost that he has avoided has been marketing. He claims the Catch of the Day stable has grown without any marketing. Zip. He says it’s all been word-of-mouth from his two million customers.
“Our growth from day one until today has been very much been word-of-mouth and for that reason our consumers are a lot more loyal, a lot more active than other consumers out there,’’ he says. “It’s all about creating that ‘wow’ effect.”
“We all shop online and surf the net and see lots of banners by other websites trying to entice us to come and shop with them but nothing beats word-of-mouth. And the way we have been growing is by offering unbelievable deals to our consumers and we find nothing is better for growth than if people tell their friends about something that they bought or on offer at Catch of the Day.”
What about an SEO strategy? It’s zero, he says. “Google is not getting a cent from us. If you talk to online companies out there, they spend a huge amount of their profits or non-profits back into SEO, we spend zero.”
Instead of marketing to the outside world, the group markets the different sites to its own customers. “When we launched Scoopon two years ago, we didn’t spend a cent on marketing. We went to our existing database at Catch of the Day and told them: “Guys you buy products from us, why don’t you buy services and entertainment coupons from Scoopon? And it was the same with GroceryRun. We went to our database with Catch of the Day and Scoopon and said: ‘You are buying groceries, buy groceries from us’.”
As part of that, there is a social media strategy with each of the sites operating on Facebook and Twitter. Catch of The Day has 266,000 “likes” on Facebook, all part of the word-of-mouth strategy.
Leibovich sees the group only heading one way. “All I know is that if you stop 100 people in a shopping centre in Sydney and ask them if they’ve heard of Catch of the Day, I believe 97 of them haven’t and that’s very exciting to me to know that our potential for growth is still phenomenal.”
That might create more problems managing the growth. But then Leibovich would say it’s better than the alternative, it’s a good problem for any business to have.
