AussieCommerce heads up-market, eyes IPO

February 19, 2014 Leave a comment

AussieCommerce heads up-market, eyes IPO

Published 13 February 2014 09:48, Updated 14 February 2014 09:07

James Hutchinson

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Jeremy Same and Adam Schwab of Deals.com.au. Photo: Josh Robenstone

The chief executive of fast-growing online retail outfit AussieCommerce, Adam Schwab, says the company is moving away from group-buying deals as it mulls a public listing on the Australian Securities Exchange.

The company, which topped BRW’s Fast 100 list in 2013, this week acquired luxury online retailer brandsExclusive from APN News & Media for $2 million in cash as well as an 8 per cent stake in AussieCommerce. That is significantly less than the $42 million APN paid for brandsExclusive in 2012.

The new site will add about 2.4 million new customers and approximately $40 million in annual revenues to AussieCommerce, which is on a run-rate to $160 million in revenues this financial year. Although the company last year bought group-buying site Cudo from Mi9, Schwab says the latest acquisition was aimed at adding new products to its portfolio and reducing its reliance on group-buying deals.

He denied e-commerce valuations had degraded in recent years, describing the $40 million Yahoo!7 paid for group-buying website Spreets in 2011 as “temporary insanity” and the peak of group-buying activity in Australia.

“It’s a brighter period now than it has been in e-commerce,” he says. “When you look at group buying three years ago, dealing with hairdressers and restaurants, that wasn’t really an end game for us or anyone. We’ve really tried to skew towards the mid- to high-end of the market.”

The deal is AussieCommerce’s fourth acquisition in recent years, and its seventh e-commerce website.

Spurred on by the recent floats of rival retailers DealsDirect and iBuy, Schwab says AussieCommerce was also looking to list publicly.

“Certainly in the last six months the IPO [initial public offering] window has opened substantially and caused us to look more closely at it,” he says.

Though neither APN News & Media nor AussieCommerce would disclose the value of the former’s 8 per cent stake in the latter, Schwab says he believed it was “substantially more valuable” than the cash consideration.

Phil Harpur, a senior research ­manager at Frost & Sullivan, says he expected further consolidation among e-commerce outfits as competition increased from traditional retailers and international players.

“The reality is hitting that e-commerce is just part of retail, which is in part a sign of a maturing market anyway,” he says. “A lot of the online players that started up early on came in and got a really good opportunity in the market, but now it’s much more competitive. In terms of the level of competition, it’s been raised. Some of the smaller players I think will get squeezed out of the market.”

Filed under Innovation, TMT Trends

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