As the online marketplace space becomes more crowded, Melbourne-based startup MyDeal plans to shrink to greatness – when it comes to product categories, that is.
Like many marketplaces, the e-commerce company founded in 2012 by Australian entrepreneur Sean Senvirtne was initially focused on growing its customer database, supplier numbers and range. In 2017, with 1000 sellers and 25,000 products on the site, it expanded into new categories – fashion and travel – and diversified its offering with the launch of a fintech product.
But now, MyDeal is paring back its business to focus on the furniture and homewares space, an area where the company has always had a natural strength, according to head of marketing, John Barkle.
“Prior to the massive expansion of products, those were our strongest categories. I think it’s because we have the best price and range, and we’re very good at moving products that are big and bulky,” Barkle told IRW.
Today, MyDeal claims to have more than 500,000 products on its site. It aims to surpass one million within the next six months by bringing on board new sellers in the furniture and homewares space, a goal that should be made easier by its recent integration with ChannelAdvisor, a US-based e-commerce company that helps businesses list their products on marketplaces such as eBay, Amazon and now MyDeal.
“This is a significant milestone in the business that signifies 12 to 18 months’ worth of work to get the technology right on our marketplace platform,” Barkle said.
MyDeal’s marketplace technology is bespoke, and Barkle acknowledged that, in the past, this may have presented a barrier to sellers wanting to join the platform. Listing products on a marketplace can be a time-consuming and labour-intensive process, depending on the marketplace’s information requirements, the number of products the seller wants to offer and the availability of software to automate the process.
Since solving its technical issues and narrowing its focus, Barkle said MyDeal is now positioned for rapid growth. But the e-commerce company may face new obstacles in its pivot to furniture and homewares, which puts it in direct competition with some much larger and more established players in the niche, such as Temple & Webster. The listed retailer recently reported $49.3 million in revenue in the six months to December 31, a 40 per cent increase on the previous year.
Barkle declined to share any earnings figures for MyDeal, which is a private company, but said the retailer recently became profitable.
“We run a very low-cost model, meaning we can pass on those savings directly to the customer,” Barkle said. “Where we intend to compete is on providing a unique experience that improves discovery and satisfaction.”
MyDeal recently launched a “shop and earn” program that Barkle said is unique among Australian marketplaces. It allows customers to earn credits that they can then put towards later purchases every time they buy something on MyDeal. The amount of credits they earn depends on the seller they buy from, which is designed to encourage healthy competition among sellers to drive sales. Barkle said the site has seen a substantial increase in customer retention since launching the program three months ago.
Barkle also spoke obliquely about using technology to bring customers as close to touching and feeling the product as is possible online, something that other online retailers, including Temple & Webster, have flagged as being possible with augmented and virtual reality. But like its competitors, MyDeal mostly seems content to let demographics play to its advantage.
“We believe the penetration of online sales into furniture and homewares will substantially increase over the next five to 10 years, driven by millennial consumption,” Barkle said.
Housing slump weighs on homewares
Whether this will be enough of an insulating factor for MyDeal and other online furniture retailers to weather the current housing slump is up for debate. In its monthly trading figures for January 2019, the ABS reported a 0.2 per cent drop in household goods retailing, the only industry sub-group to fall in the month.
At the same time, MyDeal’s strategic move away from the general marketplace arena, where online “department store” retailers like Catch and now Kogan.com are competing with the likes of eBay and Amazon across a wide range of categories, may prove to be less effective in the long run, as competition among niche marketplaces increases.
Jason Wyatt, co-founder and managing director of Marketplacer, a software company that provides marketplace technology to businesses, said retailers, brands and manufacturers are beginning to adopt a marketplace mentality to extend their ranges without the burden of owning inventory.
“That previously hasn’t existed,” he told IRW. “I don’t think there’s room for 20 mega marketplaces in Australia, but I think we’ll see more niche marketplaces that aim to be ‘something’ for ‘somebody’.”