Online shopping club OzSale gets million investment from Twitter backers

Australian online shopping club OzSale has won $14.5 million in funding from US-based venture capital fund Insight Venture Partners, which made headlines last year when it invested $US100 million into micro blogging site Twitter.

OzSale, which was founded in January 2007 by former Brit Jamie Jackson, is an invitation-only shopping site that sells heavily-discounted designer-label clothing (usually brought in from overseas) through short “flash” sales that last for three or four days.

The site has now has 700,000 subscribers and claims to be growing at 2000 members a day. It runs sites in Australia and New Zealand and has just launched a site in Singapore.

Carl Jackson, Jamie’s brother and the company’s chief operating officer, says OzSale started looking for funding in October last year, and had discussions with a number of venture capital firms, including Insight Partners.

Insight, which already has investments in a US-based shopping club site called HauteLook and a British site called Privalia, was looking for similar investments in the Asian region.

Jackson says it is too early to say whether there will be any direct synergies between the three companies, but says Ozsale is now in contact with its stable mates.

“It’s a nice little family to be in. We now talk to those guys and there are undoubtedly lessons we can learn.”

Jackson says the $14.5 million in new funding will be used for three purposes: customer acquisition; investing in infrastructure such as warehousing, distribution and talent; and growing further into Asia.

“South-east Asia is really the prize if we are talking about what these investors want,” he says.

In Australia, Jackson expects to see to start pushing into the mainstream media, after concentrating on search marketing and a more grassroots marketing approach, with a particular focus on parenting websites.

“The heat of the audience is mums with kids. We’ve had some fantastic kids clothing…the supply chain was quite well established in those channels historically and that was really was the starting point,” he says.

“We will more creative and more varied with marketing and try to work on the brand, rather than pure search.”

Ryan Hinkle, vice president at New York-based Insight Venture Partners said in a statement the firm are “strong proponents of the online private shopping club model and are convinced that Ozsale has the ability and drive to cement its leadership in Australia and New Zealand and to do the same in Southeast Asia.”

Insight has been a regular investor in Australia, previously holdings stakes in companies such as Hitwise and GFI.