Packer-backed sites to compete in online groceries space

Online retail giants DealsDirect and Catch of the Day have both unveiled plans to sell groceries online, with industry experts confirming online supermarkets are gaining traction.

In the last two months, both sites have received investments from Australian billionaire James Packer and associated entities, but that doesn’t appear to have deterred the sites in going head to head.

DealsDirect has announced a new site dedicated to groceries and perishable products, while Catch of the Day will unveil its own supermarket site GroceryRun within months.

According to Paul Greenberg, the site is already running under the brand SupermarketDeals, following fast-tracked growth thanks to Packer’s investment vehicle Ellerston Capital.

“We think this is going to be a very long journey of offering supermarket goods… We’re not doing perishables, but for goods like hair colouring, shampoo, cosmetics and other types of foods – we will be offering that,” Greenberg told SmartCompany.

“Unlike Coles and Woolworths, which don’t deliver outside of metropolitan areas, we’re shipping parcels at a significant discount.”

Greenberg says the money received from Ellerston Capital provided much of the cash necessary for the endeavour.

He says the company has “beaten Catch of the Day to the punch”, describing the new level of rivalry as “healthy competition”.

But Catch of the Day co-founder and CEO Gabi Leibovich has been less friendly than his competitor, stating: “Imitation is the best form of flattery.”

“This is a huge area of growth for us, and we will be focusing on daily deals and time-limited offers. We have shown that whenever we get into a web space, we will sell a lot more than anyone else,” he says.

According to Telsyte senior research manager Sam Yip, the idea of online groceries has gained traction in the last year, particularly in light of the escalating price war between the two major supermarkets.

“There is a great opportunity here, and the market is wide open as the supermarket enclaves have not moved in yet,” Yip says.

While Yip says these sites have the opportunity to gain significant traction, he points out neither Catch of the Day nor DealsDirect has done much marketing outside of its own culture.

“The challenge is getting people who aren’t on these mailing lists and so on onto these sites. I expect we’ll see a lot more marketing, as right now a lot of their databases are from email lists, online, social media and referrals,” he says.

“Targeting the grocery market really means these online companies need to move out of their comfort zones. They’ve had success in the online world, now they need to emulate that with an offline audience.”

Vasa Srbinoski – who sells and delivers fresh food through her online business ecofy – says operating online is cost-effective, and an ideal way to appeal to time-poor consumers.

“Our point of difference at the moment is that we’re not a traditional business. This market at the moment is full of shops that have massive overheads and staff that stand around all day – we’re not one of those,” she says.

“We’ve got pretty good shopping cart software; it’s really flexible… When you look down the list of fruits and vegetables, you can see a little picture, it tells you how much it is and you can just order it.”