DealsDirect buys toy site but talent the main acquisition

Online department store giant DealsDirect has made another investment in an online start-up, buying ToyBarn.com.au for an undisclosed amount and company chief Paul Greenberg suggested more acquisitions of small retailers will come as start-ups find themselves lacking momentum.

The investment comes as media giant Fairfax is looking to expand its digital portfolio, with a new report claiming the company is considering an investment in private selling site OzSale that would value the company at $120 million.

DealsDirect chief Paul Greenberg says the acquisition of ToyBarn provided DealsDirect with more than $100,000 worth of inventory and about 20,000 customers and that the acquisition price was well under $1 million.

He says more retailers are finding themselves in that place – they have lack of momentum but have a big enough business that the owners can’t relax.

“This no man’s land will be a challenge for online retailers finding scale,” Greenberg said. “I just attended the retail conference in San Diego and the top retailers are doing really well but the bottom 100 are struggling to find momentum.”

Greenberg says his acquisitions – including previous buys of DinosaurDeals, KidStore and TotalDVD — are as much about the talent as they are for the companies’ infrastructure and customer bases.

“I think these smaller e-commerce guys have had to do more with less and they have some really interesting solutions around CRM, site search and so on,” he says.

“I think there is a shortage of talent in this space and these guys are showing they are very nimble and have some great knowledge with them.

“Some of the acquisitions we’ve made…we are still using the pearls of wisdom they brought in from years ago.”

Acquisitions for talent are common in the tech space – Google does it often and it’s happening more in Australia, especially as the number of e-commerce sites grow.

Groupon Australia recently acquired Melbourne deals site CrowdMass and admitted that the deal was more about talent than infrastructure.

“I think the space is getting a little too fragmented and atomised,” Greenberg says. “And general management guys are saying there is just a lack of talent available so the highlight of these buys is about the people we can get.”

Fairfax is reportedly looking at expanding its digital presence by taking a stake in private sales club OzSale.

The site, which received $14.5 million from Twitter investors Insight Venture Partners last year and has nearly two million registered members, has a huge emphasis on fashion.

The private selling model has boomed over the last two years with many sites in Europe and Asia receiving millions of dollars in investment. The sites work by invitation only and sell excess stock for large discounts.

According to the Australian Financial Review, Fairfax is in talks to acquire a stake that would value OzSale, led by Carl Jackson, at $120 million.

The sale may go ahead if Fairfax pulls out, with the publication reporting that Macquarie Capital will hold an auction for the OzSale stake.