- BRW Lists
Published 02 July 2013 11:51, Updated 25 July 2013 12:40
Enter what you think Cudo went for - somewhere between 0 and $60 million will do.
Scoopon founder Gabby Leibovich has estimated the value of competitor Cudo at “zero” as Nine Entertainment’s digital media arm sold its group buying platform to AussieCommerce for an undisclosed sum, after reportedly wanting $60 million for it in 2011.
Leibovich pulled no punches on Twitter. He described Mi9’s offload of Cudo - which together with Groupon, LivingSocial, OurDeal and his own Scoopon generate 80 per cent of the $500 million annual revenue of the group buying business - as a “f... up”.
Leibovich said he would not comment further when contacted by BRW.
AussieCommerce founder and managing director Adam Schwab did not disclose Cudo’s price tag to AdNews but said it was an all-cash deal. Schwab will consolidate Cudo’s all-important email database with those of the other sites already under the AussieCommerce umbrella - Deals.com.au, TheHome, Ouffer.com and Pop.com.au.
An Mi9 spokeswoman said its consideration for Cudo “was a significant multi-million dollar deal”, adding there was no deferred component based on future performance. Cudo was a profitable business, she said.
Leibovich’s nil estimate on Cudo may have been tongue-in-cheek, but it indicates a group buying market that’s still fiercely competitive despite the 65 sites that existed at the industry’s 2011 height being whittled down to eight of any significant size.
There was little loyalty to brand names in the group buying space, according to research manager at industry analyst Telsyte, Sam Yip.
“The top revenue writer in any given month swings wildly depending on particular deals,” he says.
Cudo in fact had the highest-grossing deal so far this year with a discounted family ticket to the Seaworld theme park.
What’s become less volatile is staff numbers at the major group buying platforms. Yips says “hunters” seeking new merchants with which to create offers have become a rarity.
“There used to be whole floors of cold-callers at these places, now it’s a much-reduced headcount of telesales people chasing warm leads, getting merchants to sign up for a second or third year.”
Complaints about group buying sites have dropped after a shocking 2011-12 for the industry, with Yip observing better product sourcing, improved customer service and longer term relationships with merchants.
Industry revenue is down - 7 per cent year-on-year for the March quarter, Telsyte reported - however Yip says the leaner, more mature players still enjoy pricing power at certain times of the year.
“You’ll find more merchants wanting to offer deals than there are sites willing to service them at certain times of the year - Valentine’s Day, before school holidays, the July toy catalogue sales, events like that,” he says.