How much is GrabOne.co.nz worth? Last week saw some big news in the daily deals market. Two group buying sites both barely a year old, sold out to larger companies. In Australia, Spreets.com.au sold for 40million AUD. In New Zealand, Groupy.co.nz sold to the Yellow Pages Group for an undisclosed amount.
In the New Zealand market, the interesting thing is that Groupy wasn’t the top group-buying site – It wasn’t even in the top 3! DailyDo.co.nz and 1DayOut.co.nz are clearly doing better as they have more areas covered, and larger databases (Facebook members).
This leaves GrabOne.co.nz as the market leader in terms of group buying sites. GrabOne has over 70,000 facebook members (few NZ companies have over 10,000). Grab One also offers deals in every area of New Zealand with 13 regions covered.
How do you value a startup company in a fast growing sector?
The Spreets sale allowed us to get some insight as to how much GrabOne could be worth. A recent article from The Australian entitled Yahoo7 buys daily deal site Spreets for 40m gives us some interesting numbers.
Spreets is the No 2 Australian group buying site. It has sold 274,000 vouchers and has $4 million in monthly turnover. Spreets also has 500,000 members.
Lets compare Spreets and GrabOne on these 3 figures:
According to The Australian article above Spreets has sold 274,000 vouchers. GrabOne happily publishes data about the sale of their vouchers. A check on the bottom section of the site today gives us vouchers sold quantity of 493,000. Hold on a minute. GrabOne has sold 220,000 more vouchers than 40m Spreets!
Spreets currently turns over 4 million AUD per month. (5.15m NZD). Unfortunately we don’t know GrabOne’s exact turnover but we may be able to estimate using their publicly displayed “Total Dollars Saved” figures. According to their site they have saved customers $15.2m NZD since their July launch.
Most deals offered are 50% off retail, so we can estimate that this figure is pretty close to their actual turnover. Its been 6 and a half months since so that rough calculation works out to 2.3m per month. But we haven’t yet taken in growth in turnover. Just like Spreets first month was only $4000 turnover, GrabOne has grown like crazy. So their current monthly turnover will be at least 2.3 million. I estimate that they are running close to 3.5 million a month.
500,000 members. Unfortunately we are unable to know GrabOne’s membership numbers. However we are positive that their membership base will be in the hundreds of thousands.
GrabOne has sold 493,000 vouchers. Some members in their database won’t have bought anything, some will have bought numerous vouchers. My best estimate is that GrabOne have 400,000 members. So possibly less members than Spreets.
So what might GrabOne be worth?
Comparing Spreets figures to GrabOnes indicates that while GrabOne has sold way more vouchers the value has likely been lower. Spreets potentially turns over 1.5m more each month, although this is only 30% more. Can we say that GrabOne is worth 30% less. I would say that’s a safe assumption.
40m AUD to NZD is 50.15 million. Take off 30% we have 35.1m NZD.
Other Value Adds
We can also add extra to GrabOnes value due to also being in hard goods. They have 2 other sub sites. GrabOne is also more innovative than its Australian counterparts.
The GrabOne network now has Vouchers, Wine and T-Shirts. 3 different market segments, and diversification into physical goods that the Aussies just haven’t got around to yet - and may never do. Did we mention that GrabOne also has launched a site for the brisbane market in Australia?
We could add $3m for the 2 subsites and hard goods ventures. And another million for the Australian launch. You can also add a hefty premium for being the NZ market leader. And for having all areas already covered. No growth work left for a buyer. Just keep the deals going. We could probably add $3m for market leader status but we will stick with $3m
So that gives us $35m + $3m + $3m = $41m
We believe that based on the Spreets sale, being the NZ market leader and several other factors that GrabOne could be worth $41m NZD. That’s not bad growth for a company that only launched 6 months ago!
Possible GrabOne buyers - NZ Companies
At $41m, New Zealand dosen’t present too many possible buyers for GrabOne. There are limited companies with the scope to buy the company in New Zealand.
There are a few choices but the sale price that would be expected rules out a big chunk of suitors. Given that the private equity bubble has dried up, its likely only a media company would have that sort of change ready for acquisition. However this is a good problem to have!
In hindsight, The Yellow Pages Group would have been one of the more likely buyers. They own a previous Bradley Media company with Finda.co.nz. But they have obviously just bought Groupy, so that rules them out. Facing financial problems, Yellow seem to have opted for the cheaper option of buying a smaller site, then using their existing staff to grow it using their existing database.
Fairfax Holdings seem the most likely New Zealand buyer. Owners of TradeMe, their Fairfax Digital arm would look after the purchase well. Fairfax has historically acquired their better website companies.
There are surely other media companies and a few other private companies that could be interested. But there is another option, albeit far-fetched. Would 1day want to buy their main competitor? Stranger things have happened.
1day got totally left behind when the group buying model came to town. They had the massive database, staff numbers, and the daily deals expertise but they simply didn’t execute with their 1DayOut offering.
Possible GrabOne buyers - Australian Companies
An Australian daily deals site buying GrabOne would be an obvious move. Being the market leader, GrabOne will be hard to beat by any new site, regardless of experience. A simple buyout saves the hassle of setting up new infrastructure, and means cashflow and profit from day one.
There are 6 major Australian Group Buying sites. Cudo, Spreets, Jump On It, Living Social, Scoopon and Our Deal. All could decide to make the move. Cudo is the only Aussie site close to launching here.
Possible GrabOne buyers - Worldwide Companies
An obvious buyer outside of Australasia would be Groupon.com. Groupon is the world leader and was the first site to bring group buying to the mainstream. All sites are based on this highly successful US company. Groupon have yet to make a move down under. Navigating to groupon.com.au brings you nowhere.
There has been lots of speculation that Groupon will buy an established Australian site to get a foot hold in an already crowded market. With things pretty quiet from Groupon regarding the Australian market this could mean negotiations are underway for an Australian acquisition.
Would Groupon want to enter the NZ market at the same time? For Groupon to buy GrabOne would mean instant market domination in the New Zealand space. Is the New Zealand market big enough for the larger companies?
This was the dilemma eBay had in the early 2000's with growing their online auctions empire. New Zealand was such a small piece of the pie worldwide, when they had bigger markets to conquer. They left NZ alone and Sam Morgan executed well and built a loyal following for TradeMe. Before long it was too late for eBay to bother with a NZ site.
NZ still has no international players here in the group buying space. It seemed like the UK's LivingSocial com (No2 company worldwide) was close to launching here. They had a starter site set up at LivingSocial.co.nz but this seems to have since disappeared.
Living Social have partnered with Australian site JumpOnIt for Aussie deals. In NZ, LivingSocial continue to advertise hard thru Google Adwords despite having no site, or even a word of plans to launch. They may just be building their database pre-launch but they've been advertising for close to a year. Anyone seen those pink cup cake ads?
Could LivingSocial want to buy GrabOne? Anythings possible, but with the thousands they are spending on advertising, a partnership may be more down their alley.
Perhaps even Google? After being rejected by Groupon with their 6 billion dollar offer, Google is possible. Word is that Google is starting on their own anyway with Google Offers. But its a possibility that they may want to buy local sites in each country to kickstart their venture.
Is GrabOne for sale?
Of course the pre-cursor to any sale is the fact that GrabOne is part owned by APN Media (publisher of NZ Herald). They may not even want to sell. Like Fairfax Media with TradeMe, APN and Bradley Media may simply be content to hold on to their cashcow. In times of falling newspaper advertising revenues, GrabOne could be the golden goose to APN, like TradeMe is to Fairfax.