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IPO talks on the rise


GraysOnlineGrays Australia will join a growing number of local e-tailers listing on the Australian Securities Exchange (ASX), following the online auctioneer’s merger with online department store, DealsDirect.

Grays will be listed online under DealsDirect owner, Mnemon. The combined company will create Australia’s largest listed online retailer, with sales of around $450 million and a database of more than six million customers across the GraysOnline,, DealsDirect, and TopBuy websites.

DealsDirect listed on the ASX on January 17 in a backdoor listing. As part of the merger, the company is proposing a name change to Grays E-commerce Group (GEG), to be headed by Grays CEO, Mark Bayliss, who joined the online auction site in June.

“Strategically, it’s a bit of a no brainer. It creates a turnover of about $450 million. Half of that turnover is in B2B and the other half is B2C,” Bayliss told Inside Retail PREMIUM of the merger.

“There’s a lot of consolidation going on in the online space, and it is now about having scale, being profitable, and having growth options.

“This really ticks all of those those boxes. I don’t think there are many online retailers in Australia that could claim that.”

Bayliss says there will be cross promotion between the brands, however, all will operate as separate businesses.

“The businesses will continue as they are, but with some good promotions and cross selling opportunities.

“We’re not going to muck around with the websites and the brands. They’re good brands and they’ve got really complimentary customer databases with minimal overlap and the demographics over them are really good.”

Listing all the rage

According to Thomas Kierath, retail analyst at Morgan Stanley, the Australian online retail landscape is following in the footsteps of the US and UK’s pureplay marketplace with more e-tailers listing, but there is still a long way to go in Australia.

“In the US and UK there are a lot of online listed businesses, whereas in Australia we don’t have that. It is the future of retail, so investors want to invest, but there is still a lack of those businesses,” Kierath says.

Online private sale club, Ozsale, listed on the London Stock Exchange under MySale Group following investments by UK-based founder Sir Philip Green.

Fellow online surfwear retailer, SurfStitch, is also rumoured to currently be in IPO talks with investors.

“The problem has been is that not many [Australian online businesses] are profitable, however, now that a few of them are turning profit, and the DealsDirect/GraysOnline deal should make a decent amount of money, they’re certainly becoming more attractive to investors.

“It’s getting harder in online retail now, the new data shows that sales growth in online retail slowed down to about five per cent year on year.

“From 2009 to 2012 it was growing at 20 per cent. It was quite easy for online retailers to grow, but now, in the market that they’re operating in, the growth rate has slowed.

“People are valuing instore experience and service, but we have caught up to a lot of other parts of the world and now we’re beginning to cycle over some pretty big numbers.”



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