Yet another deal among European online buying clubs in the space of a few short months. This time, it’s one club taking a stake in another, rather than a VC investment.
Brands4friends.de, an online shopping club in Germany, has taken a “significant” investment in Secret Sales, a buying club in the UK. Terms of the deal were not disclosed but TechCrunch is reporting it to be in the “multi-million” pound region.
The investment will help Secret Sales with its “aggressive” growth strategy in the UK, Nish Kukadia, the co-founder and CEO of Secret Sales, said in the release (PDF in German), while the deal also gives brands4friends a foothold in the UK online shopping market.
Brands4friends.de made €80 million in sales in 2009, a three-fold increase on the year before, and it ranks as the biggest online shopping club in Germany and Austria, the two markets where it already operates. It became profitable within two years of its launch in 2007 and has 2.5 million members and currently stocks products from around 400 fashion brands.
The rapid growth of brands4friends.de demonstrates how the market for buying clubs is still relatively nascent. It is picking up 10,000 users a day, with about half of those coming on viral recommendations. It’s also telling that the average age of the users is 32: that older bracket means that there may be more money spent by the average user.
Secret Sales was also founded in 2007 and sells products from about 450 fashion, lifestyle, household and leisure brands. No word how many active users there are, or details on the company’s turnover, but this afternoon when we logged on there were about 11,600 members connected.
There have been a number of other deals in online sales clubs recently although mainly in the form of VC investment: In January, Mycitydeal picked up €4 million from eVenture Capital Parnters, Rocket Internet and Holtzbrinck Ventures (which also coincidentally backs brands4friends); the Russian site KupiVIP.ru raised $20 million, and last May Spain’s Privalia got €8 million.
France’s Vente Privee is by far the biggest of these all with revenues of around €650 million annually. Tech Crunch says that Amazon (NSDQ: AMZN) has been courting it, eager to move into the buying clubs market.
The way in which we interact with technology has changed dramatically over the past few years. The era of light computing has begun, and social media is big enough that the average person can shape perceptions. A Web site is no longer the most meaningful way for us to interact to tell companies about their products or to use online services.
Smartphones are selling in droves, and people are using apps rather than visiting Web sites for everything from buying movie tickets to checking stocks. At any given time, it is likely that conversations about big businesses are happening on Facebook, Twitter and other social media, and those conversations can be initiated by anyone from anywhere.
This week, Apple announced that a 13 year old from Connecticut had downloaded the billionth iPhone app. Over 34 million iPhones have been sold to date, and sales of Android smartphones are surging.
What’s more, smartphones have become more affordable, as economies are scale are reached and competition heats up among platforms.
Developers are focusing on Android and the iPhone, which provide excellent tools for writing apps. Microsoft is reinvesting in Windows Mobile in a big way, Symbian has become open source, and an industry effort has begun to deliver standardized Web apps that work across platforms.
The momentum of smartphones has become irreversible, and so has the resulting change in consumer behavior. I use a Twitter app to tweet on my iPhone instead of logging into the Twitter Web site. If I’m in a rush, I’ll buy movie tickets with Fandango’s app– it’s a lot easier than zooming in to see the tiny buttons and fields on its Web site.
Web sites don’t cut it functionally, nor are they longer the best way for businesses to reach people on the Web. A mobile Web site is not the answer either, and here’s why –they limit imagination, and hence the potential to interact with customers.
One of the top selling iPhone apps is “I Am T-Pain.” T-Pain is a musician who is famous for using the auto-tune to distort his voice. The app lets people sing into their iPhones so that their voice sounds like his. A Web site gives T-Pain a presence on the Internet, but it couldn’t offer T-Pain the same recognition that his app provides.
It is also shortsighted for businesses to assume that a Web site will offer a clear picture of customers’ desires, or that the world’s greatest experts on your products are working for it. Sometimes we know better as consumers. Businesses can’t and should not prevent it from happening, but they can join the dialog.
Social CRM is an emerging discipline that recognizes that the traditional two-way channel of communication between business and customer should include interactions among customers themselves. Numerous start ups including Bantam Live and established vendors such as Salesforce offer solutions to make that possible.
Good luck having that same interaction on a company’s Web site. It likely won’t happen in corporate-run forums. Companies including Comcast recognize this, and have begun to address customers through Twitter. We can only hope that they are really listening.
How people access information is changing. It’s time for businesses to think big while thinking small to provide us with the best possible service.
