Online Store CatchoftheDay Challenges Australian Traditional Supermarkets Further

In a bid to get a larger cut of the shrinking Australian consumer market, online department store CatchoftheDay rolled out on Wednesday it third e-commerce portal named Grocery Run. By its foray into grocery, the online seller challenges traditional supermarkets.

To encourage shoppers to click on their mouse instead of drive down to the nearest grocery, Grocery Run offers up to 50 per cent savings on branded grocery, cleaning, health, beauty and pharmaceutical items. For some products, the discount would be up to 80 per cent of recommended retail price.

"We look to markets where we can offer significant savings and bring about real price competition and a better deal for shoppers. With three leading shopping sites now in operation, we have the experience and economies of scale to quickly launch new sites where we see a market opportunity," Inside Retail quoted CatchoftheDay co-founder Gabby Leibovich.

The company, which also operates the Scoopon.com.au Web site, aims to reach $250 million revenues for the year 2011-12 and plans the launch of a fourth Web site in 2012.

CatchoftheDay initially held a 12-month trial period for Grocery Run in which the department store offered the large discounts only twice a month. It sold two grocery items per second and netted more than $1 million in 48 hours.

Grocery Run - which offers discounts on about 200 major brand goods - went live at 12 p.m. of Wednesday and will remain open Thursday. The site has so far 1.4 million members and is expected to increase the numbers with its formal launch.

Mr Leibovich said the Web site could afford to offer large discounts by purchasing from suppliers larger volumes and paying them within 24 hours. Due to an online platform, the company takes advantage of low overhead costs from lesser rental and payroll expenses, which it passes on to consumers in the form of lower tag prices.

"The success of our grocery business shows that shoppers are looking for a better deal on groceries and we believe we have a good model in place that resonates well with today's thrifty consumer," Mr Leibovich said in a statement.

The success of online retailing in Australia despite competition from overseas e-commerce sites that do not charge the 10 per cent sales tax have spurred other retailers such as department store Myer to spend $9 million to improve its Web site and appliance retailer Norman Harvey to launch an online portal from China.