CHAPTER 3
Gaining momentum

By early 2007 we still had only seven staff, but our revenue and the volume of transactions were growing rapidly. From a rocky start of selling just $1000 worth of goods a day, we were now selling $10 000 a day worth across all three sites: eBay, DailyDeals.com.au and Catchoftheday. These figures were never going to put the big retailers out of business, but we were energetic, motivated and excited to see our figures grow. We had no inkling we were creating a billion‐dollar business! We were just like a bunch of kids having fun playing with computers.

From the get‐go, it was very clear that there were three parties needed to make this business work: Catch‐supplier‐customer. Without customers, we had no business. Without suppliers, we had no deals to attract customers.

From our early days of buying, we realised that all suppliers—no matter how good they are—make mistakes when buying. There is a joke in the retail world: ‘The buyer is always wrong’. They either buy too much, or too little. Being the buyers at Catchoftheday, we understood the meaning behind this joke and lived it every single day—and any buyer reading this book right now is surely nodding their head in agreement.

We are better buyers!

Suppliers get caught out with excess stock for lots of reasons. It could be that a big retailer cancels an order; the wrong colours or sizes are ordered; the wrong items are sent out; the boxes get damaged; or the buyer overestimates consumer demand, such as having too many air conditioners in the middle of winter. What we were looking for were deals where the suppliers were willing to let go of stock at stupidly low prices in order to free up warehouse space or to receive much‐needed cash to pay for the next container of goods. We realised that there was a massive untapped opportunity in being able to help suppliers and brands get rid of their ‘mistakes’, and this was the piece of the puzzle that Catchoftheday solved.

One of the questions we get asked all the time is, ‘Why has Catchoftheday succeeded in e‐commerce while others have not?’ and while there are many ways to answer this question, our answer has always been, quite simply, ‘We are better buyers!’

Being a great buyer is a skill that can't be taught at university, and it can't be inherited either. You either have it or you don't.

We called our buyers ‘product hunters’, because they hunted down great deals and brought them to the door of our customers.

While you've either got the talent or you ain't, here are a few strategies anyone can develop that will make you a better buyer.

  • Be curious: read sales catalogues, or just walk through shopping centres and have a look around. Curiosity goes hand in hand with learning; the more you immerse yourself in your niche, the more educated you will become. Knowing your category allows you to spot a deal the moment it comes your way. Great entrepreneurial companies and individuals always ask ‘why?’, and that curiosity powers their creativity.
  • Be an honest person, and do the right thing: this is the quickest way to build trust. If you're a jerk, the word will quickly get around. We always believed that honesty (and integrity) are the best policies.
  • Build a relationship with your seller: everyone prefers to deal with a friend rather than just a faceless executive hiding behind an email.
  • Pay your suppliers on time: even better, pay them ahead of time. They'll never forget you.

Guy Polak, Catch's head of buying, knows exactly how to build relationships.

Never forget that people do business with people they like. So how do you become likeable? Again, this is a tough question because you either have that quality or you don't, but generally speaking, good buyers need to be outgoing, talkative types who can win a room over and build rapport. If you aren't good at that, get good at it or find another person to do the buying.

Second, you don't create business by telling people, ‘I want to do business with you’. You create business by building relationships, and you do that by connecting and finding common ground between you and the other person. For example, once you figure out what someone is interested in, throw some random but related knowledge into the conversation. You don't need to be an expert on every topic; just think of something to take the conversation from awkward to exciting. Once you have the other person feeling comfortable, you can start to build that bridge.

People do business with people they like, and being likeable is as simple as showing an interest in what the other person feels passionate about. In business the financial benefit is obvious, but at the end of the day we all want to surround ourselves with nice people, both in our social life and especially in our business life.

Adam Chrapot, Catch's head of sourcing, has a PhD in relationship building.

Here are five more tips that will help you build better relationships.

  1. Meet in person. You can't fall in love unless you go on a date, which is why relationships are best built face to face. It is far too easy to misconstrue feelings over email or even a phone call, so make the effort to meet over a coffee, even for a five‐minute chat or an afternoon walk at the beach. You'll quickly see the relationship move to the next level. Our suppliers knew this and worked hard to get in front of us. We often got invited by a supplier to events like a music concert, the Grand Prix or the Australian Open tennis. Why? Because our suppliers knew it was by far the best (and cheapest) way to build a meaningful relationship with us. Once you build a personal relationship, everyone feels a lot more comfortable doing business because now you're friends rather than just distant business associates.
  2. Don't leave voicemails. No‐one listens to them anymore. If you don't get the person, hang up and ring back.
  3. Be funny. Like it or not, ‘funny is money’ and people will always prefer doing business with someone who makes them laugh. Why? Because life is meant to be fun and those who can combine business and fun will get the sale over those who can't take, or make, a joke. Don't be too serious! This approach has certainly worked for us.
  4. Don't get angry over email. We have Mediterranean tempers so when we get upset it is very tempting to respond in an aggressive or angry way. Our tip? Count to 100 and then respond. You will almost always be thankful you didn't act in haste.
  5. Never, ever close a door. Doors are very hard to open so it's your job to keep them open. Some suppliers might piss you off today, but they can be your best friend tomorrow, or even a year or two down the track. Besides, if they leave their current job, you want to make sure they say nice things about you at their next job.

So, we knew the art of buying, and we knew suppliers had a massive problem that we could fix. Now we just needed to convince them we were the ones to fix it for them. Here's the spiel we used when we'd turn up in our van trying to convince a supplier to sell to us.

Hi Joe,

I'm from Catchoftheday. We are an online shopping site. Our specialty is purchasing end‐of‐line stock and clearance offers. We buy the goods on the spot. I will make an immediate decision. I will pay you for the goods today and I will take the goods with me now. Is there anything in the warehouse you need to clear?

Here's what Joe really heard:

I will pay you today and take the goods now.

How could Joe say no to an offer like that?

Innovate or die

At some point, all suppliers and retailers get caught out with too much stock. We did too. So, we came up with a solution to get rid of it. We called it the Catchathon, a ‘monthly megasale’ of all the stuff we got stuck with at the warehouse. The sale took place on the last Thursday of every month.

While most of our deals were simply unbelievable, we couldn't expect all our customers to show up every day to buy from us, so the reality was, they missed out on some of these great deals. The Catchathon gave them an opportunity to ‘catch up’ on a product they may have missed.

The first Catchathon had 33 products, but as the popularity grew, so did the numbers. Within a couple of years, our Catchathons had as many as 1000 products, and we stretched the event over two days, generating gross profit of $500 000 over that two‐day period (yes, that's gross profit!).

From that day on, we ran it every single month, and, almost without exception, it has been the bestselling day of the month. We discovered two very important lessons from this innovation: that selling 33 of our best products on a single day generates more profits than selling one product; and it's okay to break the rules (of selling one deal a day), especially if you're the one making the rules.

Snapshot of one of the first Catchathon web pages. Check out the Small Fish panel on the left and the Catch Countdown timer. These were innovations unseen in Australia at the time.

A Catchathon event. Our best selling day of the month.

Necessity is the mother of invention

Finding an A‐grade deal every day looked simple, but every daily deal had to meet our high standards, which made the process complicated. The deal had to:

  • ‘surprise and delight’ our customers
  • appeal to a wide range of people
  • sell in large numbers
  • be super profitable so we could pay the bills of this fast‐growing business.

Sure, it was a challenge to achieve all this in one deal, but it forced us to get more creative in finding new and different ways to sell in those kinds of volumes.

For example, some of the merchandising innovations we came up with to shift old stock included classy creations such as The Box of Crap (affectionately known as the Box of Pooki). This was a bag or box containing a bunch of random items from our warehouse that we needed to clear. The message to customers? You get what you get and you don't get upset.

Here are some other event ideas we came up with:

  • the $10 Day: where all items are $10 or less
  • the $28 Day: all products sell for $28 including shipping (not one of our best ones, it only lasted for three months)
  • the Mega Baby Box: 10 items for your baby for $30 (we sold thousands!)
  • the Jewellery Megabox: 25 pieces of jewellery, normally valued at $400; we sold them for $25 (people often ask us how we sold packages of expensive jewellery for so little. See lesson for our secret to this one.)
  • the School Essential Megabox: 15 items for kids going back to school (this did well during COVID‐19!)
  • the Box of Real Crap: it was as the name suggests (and it was our top‐selling box; our customers loved this one the best of all!).

Our single biggest challenge in building Catch was getting suppliers to sell to us. As far as most retailers were concerned back then, the party was at Bricks and Mortar. As such, we often encountered measured resistance from local suppliers and brands. They just would not sell to us. They were traditional, stuck in their ways and unable to see what the future held.

So, when we came along and upset the applecart, they didn't like it very much and scrambled to find reasons not to do business with us. The most common excuse they gave was,

‘Sorry, we don’t sell to companies without a physical storefront’.

Can you believe that? It sounds laughable now, but that's what they said.

Catch was already 18 months old by this stage, shifting millions of dollars’ worth of stock every month, and yet nine out of 10 reputable suppliers and brands still refused to sell goods to us because we didn't have a front door.

As we write this book, COVID‐19 is in full swing and everyone is in lockdown. All the shopping centres are closed, but, interestingly, Catch and all the other e‐commerce players are still well and truly open for business, busier than ever and able to support their customers and suppliers during this difficult patch. How things change!

Looking back, it’s hard to imagine that no-one wanted to sell goods to us because we didn’t have a physical shop.

Our big break

One of the toughest segments for us to crack was the PC and computer accessories market. Prior to March 2008, we had not been able to source a single deal from this segment. It was a closed shop, with the retailers and suppliers all cosy in bed together and very happy with their lot, thank you very much.

When we did crack it, however, all of that changed in a major way. Looking back, this was the turning point in our trajectory that catapulted us into the league of uber‐retailers. Here's how we cracked it.

The following week, we were bombarded with offers from all of those companies wanting us to feature their products: laptops, printers, hard drives, cameras, storage devices, memory cards and more laptops. Suddenly, we had the premium brands all the retailers had. This paved the way for other big brands to do business with us as they soon realised they too could sell their premium brands to us—and make a lot of money doing so.

Anees, our 21‐year‐old junior copywriter, took the calls. Until his arrival a year earlier, we had done the copywriting, and, to be honest, we were not that great at it, but someone had to do it. It wasn't long before he became an integral part of our growing team of 15 staff and our right‐hand man. Prior to joining us, Anees had never sold a thing in his life, but he was a fast learner and could turn his hand to anything. He taught himself graphic design, handled the sales calendar of deals, and started to accompany us to meetings with suppliers. At this stage he was lacking the confidence to be the main man, but all that would change within a couple of years. In the following months, with his help, we experienced the fastest and strongest growth to date. Here are just some of the fabulous sales results we achieved back in 2008:

Snapshot of the daily deals of catch of the day website.

Gabby: Here's the flyer I took to the life‐changing Ingram Micro event. This event was the turning point for Catch, and this flyer helped us break through.

  • 4000 Asus computers in less than 38 minutes!
  • 800+ units of external hard drives in a single day
  • 10 000 power boards (we made a profit of $100 000 that day!)
  • 320 000 Ferrero Rocher chocolate balls in seven hours
  • 11 000 coin counters in one day.

Sale of the century

When we arrived in Australia in late 1986 (Gabby was at year 11, Hezi was at grade 4), our favourite TV show was Sale of the Century. Every night at 7 our whole family would sit down and watch Tony Barber do his thing. Not only did we get to play a trivia game, but we also improved our English. Our most memorable ‘sale of the century’ was the Toshiba laptop.

In July 2008, Toshiba offered to sell us 8000 laptops, which we were able to sell for $599 per unit. Generally, we liked committing to and paying for goods at the time of purchase because it always allowed us to negotiate hard and get a great deal.

On this occasion, however, we simply didn't have $4 000 000 in cash lying around to pay for the stock. But one of the great advantages of running a 24‐hour‐deal business is that the sales cycle is also 24 hours, or less. We seriously wanted to do this deal so we advised Toshiba that we would run the deal on Wednesday of that week, and would advise them of our sales quantity the following day. Toshiba had nothing to lose.

The deal went nuts. It started at midday and by 4 pm we had sold 4000 laptops.

That's 1000 laptops per hour!

The whole office was buzzing with excitement. But the deal was short lived. Rumour has it that not long after the deal started, Toshiba received an urgent call from a very large PC retailer (we can't reveal the name) and as a result of that call, we were notified we had to stop the sale at 4 pm and leave the remaining 4000 laptops unsold. That's hardly normal behaviour—but it is what it is.

The news of the deal spread like wildfire. Within hours, every supplier and retailer of PCs in the country had heard about this crazy Melbourne website that was offering unbelievable products (and eating into their margins). This was the day our reputation was made. We had made the big league. We can't think of a single local retailer that could purchase 4000 laptops of one model, move them in a day and pay for the goods before dispatch. Not today, and certainly not back in 2008.

Catching fire

The word about Catchoftheday was spreading fast. That one deal sealed our reputation, and from there the new deals flowed like water. One day we sold 2000 Asus laptops in a single hour; the next day we shifted 10 000 pillow sets in five hours; the following day we sold 8000 pearl necklaces. The deals just kept coming and so did lots of new customers, each discovering us for the first time. We continued to create crazy promotions that kept our customers hungry and excited for more. We found out first hand that nothing could beat a word‐of‐mouth recommendation from a friend or a workmate. Everyone loved our bargains, and everyone loved showing off their latest toy, shoe or electronic gadget. The addiction was growing.

Snapshot of the Toshiba laptop deal which put people on the map and opened the door for deals to flow freely.

This Toshiba laptop deal put us on the map and opened the door for deals to flow freely. It was a game changer for us.

Our trusty office whiteboard, which contained the matrix that mapped and tracked all our deals, was filling fast with silly events such as the Scentathon (perfumes galore), Mamathon (deals for mum), Papathon (obvious) and Freeday (where everything is free and the customer just pays for shipping). Would you believe that on our first ‘free day’ we made a clear profit of $200 000 in a single day selling items for free!

These and many others deals like this kept the excitement level on a high, day after day. The need to innovate and stay ahead of the curve forced us to be working at the edge all the time. It was exhilarating for everyone. Even today, Catch still features these events, and many of the concepts have been copied and used by retailers all over the world. We were creating a whole new way to retail, and we didn't even know it.

By this stage, the new kid on the block was running faster than anyone could have imagined. So much so, we shut down our eBay operation, switched off the As Seen on TV channel and closed the DailyDeals.com.au site to focus our efforts exclusively on Catchoftheday. We hired some talented team members to help us keep up, including Carlo, our photographer and designer; Pooven, Vijay's brother, who worked in operations; and Kalman Polak, who joined us as our store manager. You'll read more about them later.

In August 2008 we relocated to a building in Springvale, 29 kilometres south‐east of Melbourne. We were expanding big time in every way. The building was composed of a much larger warehouse of 2000 m2, a small office of 200 m2 and a retail store of 2000 m2. Retail store? Yes, we did open our doors to the public. We were hoping that having a physical street presence would satisfy the many suppliers that were still unwilling to supply online‐only retailers like us. We were also looking to win a few extra customers and make them aware of our online offering. We found this to be a great customer acquisition channel for our maturing website.

The retail store was short lived. On 23 December 2008, just six months after opening, in the busiest week of the year, on the busiest day of that week, our store and warehouse was flooded by a massive downpour of torrential rain. The entire office was knee deep in water. Every employee worked back and spent the whole night in the warehouse moving all the stock that was sitting on the floor to higher ground. Eventually, we managed to locate a company to bring in some water‐sucking equipment to help extract the water from the warehouse. The fact it took 20 hours to remove it all tells you just how much water there was. That storm was a turning point for the store. We never reopened and we unfortunately missed out on the Boxing Day sales season, the biggest retail month of the year. It took us 10 years to give bricks and mortar another try, (but there's a lot of reading to go until you get to that bit …)

One last thing …

We can't not mention this one deal. If the Toshiba deal put us on the map, this Samsung one redefined the boundaries. In January 2009, between the hours of 12 noon and 1 pm, we sold $1 500 000 worth of Samsung TVs. Yes, you read that correctly: $1.5 million in one hour. If we could go back in time and recreate one moment from our history, this would be it: that moment our small team gathered around the computer, staring at the screen in disbelief, watching these phenomenal numbers roll in. We truly felt we were in some kind of parallel world, but we weren't. This was real, this was Catchoftheday and we were here to stay.

Photo depicts Anees and Carlo, two of our early hires and loyal team members from the old days.

Anees and Carlo, two of our early hires and loyal team members from the old days. Working hard, as usual! (Behind them you can see VJ—yes, another Vijay! He worked on that machine for 10 years and was one of the best warehouse team members we had. He is still at Catch!)

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