Catch of the Day tips $250 million revenue for 2011-12 – five lessons SMEs can learn from its success

Australia’s largest online retailer is now five-years-old, with Catch of the Day announcing its milestone this morning along with the fact it is now tracking to turnover $250 million for the current financial year, up from an estimated $100 million in 2010-11.

The growth of the daily deals company has been impressive. Just a few years ago it was operating out of a small warehouse in south-eastern Melbourne, now it has over 1.5 million customers, two new business divisions, hundreds of staff and an investment from a group including James Packer that values the business at $200 million.

Leibovich says while the growth has been fun, he still thinks it has room to move.

“The great thing is that you go into a shopping centre and most people wouldn’t have heard of us. I think that is going to change and there is great room for growth here.”

But while Leibovich might have impressive plans, the company’s current success is a great learning tool for SMEs. Here are five lessons they can learn from Catch of the Day’s success:

Keep the company flexible

As businesses get bigger, they find it harder to build new features and respond to consumer demands. But as Catch of the Day has grown, it’s been able to build new side businesses and add new features quicker than other retailers of its size.

Leibovich told SmartCompany earlier this year the company adopts a more relaxed approach in its decision-making. No board meetings, no formal meetings of any kind. Instead, the heads of business get together occasionally, discuss new features, and then do them.

“It’s a big advantage we have over other players,” he says. “The Gerry Harveys and so on need a board meeting. We just try things, and if they work, great, and if they don’t, we move on.”

Flexibility is key to a growing business. Don’t get bogged down in unnecessary planning – just go out and execute your vision.

Pump your marketing database

Leibovich maintains that Catch of the Day has never spent one cent on marketing over the past five years. Whether or not that’s strictly true, it still represents a key lesson in how to manage and use your email list properly.

“We started spending on marketing this month, but we’ve always just used word-of-mouth. People talk about it, and it spreads. I attribute it to the quality of the deals,” he says.

This may be true, but it’s also a testament to how Catch of the Day manages its email list. Currently it has over 1.5 million members, and whenever a new feature comes out, the company immediately jumps on the email list and sends out marketing messages. It’s proven their most effective form of marketing.

Too many businesses ignore databases that are right at their fingertips – they could be potential gold mines.

Be willing to move into new fields

Part of remaining flexible is also maintaining the ability to move into new territory when the business demands it. Over the past two years Leibovich has opened not only a major group buying site, but a grocery store as well. And there’s more coming, he says.

“We want to use that marketing list we have to venture into new territories and create sister sites. Being able to do that successfully has been key to growth.”

Catch of the Day has been able to succeed by noticing key areas of growth, and then turning around business opportunities extremely quickly. The company’s speed is a lesson for other SMEs to not deviate and wait when they spot a key opportunity.

Nurture supplier relationships

Catch of the Day’s key business is selling discounted goods for cheap. As a result, it needs to be able to source good deals and maintain key relationships with suppliers. Leibovich has previously told SmartCompany this is a major effort in and of itself, but maintains this is key to the company’s growth.

“I attribute our success to the deals, and of course, all the execution around them and everything else. The timing needs to be good, and we need to maintain relationships to keep promoting these good deals,” he says.

Suppliers are everything in retail. Nurturing those relationships can mean the difference between rapid growth and losing to the competition.

Culture is everything

Because Catch of the Day is experiencing a significant amount of growth right now, and hiring plenty of new faces, Leibovich says it’s becoming harder and harder to maintain the culture. As a result, he says it’s more important to ensure that the heart of the company remains intact.

Management staff don’t wear suits – Leibovich himself wears shorts and t-shirts around the office. Employees still work in small groups, and staff have plenty of fun. The atmosphere hasn’t changed just because the company’s warehouse has now more than doubled in size.

Seeing a successful business grow is great, but maintaining your culture is key to success. Just because you grow doesn’t mean the core of your business needs to change.