Customer loyalty favours MyDeal.com.au as sales double

After major e-commerce brand Kogan (ASX: KGN) saw its shares plummet 20 per cent last week as inventory build-up bit into profits, online marketplace MyDeal.com.au (ASX: MYD) became collateral damage as investors got spooked and the share price dropped 10 per cent. 

The company founded by Sean Senvirtne and listed in October 2020 was thus under the lens today ahead of reporting its March quarter results, which proved encouraging with 104.5 per cent sales growth to $44.7 million.

While this is below the busy December quarter figure of $70.1 million and a more than tripling of revenue in the second half, initial investor trepidation turned to optimism late this morning as not only have active customer numbers risen by 157 per cent in a year, but more of them are repeat customers.

The share of repeat customers has jumped by almost six percentage points, now accounting for the majority of transactions at 56.1 per cent.

Now at 883,397, MyDeal.com.au's total active customer numbers represent 27 per cent of Kogan's total, compared to just 22 per cent when the company listed in October.

Senvirtne explains active customer numbers rose by 70,000 over a three-month period, while the number of active sellers has crossed the thousand mark with six million products listed on the marketplace.

"In addition to growing our gross sales and customer numbers, a record 56.1 per cent of all MyDeal's transactions over the last quarter were from returning customers," Senvirtne reiterates.

"This is further evidence that our strategy is playing to our strength as Australian consumers become more savvy with their online purchases, they increasingly look to maximise value through the lowest prices, and put increased importance on a seamless customer experience and convenience.

"Our strong level of customer retention is confirmation that our proprietary marketplace technology is delivering a positive user experience for both sellers and buyers - even when ordering bulky household good items from multiple sellers from anywhere in Australia all through the one easy transaction - enticing them to return again and again."

The company continues to bolster its private label offering, but with $2.2 million worth of sales the category makes up a small percentage of sales.

Investments in private label inventory and additional staff, as well as timing-related issues surrounding advertising and supplier payments, led to $2.35 million worth of net cash outflows.

The group still has more than $45 million worth of cash and cash equivalents, and to date has spent slightly more than a quarter of its planned expenditure from the $40 million initial public offering (IPO) last year.

Senvirtne notes a "sustained level of optimism" for the rest of this financial year and beyond.

"Australians are adopting e-commerce at an accelerating rate, and online shopping in the furniture and homewares category remains significantly underpenetrated by global standards," he says.

"As we enter Q4 FY21, we naturally expect the high growth we have seen in the nine months to 31 March to moderate as we cycle the COVID-19 lockdowns in the pcp [prior corresponding period].

"With that said, it is pleasing to report that Q4 has started positively, showing gross sales growth in April to date against the same period last year, noting that April 2020 was our second highest growth month last year."

The marketplace founder says the company is well placed to deliver growth for customers, suppliers, the team and shareholders.

"Moving into Q4 FY21 we will give our customers even more reasons to shop with us by launching our mobile app for iOS and Android and increasing our private label offering," he says.

"We have a loyal customer base of nearly 900,000 active customers with engagement levels continuing to improve as evidenced by our increasing repeat purchase rates.

"In addition, our pipeline of initiatives will continue to drive a seamless customer experience that will underpin future growth.

MYD shares were up 3.25 per cent at $0.795 each after midday, down more than 20 per cent on their IPO listing price of $1 and the heights of $2.20 per share achieved in October.

Business News Australia