Ozplaza is a $120 million retail business with thousands of customers, but you’ve probably never heard of it
Tuesday, September 25, 2018/
It’s a company with thousands of customers, more local warehouse space than Amazon, and over $120 million in annual revenue, but the vast majority of Australians would barely even know it existed.
The company is Ozplaza, and the reason for its incredible success, yet very low profile, is its position as an online megastore that chooses to sell via avenues such eBay, Kogan, Catch, and Amazon, rather than selling products through its own online store.
It began back in 2005, founded by Werner Liu and Fung Lam, graduates fresh from university who recognised the potential for online shopping in Australia before online shopping had truly taken off. Their channel of choice was eBay, which had launched in Australia six years earlier and was beginning to position itself as a leader in local e-commerce.
The Ozplaza business started like many do: in a garage that doubled as an office and warehouse, with the business shipping only small products and the owners making up two of the three employees.
However, as e-commerce in Australia took off and Australians began to wake up to the joys of online shopping, so too did Ozplaza, with the company expanding its range into niche categories, such as bar stools, then into general furniture, and eventually into almost anything.
Today, Ozplaza’s online eBay store sells nearly 6,800 items, from treadmills and pet goods to barn doors and camera tripods. Though the company considers itself a ‘megastore’, there’s still a definite bent towards homegoods and furniture, with much of the store’s listings falling under those categories.
Speaking to SmartCompany, Ozplaza’s general manager Dickson Choi says the company currently stocks over 4,000 different product categories and uses data analytics to shuffle new products in and out according to customer demand.
Choi says the company began its journey on eBay and then expanded out to use nearly all online retail channels in Australia. Today, Ozplaza does run its own wholesaling webstore, but Choi says its not really a focus for the business, which prefers to diversify itself across as many platforms as possible rather than put all its eggs in one basket.
However, operating across so many different platforms is no walk in the park.
“Every different channel has different requirements and different ways to communicate with customers. We have over 4,000 categories and thousands of listings, so it requires the use of managed solutions because managing it all manually would be a nightmare,” Choi says.
“Different marketplaces also have different demand curves, and while we could set up a pricing strategy with flat margins that would be the lazy way to do it. Instead we spend a lot of time trying to find that sweet spot in the market while always listening to our customers’ needs.”
Customer feedback spells success
Listening and responding to customers has been a big part of Ozplaza’s growth, so much so the business has recently gained the impressive accolade of being the second-ever Australian eBay seller to receive over 1 million pieces of customer feedback on the platform — and the first to do so in eBay’s home and garden category.
Across the world, there are only 83 sellers with 1 million or more pieces of customer feedback, putting Ozplaza in the top 0.0004% of eBay sellers globally.
Choi says Ozplaza’s achievement in this space is due to the company’s fervent approach to customer service, with a large portion of the company’s 70 plus employees working in the customer service department. He says they have an average response time of between three to four hours, and they try to go beyond just providing a refund or return.
“We have a technical team who know the products really well, so if there’s any issue they can give customers advice or send them just specific parts to fix the product, rather than just giving a refund,” he says.
“We use a lot of data to help with customer feedback by we don’t treat our customers like data. Every inquiry and every complaint counts, and every one reflects a way to improve our business for customers and how we can better treat them.”
Like many Australian retailers, the launch of Amazon in Australia last year presented an opportunity for Ozplaza to have another popular channel to sell its goods. However, many small businesses have found the e-commerce behemoth to be lacklustre, and some believe it will take more time for the US-based player to fully ramp up its Australian offering.
Choi agrees with this, saying Amazon has “not performed as expected”. But he acknowledges the retailer’s tactic of slowly building momentum in new countries it launches in and says Amazon’s “time hasn’t come yet”.
“We’ve definitely had more success with eBay, as they have a lower commission rate and their staff are much easier to work with. They care more about Australian sellers,” he says.
Looking towards the future, Choi says Ozplaza will continue to do what it’s good at, while also increasing its product ranges to include more well-known and popular Australian brands.
“We have a pricing strategy that appeals to medium-income customers, so we’re looking to bring in some higher grade products down the line,” Choi says.
Choi has one final boast about Ozplaza’s growth: the business is not only profitable and growing 50% year-on-year, but it’s also beating out Amazon in terms of local warehouse space.
“In the beginning, we had a few hundred square metres of warehouse space, then we moved into a 3,000 square metre one. Today we have 57,000 square metres, which is more than Amazon has in Australia,” he says.