Smart50 Awards 2016

37 Lux Group

Revenue

$134 million

Growth

95.1%

Founders

Adam Schwab, 36, Jeremy Same, 37

Head office

Melbourne, Victoria

Year founded

2010

Employees

425

Industry

Retail and consumer products

Website

www.luxgroup.com

Lux Group_SchwabIn April this year, Adam Schwab and Jeremy Same changed the name of the e-commerce business they founded in 2010.

The switch from AussieCommerce Group to Lux Group was a clear sign that not only the had the business changed substantially in its short lifetime, but that the founders were preparing it for even further expansion.

“The name change was important because our business model has changed and innovated significantly,” the pair told SmartCompany.

“We have morphed from a business which sold essentially a single local experience offer every day to distinct geographic locations, to one which sells products and travel.”

Lux Group has come a long way from it’s humble beginnings as flash sale e-commerce website DEALS.com.au. The business has grown to 15 different e-commerce websites serving over 10 million customers. Last year, the business secured the 10th spot in SmartCompany’s Smart50 Awards, and currently boasts annual revenue of $134 million.

The founders are now taking the business global, launching pure-play websites in India, the US, and England, selling items ranging from fashion to travel experiences. The “flash sale” model from DEALS.com.au is still a core part of the business, offering customers limited time offers at significant discounts.

A move from partnerships with smaller vendors to larger ones has strengthened Lux Group’s international presence, with the business now offering products from retailers such as Hugo Boss and Kate Spade. But in working with these global brands, the business had to accommodate non-flash sale marketplaces for the partnerships to work.

“We have adapted how we operate to work with global brands and create more of a marketplace where possible to offer our members greater choice, and we are constantly looking at ways at evolving in order to give our customers the best possible user experience,” Schwab and Same say.

“For instance, our homewares retailer The Home – which typically runs flash sales – recently became the official online store for iconic Australian brand Florence Broadhurst. The store features a range of homewares and décor from Florence Broadhurst and is a permanent fixture on the TheHome.com.au.”

The founders have achieved a much of the business’ growth through acquisitions, snapping up fellow flash sale website LivingSocial last year, and New Zealand based ecommerce group DailyDo in 2014. In early 2014, the group acquired brandsExclusive from APN News and Media for $2 million, but the languishing online shopping club came with its fair share of issues.

“At the time of acquisition, the online outlet was suffering from financial losses and was struggling to stand out in a highly competitive retail market,” say Schwab and Same.

“Under Lux Group’s management, significant changes were made to the site, including a design makeover in 2015 and a new business strategy was implemented. The result is that the retailer is today profitable, and has managed to build successful partnerships with many luxury retailers.”

Starting up Lux Group involved a “chicken and egg” process say the founders, where getting a critical mass of customers was as essential as getting a similar mass of merchants. The two found getting merchants to agree to deals on a website that “didn’t exist yet” was very hard.

“Once we had the clients, acquiring customers in a cost effective manner was a huge challenge, which has continued as competition increased, but we found our offers and loyal members were the best marketing possible,” the founders say.

According to the entrepreneurs, one of the most difficult parts of operating an online business is convincing potential customers to trust you.

“This is even more difficult when you are selling expensive branded products or international travel,” they say.

“We learned that the cost of keeping a member happy is far less than acquiring new members, and excellent customer services is a far more effective marketing tool than a television commercial.”

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