Zoom2U founder Steve Orenstein isn’t afraid of making acquisitions, having made a number of significant purchases to grow his on-demand courier business since it launched in 2014.
But the company’s most recent acquisition of online logistics matching service Freight Match is a slight departure from past acquisitions, such as that of rival Fetchh.
This time around, the aim is to build further functionality into the company’s existing service through an acquisition, rather than overtaking and gaining the market share of a direct rival.
Freight Match is a service that operates Australia-wide, offering Uber-style matching of more than 2000 transport operators and customers looking to move goods. Speaking to StartupSmart, Orenstein says the acquisition will fill the gap in Zoom2U’s services for customers looking to move larger items.
“We had a lot of interest from customers about shipping larger items through our service. An acquisition was the fastest way to get things up and running, so we looked at the market and found who was doing it already,” Orenstein says.
While the founder isn’t revealing the financial details of the acquisition, he says Freight Match’s revenue was in the multiple millions and had been operating for around six years.
From idea to inception, the whole acquisition process took around six months, says Orenstein, who wanted to wholly understand the business and its fit, whilst identifying any areas where improvements could be made.
“Freight Match had a reasonable online presence, which we took advantage of, and we’ve done some work there already from an SEO point of view,” he says.
“The founders have already exited the business, so there was a small number of staff it made a lot of sense to bring on board.”
Along with the increased functionality it brings his platform, Orenstein says the acquisition will expand the Zoom2U’s reach and help the startup better deliver for customers in metropolitan areas, along with providing customers better real-time information about their deliveries.
“It doesn’t always have to be a grand acquisition”
Making an acquisition of a direct competitor makes “a lot of sense”, says Orenstein, noting the advantages of acquiring their market share and effectively eliminating them as competition.
But startups shouldn’t be afraid to consider smaller, less obvious acquisitions, he says.
“In the early days of Zoom2U we had a domain name from an already existing business that really helped drive traffic to the site,” he says.
“Because of that I’ve acquired four to five smaller businesses for their domain names alone, and that’s really assisted the businesses’ growth over the years. Compare the cost of acquiring a domain name to the cost of Adwords — it can be a better return on investment.
“It doesn’t always have to be a grand acquisition.”
With multiple deals under his belt, Orenstein says the process of discussing an acquisition shouldn’t be nerve-wracking for startup founders. It can be as simple as seeing an opportunity and reaching out.
“Tools like Whois can help you find the owner of a business through their website, and then it’s just a matter of sending them an email to discuss. You’ll usually get a response pretty quickly,” he says.
“We also made sure we had plenty of time to understand the business and know exactly how the process would work. The due diligence stage is absolutely essential.”