Dealised Acquires Hong Kong-based Lokaly To Drive Asian Expansion

15 Dec 2011

About five months ago, we covered Dealised’s funding from SingTel Innov8 and their headquartering in Singapore. Today, the group-buying technology services platform announced their acquisition of Hong Kong-based Lokaly Network Limited (LNL) which will drive their expansion across Asia. LNL is the owner of group buying services platform Lokaly and consumer group buying site ValuUp.

According to Dealised CEO, Jonathan Marchbank, “A lot of it [the acquisition] was all paper deal. So they [the founders of LNL, Doug and Matt Aitken] took a percentage of Dealised shares, which was valued on their current and potential turnover. Honestly, it was a very easy transaction because what they wanted to do was grow and to be part of a bigger organization. They actually contacted us and it was a chemistry thing for me.”

The reason for the acquisition is part of Dealised’s strategic move in response to the rapidly changing group buying industry. According to Jonathan, “What I have discovered in the last six to nine months is that just having the platform on its own, is not enough. Most people who are going to get into group buying, who have a brand, an audience and merchants look at Groupon and Living Social and they shake because these guys are so big. What we are trying to do is de-risk it [group buying] in certain markets. So Hong Kong and the UK are really the two hubs for us right now. And in Singapore we are more focused on Southeast Asia.”

So, instead of just providing a white label group buying platform for brands that are interested to enter the industry, Dealised now provides a turnkey solution that includes online marketing, analytics and sales on top of their current platform. With traditional advertising revenue seeing a continuous dip in revenues, non-digital businesses are looking to venture into the digital arena. And they need help. “The way the market is going right now, the bigger getting bigger and the smaller falling over. The only people who can really compete with big guys are people who have a brand, have a customer base and have access to merchants. Normally such companies aren’t necessarily good at digital or direct marketing via digital, which is really what group buying is. So we provide the resources and the know how to leverage their assets,” says Jonathan.

Dealised handles the sourcing and publishing of deals, analyzing buying patterns and re-targets and re-markets accordingly, collects all transactions and pays the merchants and sales force. All businesses have to do is pick up their cheque at the end of the day. Some of Dealised’s customers are The Daily Telegraph with Telegraph Select and, with the penetration of the Hong Kong Market, South China Morning Post which will launch Redeem Me.

Said Jonathan, “everybody looks at group buying and thinks Groupon is the king, and I think they are the king today and they are definitely wiping everyone else out. But their profits are being reinvested into acquiring customers, going and getting more merchants and getting better deals. And I think when established companies come in they’ll expand the market so consumers will be more interested in buying from more reputable companies that they know and trust and buy other things from. Whether it’s a newspaper or television subscription.”

Jonathan also understands the Southeast Asian region has huge differences across the various countries. “I think the way, if you want to be quick, into Southeast Asia and Asia in general, it’s a hard market to organically grown, so if you look at what Living Social is doing and what we are doing, the way to get a foothold is not to reinvent the wheel but to see who is leading, who are the people who have strong value proposition and either partner with them or buy them,” Jonathan said. The buy-in into the Hong Kong market also provides him with a sales force with the local knowledge and allows Dealised to complement it with their existing assets and brand entity. He also points out the strategy of “leveraging existing infrastructures, that what I would call a little bit more “basic”. Just to get things going. But the economics actually work out fine,” when talking about how to deal with markets like Indonesia and Vietnam where online payment methods are not as widely available to consumers.

Dealised is focusing on Hong Kong and Taiwan with this acquisition but also views Malaysia and Thailand as their next opportunities. The former being that the market potential has yet to be reached and Thailand because of the few players in the group buying industry which opens doors for more established brands to enter.

The way Jonathan sees it, print media is the industry currently turning towards group buying. The second wave, he reckons, would be television, as television advertising revenues continue to decline. This would then be followed by the retail industry, specifically credit cards. Jonathan shares that, “we are talking to more than one credit card Company because they obviously have large relationships with merchants. Most credit card companies have most of the merchants in any country but they also have a large pool of customers. At the moment they are taking a percentage of the transaction. But credit card companies are now going; actually everyone is now going online to buy now. It is very clear that there is a big move particularly this holiday season, there’s a lot more transactions happening online then in brick-and-mortar retail. And the credit card companies are saying, “If we have the merchants and we have the customers, why aren’t we moving the product and taking a margin on the product?”" Dealised is also looking to engage loyalty card companies and other data rich companies that can use that data to market themselves.