Online discounter Discount Dragon, which saves surplus fmcg from going to waste, is stepping up advertising to reach new customers, having seen first-half revenue grow by 61.3% to £4,903,000.
Owner Huddled Group has also underpinned a “commitment to saving surplus stock from going to waste” with the acquisition of new e-commerce sites.
Discount Dragon, which sells surplus branded fmcg often close to its sell by date, grew its customer base by 71% to 41,500 in the six months to 30 June, boosting order numbers by 54% to 138,000. Average order value also rose, by 3.8% to £34.99.
In July, the brand raised its profile with a regional ad campaign on ITV1 in Granada and Yorkshire, as well as on Heart and LBC Radio.
“Encouraging” results led to the removal of a £30 minimum order threshold, allowing customers to buy as little as they like – a move that nevertheless further boosted average order value to an expected £41 in September.
Advertising spend had reduced in August as the change was implemented but had resumed as of 23 September, said Huddled Group.
Following advertising expenses of £422,000 in half one, Discount Dragon was now investing more than £80,000 on marketing this month, said Huddled CEO Martin Higginson.
“We’ve done a number of radio channels including Heart and a number of global radio channels, as well as peak times on ITV1.
“Based on results from last week, we’ll re-engage with ITV and now start looking at having a regular slot.”
Discount Dragon sources surplus stock from wholesalers and manufacturers who “don’t want to see stock go to waste and want some remuneration for that stock”, said Higginson. The online retailer was founded in 2022 and claims to offer some of the cheapest prices available online for well-known brands across categories including food cupboard, household cleaning and beer, wines & spirits.
It made an adjusted EBITDA half-one loss of £731,000 in a “period of heavy investment in operational capabilities”, including increased warehouse staff costs to meet rising demand, according to the trading update.
Huddled Group also expanded its surplus e-commerce portfolio by completing the acquisition of Food Circle Supermarket in April and rebranding it as Nutricircle, specialising in protein and healthier snacks. The site achieved revenue of £349,000 in the period, delivering gross profit of £53,000 from 9,800 orders,
In July, the group expanded further with a 75% controlling stake in Boop beauty, which specialises in cosmetics from brands such as Sol de Janeiro, Drunk Elephant and L’Oréal, at a “substantial discount” compared with high street prices.
The site aims to help suppliers address the challenge of the £3bn worth of cosmetics which go to waste each year, by providing a route to market.
Across the group, first-half revenues were up by 123% to £5,274,000, with 44,500 new customers added in total. Operating losses came to £1.9m, compared with a £1.3m operating loss in the same period a year earlier.
The period was “all about investment and growth, expanding our offering and solidifying the foundations of the business”, said Higginson.
“The acquisition of Food Circle Supermarket, now rebranded Nutricircle, followed by Boop Beauty in quarter three have strengthened the group’s e-commerce portfolio, and underpinned our commitment to saving surplus stock from going to waste,” Higginson said.
“We have demonstrated to manufacturers and suppliers alike that there is an alternative, allowing customers to save money on some of their favourite brands, from coffee to cosmetics, perfumes to protein shakes. The positive comments we receive on TrustPilot, as well as the thousands of customers that come back month after month, is testament to our strategy.
“Half two 2024 is now about continued growth, while also driving efficiencies from shared group operations and expertise, all of which we believe will deliver a profitable and sustainable business model.”
Having relaunched earlier this month, Boop Beauty fulfils orders from Discount Dragon’s warehouse in Leigh, Greater Manchester. Nutricircle’s warehousing is expected to be absorbed into the same operation in October 2024.
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