Entrepreneurs, including Zip founder Larry Diamond and Catch co-founders Hezi and Gabby Leibovich, are backing an online start-up that promises to transform the relationship between wholesalers and small businesses.
Mr Diamond, the Leibovichs, former Catch chairman Gary Levin, Marley Spoon co-founder Daniel Jarosch and APG & Co chief Martin Matthews have tipped $2.5 million into TradeSquare, a digital marketplace for Australian wholesalers and small businesses such as retailers, childcare centres and healthcare and hospitality businesses.
TradeSquare was launched last April by former Catch chief executive Nati Harpaz and his business partner, Einat Sukenik, who came up with the idea for an online B2B platform when the pandemic forced trade fairs to shut down and prevented buyers from travelling overseas to source stock.
“I wanted to build a platform that replicated the trade fair and allowed small retailers to buy those products [online],” Mr Harpaz told The Australian Financial Review.
“Then we started talking to suppliers who said why limit it to retail – there’s hospitality, education, healthcare – everyone needs access to products at wholesale, and currently there’s no platform that allows them to do something like that,” he said.
“We are taking an industry that is yet to be disrupted and transforming it into the 21st century.”
Mr Harpaz helped build Catch into one of Australia’s largest digital marketplaces, lifting sales from about $250 million a year to an annual run-rate of almost $1 billion.
The marketplace helps wholesalers connect with business buyers online and enables small retailers and other enterprises to source stock at wholesale prices.
After leaving Catch last April, 10 months after the online retailer was sold to Wesfarmers for $230 million, Mr Harpaz was restricted from participating in businesses that competed with Catch or Wesfarmers’ Kmart Group.
“Wesfarmers have agreed it doesn’t compete with their businesses, so they gave me the green light to go ahead,” he said.
The marketplace, which went live in September using Mirakl and Magento technology, helps wholesalers connect with business buyers online and enables small retailers and other enterprises to source stock at wholesale prices.
Payments are collected by TradeSquare, removing the need for sellers to set up individual customer accounts and chase up invoices, while small businesses vetted by TradeSquare can pay by credit card or use Zip’s $30,000, 60-day interest-free credit facility.
TradeSquare has signed up more than 500 sellers, 250 of which have started trading, selling more than 100,000 products across categories that include homewares and hospitality needs, office supplies, pet supplies, fashion accessories, health and beauty products, cleaning supplies, and toys, games and books.
Consolidation is likely
Mr Harpaz expects the number of sellers to reach 1500 by the end of the year and 3000 next year.
TradeSquare has also teamed up with the Australian Gift & Homewares Association to enable suppliers to connect with business buyers online and is in talks with retailers to help them establish digital operations for commercial buyers and franchisors to transform their ordering systems.
“We’re essentially a technology company, and we’re providing a service to either the wholesale industry or businesses that need that transformation and support,” said Mr Harpaz, who plans to raise another $5 million, most likely from venture capital investors, in the next few months.
Unlike other online marketplaces such as Amazon Australia, eBay, Catch, Kogan.com and Mydeal, TradeSquare is restricted to Australian suppliers and buyers must have an ABN or ACN.
Mr Harpaz and the Leibovich brothers have also snapped up a 10 percent stake in online retail marketplace MySale Group, for $9.3 million. MySale operates 12 retail websites in five countries, including OzSale, BuyInvite, DealsDirect and Top Buy and is preparing for an initial public offering.
Mr Harpaz believes that while there is room in the market for a B2B platform, consolidation is likely in the B2C or business to consumer space.
“I struggle to see how smaller marketplaces will catch up to Catch and Kogan and eBay and Amazon,” he said.