Cudo lays off all New Zealand staff

MEDIAWORKS’ joint-venture group buying site Cudo has axed all its New Zealand staff, and is not ruling out pulling the plug on the daily deals business.

It reported a loss of $2.1 million for the eight months to June last year on sales of only $384,639.

A Cudo Australia spokesperson said the revenue reported was total sales through its website – before service providers were paid – for its first three months of operation. ‘‘The business was very much in start-up phase and incurring one-off expenses including initial licence fees and launch advertising spending.’’

All technology, finance and customer service functions for the New Zealand business were managed out of Australia. ‘‘There are currently no dedicated Cudo employees in New Zealand.’’

The company did not rule out shutting down Cudo, saying it was ‘‘assessing all options’’ for the New Zealand business.

Cudo is a joint-venture between Mediaworks and Cudo Australia – itself a joint venture between Microsoft and Australian media firm Nine Entertainment.

Trade Me head of operations Mike O’donnell said Cudo’s results were sobering and ‘‘a manifestation of the hyper-competitive marketplace that the group-buying sites are operating in’’. Trade Me has its own rival group buying site, Treat Me.

As of about a month ago there were more than 40 of the sites in New Zealand. ‘‘If you consider we’re 4 million people concentrated across eight cities, that’s 30 or 40 sales teams in those cities going after the same deals and the same providers. It’s not sustainable,’’ O’donnell said.

‘If you go to a website three times and don’t see anything [appealing] . . . you’re probably not going to bother any more.’ STEFAN KORN E-commerce analyst

Rationalisation in the sector was inevitable. Some had already occurred with Yazoom buying Dailydo and the pullout of 1-dayout.co.nz last year, he said.

Yahoo7-owned Spreets was also being remotely run from Australia, he said.

A Spreets spokesperson said it continued to offer select deals in New Zealand.

E-commerce analyst Stefan Korn said it made sense for Cudo to leverage economies of scale by operating from Australia ‘‘but it might be difficult to make it relevant to a New Zealand audience.’’

‘‘What often kills these com panies is the sheer operational grind of having to do new deals everyday, and getting decent deals. People are impatient, if you go to a website three times and don’t see anything that’s a really cool experience, you’re probably not going to bother any more.’’

A note in Cudo New Zealand’s financial statements said there was ‘‘significant uncertainty’’ the company would continue as a going concern, and Microsoft and Nine had confirmed their financial support ‘‘to assist the company to meet the full amount of its liabilities’’.

Grabone, 75 per cent owned by APN, has the largest market share of the daily deal market with 65 per cent.