Jeremy Reid has managed to attract stellar investment despite still serving an ASIC ban. Photo: Louie Douvis
Its revenues might be negligible in the context of a group tracking toward $200 million revenue this financial year, but AussieCommerce co-founder Adam Schwab thinks the Australian arm of product sample distributor PinchME can turn his e-merchant into “a media company”.
AussieCommerce began negotiations before Christmas with PinchME’s now New York-based founder, Jeremy Reid, who despite still serving a two-year ASIC ban on providing financial services following the collapse of his hedge fund-of-funds Everest Babcock & Brown, managed to attract stellar backer for his sampling start-up: Kerry Stokes, the Liberman and Smorgon families, Toll Holdings founder Paul Little, SEEK co-founder Andrew Bassat and advertising heavyweight David Droga.
That group will continue to part-own PinchME’s US business, which now employs 25 people in New York and according to president Adam Caplan, has completed 200 campaigns and shipped four million samples for brands including Johnson & Johnson, P&G, Unilever, L’Oreal, Revlon, Coty, Pfizer, Kimberly-Clark, Kraft, and Kellogg’s.
The eight employees of PinchME Australia are already installed at AussieCommerce’s offices at Wynyard in Sydney, and its 500,000-strong database of subscribers are a source of wonder to Schwab.
“The fact that you’re giving these people free samples means they’re incredibly engaged,” Schwab says.
“The open rates on PinchME emails are twice or three times what you get at a typical e-commerce business, and the information they’ve gathered on subscribers is the richest I’ve seen.”
Its multinational clients pay PinchME to provide narrowly targeted sampling campaigns, and the fact that each sample is accompanied by six questions – which the subscriber must complete if they want another freebie – means the ability to segment its database is always improving, Schwab says.
“The more targeted the offer, the more powerful. PinchMe is going to be a great complement to [group buying platform] Spreets that we bought last year,” Schwab says.
Of particular interest to Schwab is the full-fledged marketing campaigns which PinchME can produce alongside the sample deliveries.
“This acquisition turns us into a media company,” he says, pointing out that revenues from AussieCommerce’s original flash sale and ‘daily deal’ activity is now “a single digit percentage” in terms of the overall group.
Terms of the deal were undisclosed. PinchME Australia’s revenues are not known however it’s understood to have not yet turned a profit since its 2013 launch.