Robert McIntosh is a serial entrepreneur who considers himself an ‘online property developer’. His latest venture, Gift Of The Month Clubs has just launched.
There are two very different types of internet entrepreneur you’re likely to meet. One plans out their business model and product before they even think about spending on digital infrastructure. The other kind is Robert McIntosh, who starts with the domain name first, before building out from there.
It was using this model that McIntosh managed to build a company up to a $50 million valuation during the dot com boom.
That’s why McIntosh considers himself more of a property developer than an e-commerce business owner. Where most people would recommend to begin with a great product or service offering, he starts with a great domain name. It’s then his challenge to develop it into a profitable venture.
His latest challenge, Gift Of The Month Clubs sprung from a US business model that was just crying out to be started here in Australia. Power Retail recently spoke with McIntosh to find out more about his methods, drive and new business.
When did you have the idea for this business and who was involved initially?
It was a combination of things that came together. When I started my first online business in 1998 I had a plan to basically find something that was working in the US and bring it to Australia. And it has always been to acquire the best property in the form of a generic domain name and build a businesses on it for future sale. For example, I did this with gamble.com.au ($3 million in seed capital from 20 investors, a Vanuatu gambling license, Clubs Victoria as a partner, and a 20 million IPO joint underwriting agreement lead by Austock which was cancelled before the IPO date when the Australian government introduced a 12 month gambling moratorium), discounthotels.com.au (registered 300 participating hotels, sold to Sensis Ltd.), location.com.au (it was a luxury property website which I couldnt get off the ground, and is now the home of some of my other domain names), newcars.com.au, cardealer.com.au, cardealers.com.au (sold leads through dealership agreements around Australia, sold to carsales Ltd.), coupons.com.au (600 participating businesses, sold to CatchOfTheDay) and now Gift Of The Month Clubs.
The idea for Gift Of The Month Clubs evolved after I finished a project management role with CatchOfTheDay and was looking for a new opportunity. I first started thinking about what had worked over the years and remembered: a) the right generic domain name can get you a seat at the table in any industry and give you an opportunity to be the authority in the space, and b) creating win-win agreements. For example, I have made over 1000 agreements with individual businesses personally and wanted to find something that could blend the two together. And I had already seen gift of the month clubs in the US and registered a few domain names for future sales, but when I saw it again I was attracted to it because I had the category domain name for the space in Australia (giftofthemonthclubs.com.au), New Zealand, Singapore and UK for future growth for investment and I also saw a way to apply The Law of Giving And Receiving (as written in The Seven Spiritual Laws of Success – Deepak Chopra), and contribute to the abundance of the universe circulating in peoples lives. A true win-win deal compared to a transactional website developed for the sole purpose of making money. Not that there’s anything wrong with that, but like most people I would prefer to make a positive difference to the world where possible.
How do you describe the concept and what do you identify as it’s unique value propositions?
The idea is if you’re looking for a gift, you can give someone a membership to one of our amazing clubs. For example, the Beer Of The Month Club where members receive a different pack of craft beer every month for three, six or 12 months! Or give someone the Flower Of The Month Club where members receive a different bunch of flowers every month, ideal for the home or office. Or treat someone to a night out at the movies with a single or double ticket every month for three, six or 12 months! They’re all fantastic gifts I would love to give and receive, using a concept inspired by a decades old proven business model in the US and tailoring it for Australia.
There’s a total of 14 different clubs to choose from, and our unique value proposition is we’re the only website providing a full range of Gift Of The Month Clubs in Australia on one central website. There’s a few subscription sites, for example dog food, but we’re offering a range of clubs on one central site for gifts, on the industry domain name positioning us as the authority in the space, just like carsales.com.au and realestate.com.au have used the category generic domain names for their industries. And gifts are a big market. For example flowers are a billion dollar market in Australia and gift baskets are another two-three billion. So we only have to carve out our own niche in a big market, and having the category domain names and a first movers advantage is a good opportunity.
What particular challenges were there in bringing the concept to market?
The challenge was and is explaining it to people because it’s a new way of giving in Australia, and I wasn’t making it easy for myself because I wasn’t explaining it properly, which left people saying things like, “Well if it works in America it should work here”, which is true but no-one was saying “Wow, what a good idea” until I worked out how to explain it simply and then people started saying “Hey, great idea!”
As a privately owned and operated business, another challenge is funding. My developments over the years have been a mix of very successful, to covering costs, to expensive learning lessons.
But I try not to think a lot about the failures, other than the positive side of learning how not to do things 1000 ways compared with the ‘one hit wonders’ who have really only sailed with the wind behind their back.
Which technologies/solution providers have you engaged to help launch Gift Of The Month Clubs?
I’ve got an offshore development team based in India who are as good as anyone else, but for a quarter of the cost. In saying that, ideally I would like to mix this with a team of local, in-house developers.
What elements of your business do you oversee personally?
I project manage the website and business and look at myself as a web developer in the same way a property developer works, where I acquire the best online real estate “location, location, location” develop it and sell it.
Supplier agreements, stock purchasing and shipping are also handled in house for the majority of clubs.
What does your marketing mix look like so far?
To my surprise the generic domain names for nearly the entire Gift Of The Month Clubs space were available in Australia, in 2012 and 2013! So I registered a virtual clean sweep of more than 200 names for search engine optimisation and defensive registration purposes including wineofthemonth.com.au, coffeeofthemonthclub.com.au, beerofthemonthclub.com.au and more.
Hopefully we’ll get some time to capitalise on a first mover’s advantage (and already have in regards to category generic domain names) but I anticipate other businesses will start entering the market in the not too distant future. The good news is most of them will use the generic terms in their marketing and across their websites (like they do on every Gift Of The Month club website in the US, eg “Wine Of The Month Club”) and actually help us introduce “Gift Of The Month Clubs” to Australia where we hope to position ourselves as the authority in the space.
I intend to use Google AdWords targeting a few niches only, niche by niche. For example, I could promote the Wine Of The Month Club first, and when people come to the website they will see other clubs and repeat the process.
Do you see any particular challenges on the horizon? Do you have any more big developments you intend to announce soon?
Generating traffic. That’s the number one challenge for any new business because there’s no easy or cheap traffic these days. Ideally we would get an investor or traffic partner (or outright sale) to help develop a full search engine optimisation strategy off 200-plus generic domain names on top of paid search campaigns. By doing this the business will grow virally off a base marketing strategy due to it’s newness and quality service. Plus every different club has a higher return on investment compared to any competitor selling one-off sales, which should help us compete in google adwords, bing and yahoo paid results.
For example, can you imagine someone’s wife or girlfriend receiving the Rose Of The Month Club – where members receive a different colour bunch of long stemmed roses every month? I mean, we don’t think it’s crazy thinking they’ll tell everybody they know about it, do you? Or for corporate gifts, try comparing a Beer Of The Month Club or Wine Of The Month Club membership to a one-off gift voucher and companies will soon see the power of the gift that keeps on giving when other gifts are gone and forgotten.