According to Euromonitor International, global retail sales, excluding grocery sales, were worth $7.5 trillion last year. Globally, as access to the Internet and mobile devices increases, there is a rise in the use of online tools to make purchase decisions. A recent report by IDC estimates the consumer e-commerce market at $987 billion globally. IDC projects a growth rate of 18% annually for the e-commerce market from 2012 through 2017. IDC also estimates the mobile commerce market to grow 36% annually over this period from $63.4 billion in 2012.
The Internet is not only helping drive sales, it is also helping keep consumers more informed about available choices. Not only are consumers now able to compare prices and products, they are also able to search for discount coupons that can help them get better deals. According to eMarketer, 48% of Internet users in the U.S. redeemed a digital coupon for either online or offline purchases made last year.
Austin, Texas–based RetailMeNot is the world’s largest portal for online coupons and deals. The company was founded in 2006 and was initially known as Smallponds Inc. It acquired several small companies before making the $100 million acquisition of Australian coupon site, RetailMeNot. In 2010, they were acquired by online coupon aggregator WhaleShark Media, which renamed itself as RetailMeNot.
Last year, more than 450 million visitors accessed the site to connect with discount offers from more than 60,000 retailers and brands worldwide. They feature more than 500,000 digital coupons monthly that are available for use either online or in physical stores. They own and operate the largest digital coupon websites in the U.S. at the address RetailMeNot.com and the U.K. at VoucherCodes.co.uk. Earlier this year, they crossed the one billion visitor milestone.
More than half of the coupons on RetailMeNot are contributed by visitors. The company earns revenues both through advertising and commissions from a mere 10% of its retailer network. Last year, RetailMeNot had contracts with more than 10,000 retailers from whom they earned commissions. Retailers can pay a nominal fee to the company to display special offers on their site. Today, commissions form a bigger portion of the company’s revenues than advertising.
RetailMeNot has seen strong revenue growth over the past several years, reporting annual growth of 193% over the period 2010 through 2012. It recorded revenues of $16.9 million in 2010 and ended the previous year with revenues of $144.7 million. Unlike several other Internet players, the company also records profits. Net income has grown 233% annually from $2.3 million in 2010 to $26 million in 2012.
Till recently, RetailMeNot was largely venture funded, with $300 million in funding from investors that include Austin Ventures, Norwest Venture Partners, Adams Street Partners, Google Ventures, Institutional Venture Partners, and J.P. Morgan. Earlier last month, it filed their S-1 for a proposed $230 million IPO. The company plans to use these funds for market expansion. RetailMeNot is looking to grow its presence in other international markets. Currently, 78% of revenues come from the U.S. and the rest from the U.K., France and Germany. Earlier this year, it expanded their operations in the Netherlands through the acquisition of Actiepagina.nl, a leading Dutch online coupon site.