Mighty Ape chief executive Daniel Balasoglou at the company's Sliverdale HQ. Photo / Dean Purcell
Mighty Ape hopes to encourage customers on its database to make the great escape.
The New Zealand-founded e-commerce original has followed its Australian parent company in launching a travel site with its best deals targeted at subscription-paying members.
The 16-year-old company has quietly pitched Mighty Ape Travel to about 27,000 subscribers, but hopes to leverage more business among its 580,000 customers in this country and 120,000 in Australia. Subscribers, or “primate members”, who pay a $60 annual fee for a range of benefits will get the steepest travel discounts – which don’t yet include flights – as part of Mighty Ape’s aim to better reward them.
It’s also part of diversifying its revenue base as it faces soft demand in key parts of its traditional range and growing competition from e-commerce outlets overseas.
Mighty Ape Travel is up against global online travel agent giants such as Booking Holdings, which last year earned US$21.4 billion ($34b), and well-established bricks-and-mortar travel agents, which have enjoyed a boom in bookings as the Kiwi appetite for post-pandemic travel shows few signs of easing off.
Travel by Kiwis overseas is running at 91% of pre-pandemic levels and at least in one month, records for travel have been smashed this year.
Mighty Ape says being able to target those on its database directly is key in the crowded online travel agent area for the business based in Silverdale north of Auckland.
Dan Balasoglou, 48, has been chief executive for the past six months after a year as chief financial officer at Mighty Ape.
He says social media and emails direct to customers are crucial but so, too, are personal recommendations.
“If you’re not a customer, but you talk to a customer about a great experience and you’ve got a good deal, that’s good word of mouth as well.
“We still have a large customer base that we can communicate regularly and offer what we believe will be very competitive rates, and probably the key point of difference between us as a small player coming and competing against someone like Booking.com is the offer around our primate customers.”
Hotel discounts of up to 25% were on offer for about a million properties around the world.
“We’re trying to be as competitive as we can as new entrants into the market.”
While the company traces its origins to an Auckland City video game store that opened in 1995 and still has a big presence in the gaming gear and software sector, its customer base isn’t necessarily skewed young, so travel offers would mirror its other range of 1 million products in stock that appeal to a wide age group.
“We have 23 categories out there, ranging from things that might skew potentially a little bit older, like electronics or computers to collectables and hobbies and toys, pets.”
The key was to offer good value and provide back-up services, especially because online agents had a patchy record for stepping up if holidays went wrong. The travel inventory, booking and service are sourced and provided by Australian white label platform TRAVLR, which Balasoglou says provides round-the-clock helpdesk support for customers.
“They’ve got great customer service based off reference checking, so we feel confident that with that plus we’ve got the Mighty Ape brand behind it that’s been established a long time in New Zealand.”
Mighty Ape was bought by a bigger Australian online retailer, Kogan.com, in 2020 for A$122.4m ($128m at the exchange rate then). The Australian firm was founded by colourful entrepreneur Ruslan Kogan and this year launched its online travel site, also targeted heavily at its subscribers. The Australian company sells insurance too, something that Balasoglou said was a likely new vertical for Mighty Ape, which last year launched mobile pre-pay plans.
“We’re always looking, and the key thing for us is finding the right partner around that because we have a high reputation around our service, so that’s particularly important to us. If we were looking ahead in the next 12 months, I’d expect to be onboarding probably at least two different verticals potentially in the insurance space, for example, travel insurance.”
Despite a soggy climate for retailers, Balasoglou says Mighty Ape remains profitable, although top-line performance slipped last year. It is broken out in the Kogan annual result, which showed gross sales were down 4.4% to A$147m. Its performance was also hurt by the cost of a 5000sq m delivery centre in Christchurch to better serve that city and the rest of the South Island.
While it had held on to its customers (and seen primate subscriptions grow annually at 30%), they were spending less per transaction.
“We haven’t held off investing in the business, we’re still a profitable business, even though these are tough times we have [had] for the last few years.”
Its traditional mainstay, gaming, had been soft with the dearth of new products being launched, although that would change soon. Demand for electronics and appliances such as TVs and mobile phones had also softened because discretionary spending has been squeezed by cost-of-living pressures.
“On the flip side, we’re actually seeing great growth in some big categories as well like toys. Pets has grown through the pandemic and people are spending a lot more.”
Health, beauty and sports equipment were performing strongly.
Just as Mighty Ape is taking on global giant online travel agents, its traditional retail business was under growing threat from enormous overseas operators such as Temu, which in the last quarter alone raked in US$12b revenue and has grown rapidly in New Zealand with free shipping of a staggering array of products.
Balasoglou says the “challenge” of global competition was ever-present.
”Competition is always a threat, but it’s always good for the customers. It makes us sharpen our pencils and look for good deals and deliver value to our customers.”
The Mighty Ape brand’s reputation for service differentiated it from overseas threats, he said.
The business employs about 200 people in New Zealand. Unlike small purchases on sites such as Temu, Mighty Ape customers have to pay GST to the Government.
Balasoglou said he didn’t have a strong view on whether overseas firms needed to face similar requirements.
“That’s outside of my bandwidth [but] it does present those challenges around being able to get to New Zealand consumers cheaper than what we can because of those breaks.”
Prior to joining Mighty Ape, Balasoglou served as CFO at Lotto New Zealand. He also held key leadership roles at GE Oil and Gas and Capita Symonds while working in Britain.
What attracted him to Mighty Ape?
“I’m a Kiwi boy, but lived overseas for a large period of my life. It’s a really great New Zealand brand with great purpose, so for me that aligns.”
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism.
1995 Founded as Gamezone, an independent video store in Symonds St, Auckland set up by founder Simon Barton
1996 Gamezone launches one of NZ’s first retail websites
2002 Gamezone becomes Gameplanet store (GP Store)
2008 GP store relaunches as Mighty Ape, a reference to Donkey Kong in a reference to its video game roots
2010 Primate subscription model launched
2018 New 10,000sq m Silverdale distribution centre opens
2020 Kogan.com buys Mighty Ape
2021 Jungle Express delivery service launched
2023 Mighty Mobile launched, Christchurch delivery centre opened
2024 Mighty Ape Travel launched
Greatest hits
More than $1b in sales
8000 items picked from warehouse a day
6000 orders picked up by customers a month
Most expensive order was a $9500 Gorilla Rig
Highest selling products are Hostess Twinkies and Cards Against Humanity
Supermarkets like FreshChoice Epsom now stay open until 9pm for online orders.