keting lecturer at RMIT University, for their take on the situation. Reason 1: The competitive and increasingly sophisticated e-commerce landscape “The early advantage that Catch and other pureplays enjoyed has eroded significantly,” Mal Chia, managing director and co-founder of Ecom Nation, told Inside Retail. “Traditional retailers have developed omnichannel capabilities – including launching their own marketplaces – while pureplays have also become more sophisticated.” Amazon, Temu and Shein are now “the poster children” for modern, successful e-commerce companies, according to Brian Walker, founder and executive chair of Retail Doctor Group. “These businesses don’t rely on profit, per se. They rely on scale and database and growth. They’re different machines, and they’re built for purpose,” Walker told Inside Retail.  Reason 2: The arrival of Amazon and the race to the bottom in online marketplaces When Wesfarmers acquired Catch in 2019, Amazon was still new to the Australian market.  “Eight years later, Amazon has more or less taken Catch’s market share,” Chia said.  The challenge, according to Chia, is that “marketplaces operate on very low margins and require massive scale to succeed due to the inherent economics of their business model”.   “Catch lacked the capital and any differentiated value to compete with Amazon who made huge infrastructure investments to improve the customer experience, not to mention bundling all their additional services with Amazon Prime that creates a high-degree of lock-in,” he said. And it’s not just Amazon that Catch has been competing with in recent years, as more Australian retailers, such as Myer, Freedom, Woolworths and Coles, launched their own online marketplaces. “The increased fragmentation and competition from major retailers like Myer and Woolworths entering the market has made it more competitive than ever for customers and sellers by leveraging their existing customer relationships and brand equity,” Chia noted.  “The market has essentially been commoditised and unless you can demonstrate exceptional value that justifies a premium on price or attention, it is a race to the bottom.” Reason 3: The lack of a clear value proposition  “Catch’s closure could be attributed to lack of clear branding and value proposition,” Dr Jessica Pallant, lecturer, marketing at RMIT University, told Inside Retail.  “Catch started by offering once-a-day deals in limited quantities. This triggered an immediacy for the products and capitalised on consumers’ fear of missing out. The company then became a low-cost e-commerce platform offering everyday deals. But it didn’t signal to consumers the benefits of this – or provide a point of distinction from other retailers.” Chia agreed that Catch “threw the baby out with the bath water somewhat when they abandoned the original exclusive deals/bargains positioning they were known for and transitioned to a full marketplace model”.  “The increasing commoditisation of retail means that all brands – not only pureplays – really need to figure out what makes them distinct to combat rising customer acquisition costs wrought by higher CPCs and greater competition,” he said. Reason 4: The failure of Wesfarmers to understand Catch Aside from the changing e-commerce landscape, Walker believes Catch suffered from a cultural misfit within Wesfarmers.  “I actually think at the end of the day, they [Wesfarmers] bought something they didn’t fully understand in a marketplace that was evolving,” he said. “It’s been loss-making for Wesfarmers over its existence, and they’re not going to keep loss-making operations.” Former Catch managing director Nati Harpaz made a similar argument in a post on LinkedIn following the news of Catch’s closure. “I have decided not to share the Inside story but I will say this, when Wesfarmers bought Catch they stated that they will not repeat the mistake they made in the UK by buying a business they don’t know much about and transforming it to be what they think it should be. Well, they proceeded to do exactly the opposite,” he wrote.  “Business is all about people and if you fail to preserve your biggest asset don’t be surprised with the results. Catch had an amazing team, an unbelievable momentum with a run rate of $1B and high profitability when I left. If I was a shareholder of Wesfarmers I would demand the board conduct a full enquiry of the waste of shareholders funds.  “How is it possible that executives can create a loss of $800m and no one is held accountable…I guess if you look at politics in Australia you can understand it starts at the top.” Catch co-founder Gabby Leibovich declined to comment for this story.  Harpaz is an owner of Octomedia, which publishes Inside Retail.