Meet the pureplay brand setting the value sector alight.
Emerging as a new player in the value market, Discount Dragon is striving to guarantee Brits a bargain. Boss Martin Higginson is co-founder and CEO of parent company Huddled.
The former journalist and long-time businessman acquired the brand in the summer of 2022, building up £75,000 of revenue in its first month of trading, before being made a publicly listed company in 2023. Higginson was above all interested in the business model of selling mispackaged items, surplus stock and groceries nearing the best before date at a reduced price.
“Prices are ‘often 60% below’ what consumers would pay elsewhere. Discount Dragon buys stock that would otherwise go to landfill and resells it.”
He tells Retail Week: “We’re seeing a consumer crunch at the moment as everyone is under pressure in terms of where that pound is being spent. “Being able to offer a cheaper alternative, whether it’s a tin of beans, craft beer or a box of biscuits, we’re offering them at significantly reduced cost than the supermarket.”
The group states that its prices are “often 60% below” what consumers would pay elsewhere since Discount Dragon buys stock that would otherwise go to landfill and resells it to customers. Higginson says the company stopped around 2,000 tonnes of products going to landfill last year. “If supermarkets aren’t selling all of their stock or there’s a backlog, that has to go somewhere,” he says. “We’re ready and willing to take it because we’re very fleet of foot and can react quickly to take surplus goods off people immediately.”
Being a new player in the value sector isn’t easy, as rival retailers, such as Poundland, Aldi, Lidl, and B&M, have all grown sales and customer bases throughout the ongoing cost-of-living crisis. But Higginson doesn’t see Discount Dragon competing head-on with other value retailers and wants the brand to create its own niche.
“First of all, we’re exclusively online and deliver to your home, which we think is really important for older people, younger people and those who haven’t got cars. “Most importantly, what differentiates us is our ability to move quickly on best before dates or mispackaged goods, changes of branding, all of those sorts of things.” Perhaps the closest competition Discount Dragon had was fellow online value retailer Motatos, until it exited the UK market in September 2023. Discount Dragon parent company Huddled then acquired Motatos’ stock, merging it with Discount Dragon due to the evident similarities between the brands.
“Motatos is part of Matsmart, which successfully operates in Scandinavia, Germany and Austria, but they were struggling somewhat in the UK,” Higginson says.
“The UK is very much monetary focused at this time. Customers want to save the planet second – first priority is to save some cash.”
“I think they were struggling primarily because of Discount Dragon, and I think they would admit that. “We understand the UK psyche better than they did, as the UK is very much monetary focused at this time. Customers want to save the planet second – first priority is to save some cash.”
It seems that every Brit wants to bag a bargain, no matter their income or situation. Higginson says he is “continually surprised” by the socio-demographic spread of Discount Dragon’s customer base. “We’ve recently introduced craft gin and have been selling a lot, because they’re £20 rather than £40. But this isn’t something you would necessarily associate with low-income families,” he says.
As well as craft gin at a reduced price, Discount Dragon mainly focuses on selling non-perishable branded essentials, including popular brands like Heinz, Kelloggs, and Harpic. Recently, it sold 24-can packs of Fanta for £1.99. “You probably won’t be able to do your weekly shop with us, but that doesn’t stop you shopping weekly with us,” Higginson says. “The business has grown exponentially and we saw £1.8m in revenue in the fourth quarter last year, with 48,500 orders placed in that period, up 18% on Q3.” More growth is expected, as Higginson says the group hasn’t even touched the tip of the iceberg in terms of customer reach and brand awareness.
Despite this still being early days, Discount Dragon has had some important TV coverage that led to a crucial gain in traffic. “We featured on ITV’s This Morning and that drove over 250,000 unique visitors to our website,” Higginson says. “The show got 1.2m viewers, so nearly 20% of their audience actually engaged with the website, which is evident of the size of the opportunity.” While marketing, advertising and overall brand awareness is on his radar, Higginson says there are more urgent imperatives to be working on.
Processing orders quicker is something he wants to perfect since standard orders reach customers within 5-7 days; it’s quicker with express delivery. “I think as a customer, Amazon sets the benchmark by which we must all adhere. With Discount Dragon, we need to make sure you know that when you order with us, your parcel will arrive the next day or in 48 hours.
“If customers have a good experience and products arrive on time, then there’s no reason why they wouldn’t come back, especially since we are cheaper.” Higginson adds: “While we could explode our growth by doing a lot of TV advertising, all we’d do is let a lot of customers down because we wouldn’t have the infrastructure in place to cater for it.” Discount Dragon has the ability to serve anyone with a UK postcode thanks to its partnership with the Royal Mail, and Higginson is confident that the group will grow even while the economic environment remains bleak.
“We think that we can establish ourselves as not only the leaders, but the owners of this space.”
“I don’t feel that best before dates or surplus stock is going to go away, and supermarkets are going to get tougher on their supply chains,” he says. “If anything, that is going to play in our favour. We also have the wider financial impact that’s going to be here with us for a while. “We think that we can establish ourselves as not only the leaders, but the owners of this space.”