After a $46 million cash injection and a $171 million majority acquisition by Japan’s Recruit Holdings last month, Wahanda, the StyleSeat-esque European salon and beauty booking platform, is continuing with its strategy to scale up its business. It has acquired Treatwell — a competitor in The Netherlands, Belgium and Germany — for $38 million (€34 million).
“We are delighted to be joining forces with Treatwell,” Lopo Champalimaud, Wahanda’s CEO and founder, said in a statement. “Treatwell’s team includes a co-founder of Just-Eat Benelux, an ex-CFO of Booking.com and a former senior executive at Procter & Gamble, who between them have helped build Treatwell into one of the fastest growing online marketplaces of its kind in Continental Europe.”
This is Wahanda’s fourth acquisition in the last six months — a sign of the consolidation happening in this particular area of e-commerce. Others include buying Salonmeister in Germany, Lemon Labs in Lithuania; and Beautycheck in Austria. Treatwell brings Wahanda’s footprint up to 15,000 salons and 10 countries, “with further plans for European expansion in the months ahead,” the company notes.
In two different ways, Wahanda’s acquisition march should not come as a surprise.
First, businesses like Wahanda’s are built around economies of scale: Wahanda (and others like it) take a commission on bookings made on its platform, so the more bookings it processes the more returns they are making on the platform they’ve built. And in the world of beauty salons, while there are a ton of small businesses, there are also several large chains that will sometimes extend beyond country borders. Being able to cut deals that cover more than one market will be another way that a business like Wahanda can grow its funnel.
It also means that smaller players that are growing fast but still small are more vulnerable acquisition targets. That looks like it may have been the case for Treatwell: the company has had 425 percent year-on-year growth since launching in 2013 and has over 2,500 spas and salons across The Netherlands, Belgium and Germany. The combined company now has over 15,000 venues across Europe, and over 20 million people using its automated booking service.
Second, if you have tracked the growth of other online marketplaces, consolidation like this is a regularly recurring trend. Because of the economics of the marketplace model, companies like eBay, Amazon and Groupon all grew out their businesses more quickly in by way of inorganic acquisition.
The basic idea behind the StyleSeat/Wahanda business model is to solve a pain point for consumers and the small businesses that want to connect with them. People may have a go-to place for a certain treatment, or more likely might like to browse a selection of places for what is on offer and easily book something on the spot. A platform like Wahanda’s can do both.
Like OpenTable does for restaurants, Wahanda, StyleSeat and the others are essentially filling an IT/marketing need for the smaller salons that they might not have been able to invest in to build on their own. Like many other areas of our consumer economy — transportation, cleaning and other home services, shopping and more — beauty salons and the process of how we are engaging with them is being disrupted by technology.
“By bringing Wahanda and Treatwell together, we have formed the undisputed leader in the European market.” said Laurens Groenendijk, co-founder and CEO of Treatwell. “Our geographical coverage and our cutting-edge technology complement each other perfectly, as do our cultures and ambitions. We are thrilled to be part of this exciting venture.”
For its part, it may sound a bit odd for a company like Recruit, mainly focused on job listings with ownership of sites like Indeed.com in the U.S., to be buying into the salon-booking market. But in actual fact, it’s also not a surprise.
Recruit has been looking to diversify into different kinds of “job booking” services for a while now — at one point eyeing up the acquisition of Freelancer.com as part of it. Wahanda and the expanding empire of rivals it controls gives them one kind of access into this — rather than providing a place to advertise job vacancies to would-be employees, this is a platform to advertise open slots for small businesses to would-be customers.
With Recruit already active in the U.S. and now clearly helping Wahanda scale up its business, you have to wonder if they’re also eyeing up StyleSeat, or at least trying to take it on as well.
Prior to its exit, Treatwell had raised an undisclosed amount from two investors, Berlin’s Project A Ventures (which invests in a bunch of European startups such as World Remit) and Piton Capital (which invested in another startup sold to Recruit, Quandoo).