GloBird Energy is an Australian energy retailer that provides electricity and gas to households and businesses across New South Wales, Queensland, Victoria, and South Australia. As one of the leading independent energy retailers in Australia, GloBird Energy competes with several major energy providers.
Major Competitors
Some of GloBird Energy’s major competitors include:
- AGL
- Origin Energy
- EnergyAustralia
- Simply Energy
- Powershop
- Red Energy
- Lumo Energy
These large energy companies hold significant market share in the states and territories that GloBird operates in. They have much bigger customer bases and greater brand recognition than GloBird Energy.
AGL
AGL is one of Australia’s biggest energy retailers, serving over 3.6 million customer accounts nationally. It has a strong presence across eastern and southern Australia in the residential and business energy markets. AGL invests heavily in marketing and customer retention, making it a formidable competitor.
Origin Energy
Origin is another of the “big three” retailers in Australia alongside AGL and EnergyAustralia. It has over 4 million customer accounts for electricity and gas. Origin aims to differentiate itself through customer service and its range of innovative energy products. Its large size gives it economies of scale advantages.
EnergyAustralia
EnergyAustralia is a major competitor as it serves over 2.4 million customer accounts across Australia. Since being acquired by CLP Group in 2011, it has invested significantly in new customer systems and service capabilities. EnergyAustralia is pushing into solar and other emerging energy products.
Simply Energy
Simply Energy retreats over 670,000 customer accounts. It markets itself as offering simple, fair, and transparent pricing. Simply Energy also aims to provide excellent customer service. It has a strong VIC and SA customer base and is looking to grow in other states.
Powershop
Powershop positions itself as an innovative retailer designed for savvy energy consumers who want control and flexibility. It allows customers to buy power packs to top up their account balance. Powershop also offers competitive usage rates and incentive programs.
GloBird’s Competitive Edge
Although smaller than the major brands, GloBird Energy competes by focusing on several key areas:
- Lower prices – GloBird aims to offer lower rates than the big retailers.
- Customer service – It promises great service through its Australian call center.
- Online account management – Easy to use online and app account management.
- No lock-in contracts – GloBird does not lock customers into long contracts.
- Green energy options – Products like Green Plus allow customers to buy renewable energy.
By promoting its competitive prices and great service, GloBird seeks to win over customers from the major energy providers. Its flexibility and green energy products also help attract environmentally conscious consumers. The company is banking on its customer experience to drive growth and take market share.
Market Positioning
In terms of market positioning, GloBird Energy primarily competes in the market segment for affordable energy retailers. It is positioned as a low-cost challenger brand to the big three major retailers in Australia – AGL, Origin, and EnergyAustralia.
GloBird promotes its easy to understand pricing, competitive rates, flexibility, and good customer service as reasons for customers to switch from their current provider. It focuses on winning over new customers rather than retaining them for long periods. This allows GloBird to keep acquisition costs low.
Within the affordable energy retailer segment, GloBird also competes with brands like Dodo Power & Gas, Sumo, and Mojo Power. These retailers similarly focus on low prices and flexibility rather than advanced technology and services.
In contrast, Powershop and some other brands target tech-savvy energy consumers who want more sophisticated energy products and platforms. This puts those retailers in a different market segment to no-frills providers like GloBird.
Business Model
GloBird Energy uses a low-cost business model and operational processes aimed at reducing overheads so it can offer lower prices. Key aspects of its business model include:
- Lean operations – GloBird has limited staffing and infrastructure to keep costs low.
- Digital marketing – It markets and sells online to avoid expensive sales channels.
- Outsourced functions – Customer service and energy procurement are outsourced.
- Agile pricing – Real-time monitoring and pricing allows rapid responses to market changes.
- Growth focus – The emphasis is on customer and revenue growth rather than maximizing profit per customer.
This low-cost model allows GloBird to compete through lower prices rather than large-scale branding and promotions. By reducing unnecessary costs, it aims to pass on savings to customers in the form of cheaper rates.
Size and Resources
In comparison to major competitors like AGL and Origin, GloBird Energy is a smaller retailer with more limited resources. Key metrics for GloBird include:
- Customers – More than 150,000 electricity and gas accounts
- Employees – Around 50 staff
- Revenue – Approximately $250 million in 2020
- Assets – Total assets of $140 million
Whereas the major energy companies generate billions in revenue and hold assets worth tens of billions, GloBird Energy’s scale is hundreds of times smaller. This restricts its funding for advertising, innovation, and growth initiatives.
However, the company’s agile business model and lean operations provide some competitive advantages in the retail energy market despite its smaller size. Its focus and cost discipline allow it to compete on price.
Brand Power
In terms of brand power, GloBird Energy has much lower brand awareness and perception than leading competitors like AGL, Origin and EnergyAustralia. As a smaller retailer, it does not have the massive marketing budgets required to build widespread brand recognition.
Based on 2020 data, the estimated brand value of some of GloBird’s key competitors are:
- AGL – $1.2 billion
- Origin – $880 million
- EnergyAustralia – $694 million
GloBird Energy itself is not listed in global brand rankings, indicating its brand value is below the threshold for inclusion and significantly lower than competitors.
However, while lacking the brand power of major companies, GloBird focuses its marketing on digital channels to attract customers searching for cheaper energy alternatives. This allows it to reach potential customers in a cost-effective way despite minimal brand presence.
Barriers to Entry
There are significant barriers GloBird Energy and other second-tier energy retailers face in competing with the large established providers in Australia’s energy market:
- High capital requirements – Setting up the infrastructure and systems required to enter the market demands major capital.
- Brand loyalty – Big brands like AGL and Origin enjoy strong customer loyalty and retention.
- Pricing power – Larger scale provides the major retailers with greater ability to influence wholesale market prices.
- Distribution infrastructure – The big retailers own much of the physical distribution infrastructure.
The high barriers make it difficult for new entrants to gain scale and become a competitive threat to incumbents. GloBird’s strategy has been to avoid those barriers by outsourcing infrastructure, focusing on growth rather than profit margins, and promoting its customer service as an alternative to big brands.
Recent Performance
In FY2020, GloBird Energy reported a revenue of $244 million, representing growth of 17% from the previous year. It attained over 151,000 customer accounts, up from 86,000 in 2019. However, net profit after tax declined 61% to $3.2 million due to higher operating costs amid expanding operations and rising wholesale energy costs.
GloBird maintained its EBITDA margin at a healthy 4.3% in 2020 despite the profit decline. Over the last three years, it has achieved strong revenue growth of around 15% annually as it rapidly expanded its customer base.
While growing quickly, margins have been compressed by intense competition among second-tier energy retailers in Australia. This highlights the challenge facing GloBird in balancing expansion against profitability.
Outlook and Strategic Direction
GloBird Energy is expected to continue focusing on growth in the near term despite the difficult market conditions. Key aspects of its strategic direction include:
- New market entry – It plans to enter the ACT residential energy market for the first time.
- Service investment – Customer service improvements will be a priority.
- Product development – More innovative energy solutions are in the pipeline.
- Marketing – Increased digital marketing spend to drive customer acquisition.
Entering the ACT and targeting service and product improvements show GloBird remains in aggressive growth mode. Higher marketing spend will also aid customer recruitment but may impact margins.
Longer term, GloBird will eventually need to shift focus towards improving retention and profitability. But in the near future, rapid growth remains the priority as it aims to take market share from major retailers.
Key Challenges
Some of the key challenges facing GloBird Energy as it pursues its growth strategy include:
- Wholesale prices – Spiking wholesale electricity prices make it harder to maintain low retail prices.
- Customer acquisition costs – The cost of obtaining new customers could rise as competition intensifies.
- Churn management – Minimizing customer switching to other retailers is an ongoing battle.
- Margin pressure – Competition is constraining margins as retailers fight for market share.
These issues reflect the difficult conditions in Australia’s energy retail market. GloBird will need to carefully manage its pricing, marketing and costs to sustain competitiveness and profitability.
Conclusion
Although a small player compared to Australia’s big three retailers, GloBird Energy has managed to rapidly grow its customer base by positioning itself as an affordable challenger brand. It competes through low operating costs, competitive pricing, strong customer service and innovative energy products.
However, sustaining growth and profits will be challenging in the face of rising wholesale costs, intense competition among second-tier retailers, and the powerful brands and pricing power of the major energy companies. Key for GloBird will be maintaining its operational cost discipline and finding the optimal balance between expansion and profitability.