The US group buying goliath Groupon has struggled in the cluttered Australian group buying market after its February launch despite the sector growing 62% in the March quarter, according to media and telecoms analyst Telsyte.
It remains unclear what impact group buying is having on media such as paid search, Yellow Pages, radio and suburban newspapers as thousands of small businesses trial group buying sites to move products and services via steeply discounted 24 hour deals.
But parallels are being drawn to the major disruption online classified sites such as Seek, carsales.com.au and realestate.com.au had on established media revenues as they emerged and gained widespread consumer take-up.
Scoopon’s general manager, Jon Beros, told AdNews the company was receiving “hundreds of calls a day” from merchants wanting to launch offers.
In the latest quarterly report from Telsyte, Scoopon and Spreets made a clear break this year from the dozens of group buying ventures operating in Australia.
The top four players control 80% of volumes in a sector forecast to top $400 million this year – Scoopon and Spreets, the latter now owned by Yahoo!7, hold an estimated 20-25% share each in the sector.
Nine Entertainment Co.’s Cudo and Jump On It – acquired last year by the world’s second biggest group buying player Living Social - are the other players in the top four with marketshares of 15-20% each.
Telsyte’s senior research manager, Sam Yip, told AdNews that Groupon, which operates as Star Deals in Australi, had garnered a “low single digit” marketshare in the March quarter. “Groupon’s been quite slow,” he said.
“There is a big gap between where they want to be and where they are at the moment. It’s still got a long way to go.”Scoopon’s Beros said Groupon’s initial impact was less than what the industry expected although he resisted repeating the claim made to AdNews by Scoopon’s co-founder Gabby Leibovich that the US giant would fail in Australia.
“They’ve come into a very tough market and started a little bit slower than they would have liked or what was expected in the industry,” Beros said.
“Australia’s probably got some of the best group buying sites in the world and the reason is because of the level of competition. But Groupon will be around for a while.”
According to Telsyte, consumer spending in the March quarter alone on group buying sites exceeded the total figure for the industry in 2010 - in the three months to March, spending was up 62% to $73 million over the December quarter and Telsyte predicts the sector will top $400 million in 2011.
This figure does not include the huge sales volumes also being generated by daily deals sites, which do not require a specified number of offers to be taken up by users before the deal goes live.
There were nearly 6,000 group buying deals published between January and March this year, up from 2000 in total for 2010.
There are also major changes underway in the types of offers being put to the market – price points are ranging widely from $2 drink deals to $150 hotel packages and $700 laser eye surgery offers.
Scoopon claims to have sold more than 7,000 $149 “hotel experiences” for Rendezvous Hotels in 24 hours while Telsyte cited a $792 Thailand “holiday experience” on Cudo which raised $1.6 million in sales from 2000 vouchers.
Yip said the single biggest response for any offer so far this year came though Our Deal for Taiwanese drink chain Chatime (Cha is Chinese tea), which saw 22,000 vouchers sold for a $2 drink.
“What’s interesting with that offer is it shows people do use social networks to spread the word about these deals,” yip said. “It’s not a mainstream drink but it really worked.”
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