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Group buying industry future looks not so cloudless

Recent research conducted by Professor Utpal M. Dholakia from Rice University contains facts that are not very pleasant form currently booming group buying industry:

  • just a bit more than half (55.5%) of businesses recorded a profit after group buying promotion, more than quarter (26.5%)  made losses and the rest broke even
  • less than half of businesses that ran group buying promotion are going to do it in the future;
  • almost 3/4 of merchants have no loyalty to group deal provider and ready to switch

So the conclusion that the researchers made is not very positive for group buying industry especially for websites that provide deals: the little loyalty, low rate of interest to repeat purchase from merchants and increasing competition will lead to the erosion of the current healthy margin and make the life of group deals providers harder.

The research collected data from 324 US businesses operating in 23 markets that used group buying promotion in 2009-2011.

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Telsyte estimates group buying market in Australia $63M in 2010 and projects $242M in 2011

Group buying industry is booming in Australia according recent research of Telsyte (business unit of Gibson Quai-AAS Consulting) and the market will grow 284% this year.
The research covers over 20 group buying web sites that offer heavily discounted group deals for Australians. Over 79% of the market share reported to be taken by four leading players (Spreets, Scoopon, Jump On It, and Cudo).
This figures correspond quite well with the study that we did last fall.
Telsyte makes some interesting forecasts about future industry trends, namely (my comments are in the brackets):

• Arrival of large online multi-nationals such as Google, Facebook and Groupon into the local group buying market (actually GroupOn is already here).
• Agencies representing merchants in deal negations and analytics.
• Proliferation of mobile group buying applications (at least Scoopon and one new smaller – CrowdSauce already have iPhone apps).
• Local media publishers entering the group buying industry through white-label software platforms, acquisitions, or distribution partnerships (we also already see it, with Telstra/Sensis that launched YellowPage Offers).

Some more details about research avalable at Telsyte web site

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Who is the biggest player on the hot group buying market in Australia? Comparative research.

After the phenomenal success of GroupOn, new group buying (group purchasing) web sites had started to appear virtually every day. It is extremely hot trend and even in Australia we have many of them. One day I asked myself, who is the leader of this market? Who close deals more often, attract more consumers and get highest volume of the transaction? So when I got some spare time, I conducted a small research to answer this questions and find out more insights.

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