The group buying space in Australia is really starting to heat up. In late January Yahoo!7 announced the acquisition of Spreets, GroupOn began its Australian assault with StarDeals and a number of brands have launched aggressive marketing campaigns to win market share. This article takes a closer look at the industry and what is in store for 2011.
The Market & Who Is Buying
According to Cudo CEO Billy Tucker the coupon market has grown from zero to a $150-200 million industry in just 10 months,” and expectations are for substantial growth in 2011 and beyond. Some of the biggest fans are working women aged 20s to 40s however it seems that these aren’t the only people buying. According to Cudo – 15% of its audience are retirees with spare cash and a willingness to try new things.
The competitor set
The substantial growth of the industry has attracted many players who are vying for a slice of the market (both local and global). As a result over a short period of time the market has become quite saturated, with more than 12 sites competing in the industry. Below is a summary of stats for some of the key industry players based on internet research:
Despite industry growth this year will no doubt sort the men from the boys. It will be a gruelling year for those in the industry – with most brands pulling out all stops to cement their position as the industry’s largest group buying site. There are some fairly big obstacles however that those in the market will need to overcome. The first is surviving in a saturated market. With over 12 players in the market the number of competitors is unsustainable. Therefore 2011 will see some of the smaller sites either acquired by those bigger sites to further grow market share or they will simply fall by the wayside. Another big obstacle is differentiation in product offering to gain a distinct competitive advantage. Whilst Cudo claims it differentiates through only providing discounts which are more than 50% off the standard retail price– the reality is that there is little differentiation that I have seen amongst the industry players. Product exclusivity will be important as will be retaining a steady flow of good quality deals and offers over an extended period of time to keep users engaged. What we may see in 2011 is that some sites may become more specialised and focus their product offering on 1 or 2 verticals ie health and beauty or dining and entertainment to differentiate amongst competitors – however time will tell.
Will Facebook & Google Spoil The Party
When any significant internet trend emerges you can guarantee that Google and Facebook won’t be too far away. Facebook Deals is Facebook’s answer to the coupon phenomenon. Launched in Europe at the start of February, Facebook deals requires consumers to check-in to locations to receive discounts. In the UK a number of big name companies have already signed up to provide deals with more on the way. Apart from the location element there are a few differences between group buying sites and Facebook deals. The first is that discounts can relate to the simplest of products like coffee and advertising an offer to consumers is free. On the face of it, it therefore seems that Facebook Deals is more likely to kill foursquare than Group Buying sites however it also depends on how this product develops over time.
Similar to Facebook, Google too is set to launch its answer to the growing trend known as Google offers. Like Facebook Deals, Google Offers will provide consumers with the ability to access deals via check-in however offers will also be accessible via Google Place pages online. So will this be a “deal breaker” for the industry? Google’s recent track record with vertical strategies hasn’t been good and unless there is a dedicated team behind it encouraging brands to get onboard and ensuring that deal content is being refreshed and updated Google Offers may fall away as so many of Google’s vertical projects have.
More about Daily Deals and Group Buying sites: