How to Keep Up With Group Buying Sites

Today, there are over 40 group buying daily deal sites in the Australian market. According to Telsyte, a telecoms, media and ICT analyst firm, these sites are growing so rapidly, with turnover expected to increase from $63 million (2010) to $242 million this year. The top 4 sites – Spreets, Scoopon, Jump On It, and Cudo – claim 79% of the industry’s revenues last year.

Online Retailer Conference Chairman Grant Arnott described these sites as ”rivers of gold with no downside”. He also said that through a virtual audience and a virtual deal funded by a third party, big sales commissions are within reach.

The success of group deal sites also creates a win-win-win situation for all the players. As long as the advertisers can satisfy the enormous demand their offer attracts, it is advantageous for everyone concerned – customers, daily deal sites, and merchants.

Now, what makes a daily deal site downstage the rest? Is it the quality of their offers, customer service, number of Facebook fans, consumer ratings, monthly turnover, or profit margin?

Spreets is one of the success stories. They were one of the first daily deals sites in Australia in February 2010 and bought by Yahoo! 7 one year later in January 2011 for $40 million. Its CEO, Dean McEvoy, told that they have never expected their growth happening so quickly.

On the other hand, JumpOnIt, has successfully used Facebook to quickly launch itself to the Australian market with an established fan base of more than 400,000 consumers.

In regards to visitors’ number, Cudo claims number one. Cudo, a joint venture between Microsoft and Nine Entertainment Co, has firmly established its position as a leader with more than 785,000 unique visitors in November and December 2010, according to Nielson. CEO Billy said Cudo’s success speaks of fantastic deals they work closely with merchants to provide; their unique national offering with tailored deals in six key markets, along with the power of its marketing platforms giving them a distinct advantage.

So who will be number one?

There is still debate over whether consumers will stick to one or two favourite ‘number one’ daily deal sites or will there be less brand-loyalty as they will become more interested in the actual deals offered by various daily deal sites. Ultimately, personal preference and peer recommendation will determine the consumer ratings, while industry analysts have to decide whether it will be profit margins, revenue, or longevity that matters. As of now, there is yet to be a clear winner.

The Australian daily deals industry is still relatively new and there is much room for growth in the coming year. Watch this space for more updates on up-and-coming players and changes in the market.