The analysis comes on the tail end of findings from Telsyte’s Australian Online Group Buying Study, which showed the once-popular Australian group-buying industry grew 1.4 per cent in 2012 to $504 million.
Group buying websites are known for their large volume discounts which do not normally “activate” until a minimum number of users bite. The deals range from experiences to dinners, date nights to health care products.
According to Financial Review, there are currently 30 group deal sites in Australia, down from 80 at the industry’s peak. Since, the industry has since plateaued due to global competition like Groupon and LivingSocial. In addition, customers are currently spending less and saving more – even when it comes to online deals.
Telsyte had previously predicted the industry would hit revenues of $600 million plus, it downgraded expectations to $530 million in late 2012.
Yip now expects a relatively flat to slightly increasing 2013 that will see all but the top 15 group-buying sites cease trading – down from 80 at the peak of the market.
“The top eight players make nearly 90 per cent of the revenue,” he said. “Right now there are 15 that make above $1 million and they’re in a good position to continue.
“In a year’s time it will just be that 15 most likely.”
Telsyte’s Mr Yip explained in an article that part of the problem faced by the market was the sites all offered similar products. He added that many weren’t prepared to become retail platforms and did not have the infrastructure required to sell clothes or electronics – an issue that has led to damaging customer complaints.
But he insisted the market would see growth from 2014 on-wards thanks largely to mobile technologies and real-time deals that offered customers access to products and services depending on their location.
“It’s an emerging channel that has been around for less than three years so you’d expect a massive boom,” he said in a recent article. “The fact that it’s sustained and even had a little bit of growth shows it’s sustainable, that the model does have merit and that consumers are receptive to it.”
Source: Financial Review