Group buying market grows 72% in June quarter as 51 players battle for slice of the pie

The local group buying industry has continued to surge, with the revenue of Australia’s 51 sites jumping 72% to $123.9 million in the June quarter, according to the latest figures from market researcher Telsyte.

The research also shows that smaller, niche-based sites may have more of a fighting chance even as the market continues to become saturated in start-ups.

The figures come as the global group buying market has also continued to expand in the past several weeks, with Groupon updating its S-1 filing in the United States and local group buying software provider Dealised receiving a $5 million investment from SingTel.

Groupon Australia (which trades here as StarDeals) and launched in December 2010, now has fifth position in the market, although it is still a relatively new entry compared to others such as Spreets and Scoopon.

Telsyte says the market share of both international companies, Groupon and Living Social, has grown after “a period of aggressively investing in advertising and marketing”.

The Telsyte figures show there are now 51 sites operating in Australia offering group buying deals, publishing 4,000 deals every month. The market is now expected to be worth $400 million by the end of the year.

“Obviously we’re in a market now that is continuing to just grow and grow, and the main areas of growth are not just in the number of sites, but in the different categories of coupons that we’re seeing, and the price points,” says Telsyte senior research manager Sam Yip. 

Today Scoopon is even offering the first group buying deal for the travel industry, selling $599 flights from Melbourne to Phuket. Yip says this is a key example of how group buying sites are beginning to toy with different price points.

“We’re seeing these new price tiers merge, deals above $2000 have started to grow and that is recorded in the savings consumers had in this quarter.”

Already in the past year Yip says consumers of group buying sites may have received savings worth half a billion dollars.

Most of the fastest growing deals were in the “leisure and recreation” category, along with the “other products and services” category, both of which have grown by 121% and 264% respectively. Yip says the growth in beauty and health products is beginning to slow, which will force players into new markets.

“The categories shift we’re seeing is into homewares, travel, sporting goods, automotive goods, and so on.”

Part of that growth will come from the niche sites, Yip says. While the top eight sites, (Scoopon, Cudo, Living Social, Spreets, Groupon, OurDeal, Deals.com.au and Ouffer), generate a whopping 90% of the revenue, Yip says the 40+ smaller sites will continue to grow instead of just dying away.

“There are plenty of smaller players. The bottom half of these sites have continued to grow, as the main sites are not really concentrating on any niche.”

“The smaller ones are much more niche-oriented. They may look to be acquired or partner up with larger sites to offer localised deals.”

Opening smaller group buying or deals sites has proven to be lucrative for founders. Just this year Groupon Australia bought the Melbourne start-up Crowdmass, and Yip suggests similar acquisitions could occur soon.

“I don’t think they’re going to die off. It’s a very big market and really depends on where those sites are wanting to go. We’ve seen smaller sites like TravelZoo that have grown from nothing to well past one million dollars this quarter by only having a handful of deals.”

The number of national deals has grown, now representing 17% of the market from 13% in the last quarter.