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Group buying sites shed more jobs

Group buying site Spreets has shed most of its staff hot on the heels of job losses at competitor LivingSocial, but analysts say the $500 million daily deals market is not imploding, just consolidating.

Analyst firm Telsyte said over the past few years the daily deals market in Australia had been whittled down from 80 to 40 sites to today's position where the top eight – Groupon, Scoopon, LivingSocial, Cudo, Spreets,, Ourdeal and Ouffer – generate 95 per cent of the industry's revenue.

But now the market is struggling to support even that many players with Groupon and Scoopon now accounting for more than 50 per cent of the market and growing.

Over the past week Spreets has slashed most of its sales staff as it restructures around an “affiliate model” whereby it will be a portal site linking to other sites' deals as opposed to running its own deals with small businesses.

Last week LivingSocial cut 24 staff from its Australian office and 400 worldwide.

“It's the consolidation that we all expected as it's increasingly a harder market to compete in . . . the way I see it there's only space for a few players,” Telsyte's senior research manager, Sam Yip, said.


Spreets owner Yahoo!7 would not confirm the exact number of job losses but said the restructure would allow the site to become “a more sustainable and profitable business”. LivingSocial said its staff cuts were about “refocusing and reinvesting in key growth areas”.

Spreets co-founder Dean McEvoy, who sold the site to Yahoo!7 last year for $40 million before exiting the business earlier this year, told Fairfax he was “shocked and saddened” by the news.

The group buying industry has attracted mountains of complaints and bad press due to shoddy suppliers failing to deliver on deals or being ill-equipped to handle the onslaught of customers.

In just one of many reported examples tens of thousands of customers who signed up via LivingSocial for two pairs of Havaianas thongs for $24 didn't get their orders fulfilled, with some claiming to have received fake Havaianas.

But Yip said the daily deals market was still very much alive and Telsyte expects the industry's revenue to exceed $530 million this year, up from $498 million last year.

“The market is not going down at all because Australians are increasingly seeing online as a discount channel,” he said.

Still, investors at least seem to think the group-buying fad has passed with global market leader Groupon losing over half of its market value in the past six months.

McEvoy, who appears to have cashed in his chips at just the right time, said: “I still think group buying is an amazing model despite the press Groupon has been receiving. It's at least as big as the yellow pages industry and works much better than any other form of local advertising.”


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