Small Business

License article

Group buying boom begins to slow

Australia's group buying industry - on a path of rapid explosion for the past couple of years - appears to have finally stabilised.

For the second quarter running, revenue has declined across the group buying market, according to technology analyst firm Telsyte.

Revenue dipped five per cent in the past three months, down to $117 million. At the end of last year, the Australian group buying market was worth $498 million. Despite a soft start to the year, Telsyte expects a strong second half, with the market estimated to be worth $600 million by the end of the year.

And Telsyte's figures show that in the past 18 months, the sector has shifted quickly away from local deals - such as meals and massages - to national deals centred around travel and physical products.

In the last quarter of 2010, national deals made up only 8 per cent of all group buying purchases. By the first quarter of this year, that figure had risen to 51 per cent.

"What's happened in the past two quarters is the sites have taken their eye off local deals and they've concentrated primarily on products," said Telsyte senior research manager Sam Yip.


He said the market had simply stablised, after a huge last quarter in 2011.

While many group buying customers have complained about finding it hard to redeem vouchers at small businesses overwhelmed by large numbers, or of substandard service, Mr Yip said lessons had been learnt.

"I think there's a lot of horror stories out there. I guess with a new industry we're learning from it," he said.

"I guess group buying isn't for every business. It requires a lot of planning around every deal."

While there are still many sites offering deals, eight main sites continue to generate more than 90 per cent of total revenue, led by Groupon, Scoopon, LivingSocial, Cudo, Spreets and

The group marketing has only existed for around two years in Australia. At one stage there were about 80 sites, which has now dropped to about 65 as some of the smaller players left the market, Mr Yip said.

Telsyte has tipped technology products and accessories to be the big drawcards in the last half of this year, as group buying sites jump on board soon-to-be-released iPhone and iPad versions.