Group buying market ‘is in a pickle’
Travel deals are holding the fast-fading group buying sector together, a new report from industry analysts Telsyte suggests.
According to the report, travel deals account for 30% of the group buying industry’s revenue, which has been flat for the last three quarters.
Telsyte is predicting that across the Australian group buying sector there will have been growth of just 7% by the end of the year compared to 2011. Group buying only became a major force in Australia in late 2009. Telsyte says this year will see revenues of $530m across the board.
Today’s Australian Financial Review quotes former Cudo CEO Billy Tucker as saying his timing was “impeccable” for leaving when he did at the end of 2011. The Nine Entertainment Co-owned group buying site has an estimated 12% of the market. Tucker tells the AFR:
“The group buying sector as a whole has got itself into a pickle. it has become addicted to this drug of low-value commodity products. It has effectively become a reseller of products out of China.”
Tucker added in the AFR comments: “There are too many emails, too many deals, too many service issues and too many unused vouchers and that is undermining the market.”
Excitement about the group buying model in Australia arguably peaked in early 2011 when Yahoo!7 bought Spreets for $40m.
Tim Burrowes founded Mumbrella in 2008. He worked on Mumbrella until 2021. At various points he was editor, content director and editor-at-large.
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Group Buying needs to be reinvented and go hyper-local and mobile…Telsyte obviously has a vested interest in the concept.
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“Not worth any stars”, “misleading”, “don’t waste your time”, “Shocking customer service”, “absolutely hopeless”… Read reviews of Cudo here…
http://www.productreview.com.au/p/cudo/2.html
Seriously, how does this company stay in business? They are truly awful and deceitful? Aren’t they owned by Channel 9? How does Gyngell let this happen?
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@Jennifer they let it happen because they are making money out of it! lots of money! It’s not a customer service model – its a cash cow.
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Most of these deal sites have now closed. Our Deal are laying off staff left, right and centre. Cudo has made most of its senior staff redundant and is losing $300K+ a month. Even the top two – Groupon and Living Social wouldn’t be in profit. Tucker’s right – he got out when the going was good. Because the report was correct – the category has been all down hill since early 2011.
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This from today’s SMH seems to suggest that category is all but finished…
http://www.smh.com.au/business.....2999u.html
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who would have thought
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How much is Spreets worth now?
Would be very interested to hear some figures.
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Ye, this was a classic goldrush game for the dotcom crowd – get in quick and you stood to make some money by having your site sold to a MUCH bigger player who didn’t want to miss out on this in case it proved to be the next big thing. But once those top few were established & successful in their own right or sold to somebody else, there wasn’t enough room left for the followers.
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Would these sites be worth anything? Dwindling subscriptions, they don’t actually produce anything, huge outlays to merchants, expensive staff and IT overheads. I read somewhere that the average spend of an Australian member of a group buying site over the past six months is 50 cents. That explains why they’re all closing down or up for sale.
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Apparently the guys who sold Jump On It to Living Social did the best deal out of anyone in this space.
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Who’d have thought it? Group buying – sending naive small businesses broke for the past few years.
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I had the sad misfortune to have worked at one of these sites. The conduct, the unscrupulous behaviour, the desperation to make budget was something I’d never encountered. If you didn’t “buy in” to it you were fast shown the door. We were constantly in trouble with the ACCC, contravening counterfeit laws, grey importing etc. I can’t remember any customer ever being happy (and comment TWO rings SO true). It was just so incredibly, incredibly dodgy, it’s refreshing to see that Billy Tucker and, basically everybody else, is fast realising that many of these buying sites are little more than charlatans and opportunists with a limited future.
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There are some group buying sites that are focus on local markets and that’s a good thing for small merchants. This will give an opportunity for them to sell at most group buying sites.
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