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.

billy tucker cudoToday’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.


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