Australians may be addicted to a bargain and flocking to the numerous collective buying websites in droves but are some better than others, and is the customer base large enough to go round? If the answers is “yes”, and “no”, that may explain why the various daily deal sites are tripping over each other to proclaim themselves leader of the pack. Cudo, Spreets, Our Deal, Scoopon, Jump On It, Star Deals, Ouffer, Catch of the Day… the list goes on. But who really is the number one and which one is the best group buying site?
A proliferation of bargains to be had sounds like good news for consumers but is tougher going for the start ups and their advertisers. With whispers that a consolidation is inevitable, these online shopping entrepreneurs are in a race to the top and being left behind may cost the stragglers, big time.
One of the success stories is Spreets, which was sold to Yahoo! 7 in January for $40 million. Spreets CEO Dean McEvoy said, ‘‘We definitely underestimated how fast it would accelerate and what the growth would be like. I think there’ll be consolidation, people will specialise in different areas.’’
But it’s not just that. For their owners, these group buying sites are a license to print money, or so it seems. Grant Arnott, chairman of the Online Retailer Conference, recently described group discount buying websites as ‘‘rivers of gold with no downside’’ for their owners.
‘‘Build a virtual audience, offer a virtual deal funded by a third party, and collect a hefty commission on every sale,” he said.
According to a study released by telecoms, media and ICT analyst firm Telsyte, these daily deal sites are the fastest growing sector in online retail, with turnover expected to rise $63 million (2010) to $242 million this year.
No wonder even the smaller players want to stay in the game: it’s a win-win proposition for all concerned – customer, deal site owners, and advertisers, as long as the advertiser can service the massive spike in demand after their offer gets a run.
So who are the top sites and is there a number one? Is it the quality of the offer that makes it the best site, the customer service ethic, number of Facebook fans, the monthly turnover, or the profit margins that make one deal site stand out from the others?
“Our customers have joined and keep visiting us because they like what they see, and what they see is simply better deals than anywhere else. Our membership grows simply by word-of-mouth and nothing else,” said Catch Of The Day Founder Gabby Leibovich. “Unlike other pretenders, our database was not bought, our customers are not joining in order to win an iPad, our Facebook followers are not based in Guatemala, and Google hasn’t seen a cent from us in regard to Adwords.”
Them’s fighting words… a sure sign the competition’s getting stiffer. Boasting a database of 900,000 members across it’s two sites, Catch of the Day and Scoupon, Mr Leibovich believes they are well-placed against much younger group buying site Cudo’s 300,000 members, and even Jump On It and its sister website, LivingSocial, who have a reach of 1.2 million which includes a large Facebook community.
So which one is the best group buying website? For the consumer, it comes down to personal preference, peer recommendation, and trial and error. For industry observers, the jury is still out and ultimately it’ll be profit margins, sale price, or longevity that determine the call. Watch this space.
Note: The author is a minor shareholder in JumpOnIt.com.
