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Why I love to hate group buying

My relationship with Spreets is an emotional roller coaster.

I was cleaning up my inbox and was amazed by all the group buying emails, unread, that I was deleting. A quick poll around our HQ showed that only one person here has bought a deal, and that was for a service she uses regularly.

When I first signed up for group buying offers I always opened the emails and read them, it was an exciting novelty. Now unless the subject line has something that is really interesting it’s automatically on the same level as spam. There is only a limited number of times I can see “65% off hairdressing” before I get the urge to throw my laptop out the window. Obviously I could unsubscribe, but then I think what if something really fantastic, kick-myself-if-I-miss-it comes through? Who do I cull? Jump on It, Cudo,  Catch of the Day- I would miss them all equally.

That got me thinking about the future of group buying. Surely I’m not the only one who has a love-hate relationship with the sometimes inbox clogging emails.

On paper it’s a marketers dream. One email, advertising a great deal at your business. Thousands of potential clients. A minimum number of buyers before you have to commit. There has been a burst of growth in the industry over the last year, and I suspect it might be at its peak.

The market has become absolutely saturated with different players and many people are starting to feel this bombardment. Fifty one players in fact. Statistics suggest the top 4 are JumpOnIt, Scoopon, Spreets and Cudo, who make up roughly 80% of the market. It’s the fastest growing advertising category in the country.

If you look at the numbers around the industry it’s hard not to be impressed. In January Spreets was sold to Yahoo! 7 for $40 million. In the first quarter of the year, the market grew to $73m with 6,000 deals offered, up 62% up on the previous quarter and bigger than total 2010 revenue. Databases and Facebook communities of these sites have exceeded 1 million contacts. A trend that was relatively unknown in this country a few years ago is now pulling some impressive figures.

There is also negative effects that come with such quick, massive growth. I  wonder whether the sudden boom is sustainable. Unlike the states, Australia is a small pond to fish in. We have less people, less business and a smaller range of products and services that can be offered. People tire of being offered the same thing on a weekly basis.

On the other hand the economy is struggling, especially the retail sector. As buyers at tightening their belts, group buying will be an alternative for savvy shoppers and a quick cash injection for struggling businesses.

So where is group buying headed?

The obvious step is to diversify- offer something different. It’s obviously going that way, with B2B and niche sites popping up. However, with 4 companies dominating the market share, the smaller players may eventually be pushed out. Some of the big boys are owned by television networks meaning that the offer have a chance to grab some television advertising. A affordable entry into a TV spot is not something the smaller players could offer.

Also the offers need to be more targeted, and possibly less frequent. I’d be interested to see the unsubscribe rates after they send the 3rd email of the day.

How do you feel about group buying? Does it have a long term future in this country or is it headed for a decline?

As for me, I decided signing up for more than one site was an act of sheer over excitement. Down to one site, and hopefully just one email a day.

What do you think?

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Michelle Gamble

Michelle Gamble

Michelle is the Chief Angel of Marketing Angels, an entrepreneur who has built Marketing Angels from the ground up over the past 10 years. Marketing Angels has grown into one of Australia’s leading marketing consultancies providing marketing education, advice and outsourced marketing management to business. Michelle claims she's a bit of marketing geek, having started her marketing career in telecommunications and online working for both Telstra and Optus before starting Marketing Angels. Michelle is also a busy mother to 3 children, and lives in Manly NSW.

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