Group Buying Trends

Last month, I gave a presentation on Group Buying and the Deals Industry at the Infopresse RDV Media conference in Montreal. The star of the show was Arianna Huffington. She delivered a very crisp and clear view of how she sees the new media world with the Internet at the forefront. For instance, news cycles and holding stories for the front page of tomorrow’s newspaper no longer matters; you break the news when you get the news or someone else will break it for you. You can never underestimate the importance of headlines, it’s not just ‘Dominique Strauss-Kahn Arrested’, it’s ‘OMG IMF’ – guess what gets more clicks?

For my presentation I wanted to share a bit about where the Deals industry has been, where we are today, and also where all of this is going. I’ve been in this industry in Canada for almost 11 years since the launch of RedFlagDeals.com in November 2000. Last year I also got my hands dirty in the crazy competitive world of group buying.

The big question is whether all of this is sustainable. If you’ve been following the rise of Groupon and group buying in general in the last two years it’s just been astounding. I can’t think industry that has grown so fast that is so exportable to all corners of the globe. That certainly includes Canada, which is proportion has more group buying sites than in the US, with more than 100 group buying sites and over 50 aggregators.

With that many competitors, plus all of the other information deal and coupons sites that don’t sell prepaid coupons, there has to be change. We’re already seeing some of this in the US with Facebook and Yelp scaling back their programs other sites closing. The challenge though will be to figure out how to evolve and make this segment sustainable for all stakeholders – consumers, merchants, and publishers like ourselves. Consumers clearly want and are willing to spend on deals, merchants love the fact that they’re paying directly for customers, and publishers are thrilled to tap into the world of local commerce.

The future though is about converting those new customers into returning customers and proving it. Down that road, there are thousands of potential paths and no one has figured it all out. But that’s what’s so exciting. Cracking this local commerce nut at scale is the big opportunity. Group buying is just the gateway drug.

This article was previously published on Life in Yellow blog.

Comments /

  1. To add to what Derek wrote, there are about 130 deal sites in Canada and about 50 aggregators. Way too much. Look for this number to be significantly reduced by the summer of 2012. The next 6 months will being plenty of mergers, acquisitions, bankruptcies in the deal space in Canada.

    However, we are still seeing large media companies get in the game as well as investors with large budgets.

    It has become more of a challenge to sign up merchants, as they are increasingly focused on whether daily deal campaigns can actually bring clients back to them.

    Percentages kept by deal sites has steadily eroded for most sites except the very large ones. 50% last year, now it is standard 35-40% and we are seeing a lot more 20-25%.

    The top sites in the country are:
    Groupon
    Wagjag
    Dealfind
    Teambuy
    Living Social
    Dealoftheday
    Tuango

    We still believe that Dealoftheday by the yellowpages should be dominating a lot more than they have thus far. The potential, the assets, the distribution, the merchant contacts and the digital know how from across the Yellow Pages group is astounding and believe there will come a time when DealoftheDay finally leads the country. For now, they have some catching up to do.

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