The daily deals market in Australia continues to shrink. Ouffer.com has been snapped up by Deals.com.au, in yet another sign the industry is forcing companies to grow scale in order to compete.
The two entities combined will have more than 1.4 million members, with Deals anticipating revenue of more than $60 million next year.
Just weeks ago, experts told SmartCompany group buying will continue to consolidate as larger businesses, including Scoopon, Spreets and Cudo, establish more product niches and buy up smaller players.
In China, the industry has seen half of the country’s sites shut down, leaving about 10 major players.
Deals.com.au chief executive Adam Schwab says he will control the newly merged entity, while Ouffer founder Josh David will control his business in a newly created division.
“They do a lot of things fantastically well,” Schwab told SmartCompany this morning. “The guys who run it have some good assets on the table and, most crucially, they have a couple of new verticals they’re about to launch.”
“One is on the gourmet food side, which we really think is going to take off.”
The industry is heading more towards using product niches to attract smaller, more dedicated audience groups – travel and groceries seem to be the most popular so far.
Schwab says the merger will allow the company to play more with that strategy, along with providing more scale.
“It just gives us a bit more scale in the industry and hopefully it will lead to more solid profitability.”
Deals.com.au claims to have been profitable for some time now, but Schwab says the addition should provide even more growth.
“There are some fantastic synergies here, and there’s a relatively small crossover in database as well. We can halve some of our costs, so it’s a good move all around.”
Schwab also says Ouffer will provide some more coverage in Sydney, where it’s more popular, with Deals.com.au finding its base mainly in Melbourne.
Although Schwab could not offer specific information about the deal, it’s understood no money has changed hands.
Ouffer began in 2010, but since then hasn’t been able to maintain the type of scale needed to break out among the larger players. The merger with Deals, which has 30 employees, should give it scope to grow.
Deals.com.au was originally Zoupon, but paid $100,000 for the new domain last year.