The group buying phenomenon has been illustrated by new figures that show a 1,000% annual increase in visits to daily deals sites, with providers able to attract new visitors to the sector rather than lure them from rivals.
According to data from internet marketing analyst Experian, visits by Australian consumers to sites offering a single product that changes daily rose by 1,000% in the year to May 21.
Meanwhile, the average time users spend looking at these sites is up by 153%.
Matt Glasner, Experian general manager of marketing services, says by offering only one product per day, group buying sites generate constant novelty for customers and can secure bulk discounts from suppliers without running the risk of being left with unsold stock.
“It’s emotion-driven buying at its best – you feel obliged to buy today or you’ll miss out on the opportunity for a great bargain,” he says.
“Group-buying is actually attracting more people on to the web and signifies new internet traffic, rather than taking internet time from existing sites.”
Glasner says that while a group buying start-up working from home may be profitable for a while, the companies with the biggest backers have proven to be the biggest winners over the past year.
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For example, Stardeals – backed by US group-buying giant Groupon – launched in Australia in December last year and has seen its market share jump from almost nothing to become a market leader.
In May alone, web hits to Stardeals’ daily deal website category accounted for 24% of the company’s overall hits.
Similarly, Glasner says Groupon rival Scoopon will be watched closely following an $80 million investment from high profile investors including media mogul James Packer.
“Funding is a significant factor. We can see that paid search traffic by these [financially backed] organisations is twice what you would normally expect,” Glasner says.
Glasner says while group-buying sites with deeper pockets rely on expensive paid search traffic, they also have more expertise in using social media to attract new users.
“If we consider Stardeals, the number one driver of traffic to their site is Facebook,” he says.
“Customer information will be key to their long-term success and will determine business growth as well as their ability to respond and adjust their business model to market changes.”
According to Experian, search engines account for 15.3% of web traffic to daily deal sites, followed by social networking at 13.7% and email at 10.4%. The data also shows that email grew the most dramatically over the past year.
“This means websites are signing up new members regularly, and these same members are visiting the websites frequently due to daily coupon emails delivered to their inbox,” the report says.