Group buying giant Groupon has finally entered the Australian market after months of anticipation, but will operate under the StarDeals.com.au domain in an unexpected move that is yet to be explained by the company in light of its strong emphasis on the Groupon brand.
The move has also been met with both surprise and cynicism by local group buying operators, with several saying they believe the company has entered the market too late to gain a substantial foothold.
“I think they were always planning to come here. Obviously Groupon are a brilliant company, and they are leaders in their industry. But we’ve got established players here, and they don’t have an advantage, it’s going to be tough for them,” Zoupon chief executive Adam Schwab says.
The local group buying market has exploded over the past year, with multiple operators all vying for attention, but Groupon was the first to come up with the model. Chief executive Andrew Mason founded the company in 2009, and since then it has exploded, with revenue reported to be upwards of $US350 million.
The company was valued at $US5-6 billion last month after several reports indicated Google was discussing a possible acquisition. Mason would have become a billionaire with his 20% stake.
The new site looks exactly like any other Groupon site, but for now only services Sydney. The company has already set up a Groupon Australia fan page, and has set up various emails with the “.com.au” domain.
The site also lists the Groupon headquarters in Chicago as the company’s mailing address, and refers to itself as “Groupon Australia”.
The website doesn’t appear to have officially launched. Groupon was contacted for comment but did not reply before publication.
The only main difference is that it also lists itself as “Groupon Inc. presented by StarDeals.com.au” – an odd choice considering the company always wanted to use the Groupon brand when expanding, according to president Rob Solomon.
“We think the Groupon brand is the meaningful part of the business, and we want to bring that with us whatever we do,” he told SmartCompany last month.
And while Groupon has certainly done that, the URL tells a different story. One explanation could be that Groupon.com.au was registered by rival Scoopon earlier this year – a move that actually caused Groupon to launch a legal battle against the local operator.
When Scoopon chief executive Gabby Leibovich was contacted, he offered no comment on the legal situation. However, he also said that, “in terms of revenue and profit Scoopon is the undisputed market leader today in the daily coupon space”, in response to whether Groupon would disrupt the market.
Leibovich’s comment highlights one of Groupon’s main problems – major players in Australia including Jump On It, Spreets and Cudo have already established a foothold here and it will be hard for Groupon to catch up.
Spreets has already claimed to be set to turnover $50 million this year, and Jump On It has been able to amass hundreds of thousands of followers on its Facebook pages.
“As huge as they are overseas,” Schwab says. “There are a lot of companies here. They’re a great company and will do great deals, but there are companies doing well already here.”
Jump On It chief executive Colin Fabig says he is surprised the company has opted to come in under its own brand instead of partnering or through an acquisition.
“I’m very surprised they’ve tried to come in organically. I think it will be very hard, because we have some serious competitors here.”
Groupon’s main competitor in the United States, LivingSocial, recently beat Groupon to market here by investing $5 million through Jump On It. Cudo chief executive Billy Tucker also says it may be difficult for Groupon to beat rivals.
“That’s going to be tough. Australia is known for supporting three leaders in any given market, and it’s no different here. But as long as they can give good deals… it’s all about who has the best deals, really.”
Schwab also says Groupon may have avoided acquiring another company due to the sites requiring too much cash.
“They possibly might have thought the valuation was too expensive. It’s very hard to value these companies given the growth rates are always changing and in some cases could be quite big.”
Schwab highlights an interesting point – no one knows just how much these companies are worth yet, even though Google was willing to pay billions for Groupon. As SmartCompany revealed last month, many of these groups are hesitant to reveal revenue and often don’t even give out subscriber numbers.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
