> Cudo chief executive Billy Tucker left the company to pursue his own ventures and told the Financial Review he left at a good time – and the industry faced plenty of problems.
> DealsDirect shut down its daily bargains site, DealMe.
> The Fair Trading Commission said in December last year it had received a large number of complaints about deals bought through group buying websites.
> Smaller sites, such as RedLipDeals, began to lament that the industry was no longer sustainable.
Now, industry insiders say the major companies are struggling. While Scoopon is said to be profitable, the media-owned group buying sites are reportedly performing poorly.
Cudo, owned by Ninemsn, Spreets, owned by Yahoo!7 and OurDeal, owned by Ten, are “not doing well at all”, according to industry sources. However, Cudo chief Mike Sneesby tells SmartCompany the company recently had its best month ever due to a deal for SeaWorld – although admits the industry is changing quickly.
“If you look at today’s market, I’d say there’s room for three or four players. We’ve heard more businesses have been pouring money into themselves to keep it running.”
“From my perspective, it can only go on for a certain amount of time.”
LivingSocial chief Adam Rigby says these media companies are the ones shackled by the whims of their parents, saying they’re “sucked up in corporate infrastructure”.
Mid-tier sites have also been snapped up. Deals.com.au bought Ouffer earlier this year – and Catch of the Day has bought another deals site of its own. Before Groupon was able to use the local name, it also bought a couple of local, smaller sites.
According to a recent report in The Australian Financial Review, Groupon and Scoopon hold about 50% of the market, while LivingSocial controls about 14%. The rest of the market is shared between the other major and minor sites.
So what’s happened?
The industry’s problems differ depending on who you speak to.
For Billy Tucker, indiscriminate marketing has been a big problem. Specifically, he means the international duo: Groupon and LivingSocial.
“The sites are just pleasing everyone and it was never meant to be a marketplace, as it is now,” he says.
He’s referring to businesses now offering more than one daily deal. Instead, they offer dozens, putting pressure on businesses to come up with more money and staff to manage merchant relations.
“The merchant used to get promotion out of this, but the information coming at the buyer is a lot to take in.”
