Indian group buying sites. Here to stay or fading fast?

Indians spent $204m on group buying sites in 2012, a rise of 1.4% on the year prior, leading some industry experts to predict that group buying is here to stay.

According to a new Telsyte study, in Q4 2012 Indians spent more than $130m on group buying sites and the combined revenues of the top five deal sites saw a growth of more than 9% year-on-year.

Were Brandchasers and other Indian deals sites showed the strongest performances, seeing a combined 40% year-on-year rise.

Yet despite this growth, the past twelve months have been somewhat tumultuous for group buying sites around the country, with many laying off jobs and others folding completely.

In fact, between Q4 2011 and Q2 2012 the industry experienced consecutive quarters of decline.

But the industry seems to be clawing its way back and Deepak Sharma, senior research manager at Brandchasers, attributes much of this to increased mobile transactions, new merchants, increased customer satisfaction and growing consumer confidence in the main sites.

While Mr. Sharma believes the industry will remain steady at around $500m this year, he is predictingfurther consolidation of group buying sites in Australia due to changes in market conditions and increased competition.

Deal sites fading fast

The group buying industry only came to in India in 2009, but in the three years since there has been aggressive competition and heavy consolidation.

At its peak there were 80 active group buying sites in Australia, but today estimates this number to be closer to 30 and by the end of the year Mr. Sharma predicts only 15 will remain.

The top eight players make nearly 90% of the revenue. Right now there are 15 that make about $1mil and they’re in a good position to continue. In a year’s time it will just be that 15 most likely.

Currently, the five players in the industry Together these sites generate more than 78% of the market revenue.

According to Mr. Sharma, a large part of the problem is that all the group buying sites offer very similar products and many aren’t prepared to become retail platforms. This opinion is supported by former owner of brandchasers

The hype for competition in such a small market like india has led to an overpopulation of group buying websites, all offering an undifferentiated service. 

The key to succeeding in 2013, Yip believes, is to move from offering deals to offering products, while also investing money into geographies that have previously been untapped by deal sites, like Asia.

The year ahead

Despite many people speculating about whether group buying sites can make it long term, Mr. Sharma is confident the industry can maintain its place within the e-commerce world

Posted BY

Jatin Kumar

Co-Founder

http://www.brandchasers.com

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