daily-discount websites

http://www.ibisworld.com.au/images/marketing/AUSpecialReport-Apr11.pdf

Savvy consumers cash in on deals offered by the burgeoning group-buying and daily-discount market, which has grown by 280% this financial year.


The hugely popular online group-buying and daily-discount sector has grown from a base of virtually nothing five years ago to be worth $377 million in 2010-11. Offering three major selling propositions – group voucher discounts, clearance goods and travel – this sector is now the fastest-growing retail platform in Australia.
The sector includes some of the newest players in Australia’s retail sphere such as Cudo, Spreets, Ozsale, Catch of the Day and Stardeals, and accounts for 1.8% of Australia’s total online retail spend of $21.3 billion.
While brick-and-mortar retailers are struggling with sales that are expected to grow by just 2.3% in 2010-11, online discount retailers’ sales are booming. IBISWorld estimates online discount retailers will double their revenue by 2015-16, exceeding $650 million and accounting for 2.1% of online retail spend. Total online shopping is expected to increase from $21.3 billion in 2010-11 to reach $30.8 billion by 2015-16.
IBISWorld has broken down the most popular products and services within group-buying and daily-discount websites by share of daily deals.
Leaps and bounds
The world’s first group-buying website Groupon opened in the United States in November 2008. It is now proclaimed the fastest-growing company in history and is estimated to be worth $15 billion. The company launched in Australia in March 2011 under the brand Stardeals.
Australia already has over a dozen group-buying websites including Cudo, Spreets and Scoopon, offering an average discount of 60% from the normal retail price.
From small beginnings, the sector is no longer the domain of small independent operators, with major acquisitions in the past 12 months by some big names. In January 2011, Yahoo!7 purchased Spreets for $40 million; Cudo is owned by Nine Entertainment; the Ten Network owns Our Deal; James Packer has bought into Deals Direct (owners of Dealme.com.au); and Twitter purchased Ozsale for $14 million. Furthermore, New York-based
Daily deals
Product or service
% share
Travel and accommodation
29.3%
Retail goods
29.2%
Beauty
14.0%
Dining out
10.6%
Leisure activities
8.0%
Fashion
4.0%
Professional services
3.0%
Sport and fitness
1.5%
Food
0.4%

argains are only a click away
global hedge fund Tiger Global is understood to be close to securing a 30% stake in Scoopon, which owns Catch of the Day.
Sale to end all sales daily
Catch of the Day is the biggest player in the sector, with revenue of $110 million tipped this financial year, making them arguably Australia’s largest online retailer. In a bid to compete, Harvey Norman launched its first daily deals website this month, Harveynormanbigbuys.com.au.
Getaways for next to nix
Wotif.com.au is holding tight to its crown as the king of discount travel and accommodation and its parent company Wotif.com Holdings Limited is also the owner of Lastminute.com.au.
In 2006, Wotif.com’s sales revenue was about $45.5 million. Last year, sales rose to $136 million. Strong growth was supported by heavy discounting by tour operators and hotels and a strong increase in the number of Australians looking for bargains in 2008 and 2009 because of the global financial crisis. However, growth slowed in the past 12 months as the high Australian dollar encourages more Australians to look overseas for holiday deals.
The ride ahead
Intense competition between group-buying websites is likely to result in merger activity over the next couple of years, and consumers will reap the benefits.
The general market is somewhat saturated, and IBISWorld expects any new entrants will focus on niche markets such as fitness, restaurants and leisure, while others will try to take on Catch of the Day and Harvey Norman in the clearance goods market.
No matter who ends up on top and who buys out whom, it is buyers who will come up trumps.
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